Proceedings of the Standing Senate Committee on
National Security and Defence
Issue 2 - Evidence
OTTAWA, Monday, November 1, 2004
The Standing Senate Committee on National Security and Defence met this day at 6:05 p.m. to examine and report on the need for a national security policy for Canada.
Senator Colin Kenny (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, it is my pleasure to welcome you to the Standing Senate Committee on National Security and Defence. My name is Colin Kenny. I am a senator from Ontario and I chair the committee.
On my immediate right is the distinguished senator from Nova Scotia, Senator Michael Forrestall. Prior to his appointment to the Senate in 1990, Senator Forrestall was first elected as a member of Parliament in 1965. He was re-elected a further six times. During his tenure, he served as parliamentary secretary to several cabinet ministers, including the Minister of Transport and the Minister of Regional Industrial Expansion.
At the far end of the table is Senator Norm Atkins from Ontario. Senator Atkins has been involved in the administration of several universities and is now on the advisory board of the Faculty of Business of Acadia University. He does a great deal of charity work and is very involved with the Canadian Diabetes Association.
Beside him is Senator Pierre Claude Nolin from Quebec. He was appointed to the Senate in 1990 and since has chaired the Special Committee on Illegal Drugs. Today, he is the Deputy Chairman of the Standing Committee on Internal Economy, Budgets and Administration. Senator Nolin is the current Chair of the Science and Technology Committee of the Canadian-NATO Parliamentary Association.
Beside him is Senator Michael Meighen from Ontario. Senator Meighen is a lawyer and an active businessman with a wide range of charitable and educational institutions. He was recently elected as Chairman of the Subcommittee on Veterans Affairs.
Beside him is Senator John Lynch-Staunton from Quebec. He is a successful businessman from Montreal and was, until recently, Leader of the Official Opposition in the Senate. Prior to his election as leader, Senator Lynch-Staunton was the Deputy Leader of the Government from September 1991 until November 1993.
On my far left is Senator Terry Mercer from Nova Scotia. Senator Mercer has held a wide variety of positions with various charitable institutions, including the Canadian Diabetes Association and the Canadian Lung Association. He is very active in the Association of Fundraising Professionals and is chair-elect of the AFP Foundation for Philanthropy in Canada. The senator has lectured extensively on modern ethical fundraising techniques.
Beside him is Senator Wilfred Moore from Nova Scotia who was appointed to the Senate in 1996. In the past, he was Chair of the Bluenose II Preservation Trust, a group of volunteers charged with restoring and maintaining the historic Bluenose II schooner. Senator Moore is also a former member of the Royal Canadian Air Force Reserve Squadron.
Beside him is Senator Peter Stollery from Ontario, one of the most senior senators in the Senate. Currently, he is Chairman of the Standing Senate Committee on Foreign Affairs. The committee recently completed a comprehensive review of the North American Free Trade Agreement with the tabling of its final volume entitled, Mexico: Canada's other NAFTA Partner.
Beside him is Senator William Rompkey from Newfoundland and Labrador. He is Deputy Leader of the Government in the Senate and has been since January of this year. He has held several other parliamentary and government posts, including Minister of National Revenue, Minister of State (Small Business and Tourism), Co-chair of the Special Joint Committee on Canada's Defence Policy and Vice-chair of the Canadian-NATO Parliamentary Association, to name only a few.
Our committee is the first permanent Senate committee mandated to examine security and defence. During the last Parliament, we completed a number of reports, beginning with Canadian Security and Military Preparedness. This study, which was tabled in February 2002, examined the major defence and security issues facing Canada.
The Senate then asked our committee to examine the need for a national security policy. So far we have released five reports on various aspects of national security. First, Defence of North America: A Canadian Responsibility tabled in September of 2002; second, For an Extra $130 Bucks...Update on Canada's Military Crisis, A View from the Bottom UP, in November of 2002; third, The Myth of Security at Canada's Airports, which was tabled in January, 2003; fourth, Canada's Coastlines: The Longest Under-Defended Borders in the World, October 2003; and fifth and most recently, National Emergencies: Canada's Fragile Front Lines, which was tabled in March 2004.
The committee is now turning its attention to a review of Canadian defence policy. During the next year, the committee will hold meetings in every province and engage Canadians to determine their national interests, what they see as Canada's principal threats and how they would like the government to respond. The committee will attempt to generate debate on national security in Canada and to forge a public consensus on the need for a military.
This evening our first witness is Alan Williams. Mr. Williams was appointed Assistant Deputy Minister (Materiel) at the Department of National Defence in 1999. He is responsible for ensuring effective materiel acquisitions for both the Department of National Defence and the Canadian Forces.
Mr. Williams, welcome to the committee. I understand you have a short opening statement. Please proceed.
Mr. Alan Williams, Assistant Deputy Minister (Materiel) Department of National Defence: Honourable senators, thank you for inviting me here this evening to speak to you and answer your questions on our procurement processes. I will begin by telling you a little bit about my role in the Department of National Defence. The ADM of materiel is the central service provider and authority for all materiel in the Canadian Forces and the Department of National Defence. The military define their requirements. The Materiel Group takes these requirements and manages equipment through its entire life cycle, that is, through procurement, maintenance and support, test and evaluation, moving and warehousing, and ending with disposal.
In addition, we provide logistic planning for military operations, including transporting troops and equipment, housing them and supplying their needs. Our assets are valued at approximately $21.8 billion and our inventory at $5.4 billion. We spend approximately $1.5 billion on acquiring new assets and a similar amount to maintain and sustain these assets.
Let me pause here to address a common misconception. It is generally believed that the cost to maintain new equipment must be less than that for old equipment. In fact, the opposite is true, with the costs of new equipment often doubling or tripling that of older equipment. New equipment is technologically more complex and involves the maintenance and updates of sophisticated software.
[Translation]
About 4,000 men and women, both military and civilian, work in the Materiel Group. They are engineers, project managers, procurement officers and many others whose mission it is to acquire equipment, goods and services for the Canadian military at the right price for taxpayers. They do their jobs with amazing energy, enthusiasm and excellence while upholding a high standard of ethics — a management code and value system we call "E cubed plus one".
[English]
Military procurement is a very big business. During 2003-04, more than 18,000 new contracts and contract amendments were let to close to 6,000 suppliers for more than $4.8 billion.
DND procurement is also very complex. Over the past decade, acquisition reforms have reduced the complexity of our procurement business. Processes are more streamlined and more aligned to commercial practices. The number of contracts and suppliers has been reduced by entering into comprehensive, long-term arrangements. Despite all of our reforms, however, some defence procurements will always have a higher level of complexity than you will find in industry.
Finally, DND procurement, unlike its commercial counterpart, strives to be entirely open and transparent. It must be able to withstand scrutiny from the media, from the public and from individual firms, both domestic and foreign. It must meet all the provisions of domestic and international trade agreements, which in Canada generally means it must be a competitive process. Finally, it must stand up to independent review by the Canadian International Trade Tribunal, the Federal Court and the Office of the Auditor General.
Military procurement is big, complex and transparent. Making it work depends on our ability to change both our business processes and our organizational culture. To help guide the changes that are needed in our organization, we developed a strategic framework called, "Getting It Right." Getting It Right means obtaining the right goods or services at the right time for the right price, while ensuring the right support and applying the right rules, all with the right people.
There are three main thrusts to Getting It Right. The first is to use the strengths of allies and industry, both to share expertise and achieve economies of scale. Working with our international partners can be a great help in reducing our time frames for acquisitions. For example, we recently had a requirement to provide an air-to-air refuelling capability. We recognized that our German colleagues were undertaking a similar initiative. Rather than reinventing the wheel, we signed a memorandum of understanding with them to place our aircraft in their production line to undergo the necessary modifications. We cut three years from the planned time frame and saved the Canadian taxpayers over $50 million. Today, as a normal part of our business approach, we look for collaborative opportunities with our allies in order to streamline the process and save money.
[Translation]
Industry also has a role to play in "Getting It Right." I think it is fair to say that the relationship between industry and DND has grown closer over the past few years. We meet more often, talk more openly and learn more about each other's environments. I meet with industry leaders frequently and speak at industry forums often. I have set up a Defence Industry Advisory Committee which is made up of government, industry and academic representatives who meet three times a year to exchange views on defence materiel and industry-related issues. This is an important step in communicating with industry, giving them the opportunity to raise concerns and to provide advice to us on issues of mutual interest.
[English]
Corporately, under the direction of the Vice Chief of the Defence Staff, we have developed a 15-year strategic capability investment plan. This is a superb planning document that allows us to better plan and manage our capital expenditures. In addition, by providing industry with a window into our plans they can better position themselves to respond to our needs.
One significant recent change in the defence-industry relationship is that we now routinely provide industry with draft requests for proposals or draft RFPs. They, in turn, provide comments to the department before finalization so that some of their suggestions can be incorporated into the final RFP. Our recent maritime helicopter program contract worked this way. We conducted hundreds of hours of consultation with industry when the draft RFP was released. Roughly 400 changes to the final maritime helicopter RFP resulted from this process, none of which — and this is crucial — changed the military's statement of requirements.
The second thrust of "Getting It Right" is introducing best practices. Let me briefly discuss four examples.
The first is total package procurement where we bundle together the initial acquisition with long-term support. In doing so, we are able to hold the contractor accountable for the full life cycle costs of the weapon system.
Second, as a general policy, we will be following a compliant lowest price evaluation methodology. That is, for bidders to be successful, they will first have to meet our mandatory requirements. Of those bidders that meet our requirements, the one with the lowest cost will be selected. This approach makes best use of every dollar in our budget. Any time you minimize life cycle costs and buy only what you need, you achieve best value. It is the approach we followed in acquiring our maritime helicopters and one we hope to replicate in the future.
A third example is optimized weapons system management, OWSM. Equipment used to be maintained with hundreds of small contracts lasting for two or three years. Under OWSM, we bundle the requirements into a few contracts, often no more than three or four, for terms of 10 years or more. Doing business this way saves the Crown large administration costs and provides industry with incentives to invest in the program as there is much more money on the table with a longer payback period.
Some examples of these optimized support agreements include Air Canada providing the parts and maintenance for our Airbus platform; Bell Textron managing the parts inventory for the Griffon helicopter with only limited holdings at squadrons; and the contractor providing in-service support to our maritime coastal defence vessels. Each of these contracts is performance-based, maximizes the use of best commercial practices, and includes incentives for cost reduction.
A final example of best practices is purchasing commercial or military off-the-shelf equipment. By avoiding developmental products, we reduce risk and save time and money. For example, in response to rapidly changing threats and requirements, we were able to buy off-the-shelf unmanned air vehicles (UAVs) very quickly. We purchased and fielded the French Sperwer UAV in support of Operation Athena in Afghanistan. We also purchased the United States Silver Fox mini-UAV and are using that in support of collaborative Canadian Forces wide experimentation. It will permit Canada's navy, air force and army, as well as Defence Research and Development Canada, to enhance their understanding about the potential use of mini-UAVs in the modern battle space.
The final thrust of "Getting It Right" is to enhance contract structure and management. Initiatives in this area include developing contracts with built-in incentives and penalties, focusing on performance criteria rather than detailed specifications and building in appropriate off ramps.
[Translation]
A major driver for all these changes is the requirement to speed up the procurement process. Several years ago we conducted a study that showed that capital equipment projects were taking an average of 16 years to move from concept to project close down. This timeframe is totally unacceptable, particularly in light of the rapid changes in technology. We have committed to reducing acquisition time by at least 30 per cent and in the longer term by 50 per cent through a broad range of initiatives. For example, of the 16 years, approximately nine years were being taken for the military to define their requirements and for my organization, with support from Public Works and Government Services Canada and Industry Canada, to conduct the procurement process culminating in the signing of a contract.
[English]
A year ago the Vice Chief of the Defence Staff and I agreed that this length of time could be reduced from nine years to four years — two years to produce the requirements and two years to produce the specifications and award the contract. Accordingly, we have issued new standards to this effect.
Next, we expect that by focusing, as I mentioned earlier, on commercial and military off-the-shelf equipment, we will reduce the delivery schedule from our suppliers.
Finally, we are also cutting back on the back end of the procurement process. We recently introduced a new project management milestone called effective project completion. We used to have dozens of projects that were still open and had project offices and dedicated staff long after the equipment was delivered, accepted and put into service. Sometimes this went on for five or seven years or even up to 10 years. The outstanding issues were usually minor, at least from a project management perspective, issues such as waiting for the translation of documents or waiting for U.S. or foreign military sales invoices. Now the project manager can certify the project effectively complete, close the project and transfer the remaining items to the in-service support organization.
All of the changes I have talked about this evening have just one purpose, and that is to make the business of military procurement faster and more cost efficient. Working toward this goal will ensure that Canadian taxpayers get the most for their money and that the men and women of our Armed Forces get the equipment and services they need to do their jobs properly.
Thank you Mr. Chairman.
Senator Forrestall: If you could only get the politics out of the process, you might save another five or six years.
I want to zero in on two or three particular questions. First, I want to ask about maritime helicopter replacement. Second, I want to know abut the situation we find ourselves in with the matter now before the courts and the government's apparent decision to move ahead. I would ask if you can tell us the risks involved in that. I will also have a couple of questions about the upgrading of the Aurora aircraft and the CF-18s.
What is the present status of the maritime helicopter project, in particular, when might a contract be signed and when might the Canadian Forces see the Sea King replacements? What risks are at stake in proceeding when the matter is before the courts?
Mr. Williams: In July of this year we concluded our evaluation that resulted in us declaring Sikorsky the winner of the competition. Since then, we, with our colleagues in Public Works and Government Services Canada, have been working to finalize the contract.
The term of the RFP was to require the successful bidder to be able to produce the first helicopters four years from the signing of the contract. In the event that we sign a contract some time this fall, we expect that the first helicopters will arrive some time four years from now, and then an average of one a month thereafter.
The matter is before the courts. I cannot really say much. We are confident in our position, but we will let that unfold as it will while we continue to do our work at the same time.
Senator Forrestall: What is the worst scenario should your confidences not be upheld by the courts?
Mr. Williams: I am not sure what the worst case scenario can be. We are proceeding under the presumption that we think we did everything appropriately. We would like to get the contract signed and the equipment to our men and women as quickly as we can.
Senator Forrestall: Equipment that, under other circumstances, might have been offered in the tendering process. Should there be any delay, could there be a reasonable chance of calling for a new contract call?
Mr. Williams: I, frankly, am confident in what we have done. There is no way I could speculate on what might happen. There is a myriad of options. As I said, we think we were fair, open and transparent.
Senator Forrestall: Mr. Williams, the SCIP projects capital funding at approximately $1.6 billion this year, increasing to $1.77 billion. Is the money there for the maritime project?
Mr. Williams: In our 15-year capital plan we do have the monies earmarked for the maritime helicopter.
Senator Forrestall: How does that bring us back to the four years? When do we start paying for these things?
Mr. Williams: Most of the funding for the maritime helicopters themselves — most, but not all — will start upon delivery. There are some up-front costs now in that the contract is signed to facilitate the company getting going, but the vast majority is payable upon delivery of the equipment.
Senator Forrestall: Can you tell us why the Canadian Forces are upgrading only 16 Aurora aircraft? Surely we should be upgrading the entire fleet, given the inadequacy of Aurora's surveillance flights.
Could you tell us why the CF is only upgrading 80 CF-18 aircraft? Since 9/11, there has been an upgraded status of requirement on their capability and time.
Can you tell us the status of the fixed wing search and rescue project? I understand the project sits in the approval process. What are the principal elements of the project?
Mr. Williams: With regard to the number of aircraft we are upgrading both the CF-18s and the Auroras, those directions come to me from the military. They define their requirements and the number of aircraft they think they need to do their mission. In fairness to them, they could probably better answer why certain numbers were specified.
With regard to the fixed wing search and rescue project, the military — and the air force in particular — is in the process of finalizing its requirements, making it absolutely clear. Once that is done it will go to cabinet for approval. If agreement is reached by cabinet, it will then come back to the department and to me to try to put this action in motion to acquire the kind of aircraft that the air force believes they need.
The Chairman: Mr. Williams, you make it sound like the folks in uniform come to you and say, "We need 16 Aurora aircraft this year," or "We need 18 CF-18s." It is much more complex than that, is it not?
Mr. Williams: The whole process is very complex. In terms of the numbers, it is they who tell me how many must be upgraded. You are talking about multibillion dollar programs with multiple projects. Each is done in a way that is most appropriate to the particular components of the programs. Most of the programs are multibillion dollar programs. These are not simple programs at all. They are complex and there are a lot of complexities in each different sub-project.
The Chairman: In broad terms for the committee, could you assist us with the CF-18s? Would the commander of the air force be told that his budget is fixed and that, if he wants to pay for other items, he has to reduce the number of CF-18s? Alternatively, does he make that choice knowing that, if he does not make that choice, his budget will be squeezed in another area?
Mr. Williams: Parliament appropriates an envelope of money to us. That money is used for people, for capital, for infrastructure and to sustain our capital. Within the department there is, typically, a lot of discussion and direction by people like our vice chief and others to determine how much money is needed for each component. Once that is earmarked, there is a process by which each of the military environments prioritize their requirements, keeping an eye on what they need and how much money they have in the envelope for the next 15 years. For example, the 15-year strategic investment plan was done this way. The military prioritized their needs together. They looked at the funds available in their allocation for the coming years and developed a plan that would allow them to accomplish their priorities consistent with the available funds.
That puts it in our budget, but it does not give authority to proceed. Depending on the program, you may need cabinet approval or Treasury Board approval at the outset, before you start to use the funds to fulfil the requirements of the particular project that you are trying to undertake.
Senator Forrestall: To follow that up, who does the squeezing? Is it the vice chief and his immediate staff? I ask that question because there is a concern. The first example that comes to mind is the replenishment/replacement program. Could the Aurora program be hoisted for two or three years to come up with the dollars? I do not like dealing in hypothetical situations, but if that were the case who would make that decision?
Mr. Williams: It is our responsibility within the department to make the best use of the funds appropriated. That is all we do. We must make those resource reallocations consistent with the budget. The worst we could do is blow our budget. We try to stay within our allocated budget. That requires significant and serious management of our funds. Our programs are broad, complex and long and there are often slippages in them. We must have back up plans so that when we put money into one project, we can reallocate it to another. We go through that process all the time, and it was designed so that we could live with whatever money Parliament appropriated to us.
To answer your question about the Aurora, that project is in the final throes of implementation. In that project, as in many others, it would be rare for us to lay down tools and move money from that to something else. When you are in the midst of acquisition, you want to weigh that carefully because you would have expended a fair amount of taxpayers' money. That would not be the scenario. We typically try to have a handle on what we have and plan appropriately.
Senator Mercer: Welcome to the committee. I am not sure whether I am mystified or mesmerized by one statement that you made. You told us that the average procurement time is 16 years to move projects from concept to completion. However, you also told us that you will move to a four-year timeline and you indicated that you and the Vice Chief of the Defence Staff have agreed to that reduced time. Quite frankly, I do not believe that can happen. You talked about reducing the time frame from the time decisions are made to the time the project is delivered, and you are closing down the shops. History shows that does not happen. I think that you are setting yourself, the department, the government and the Armed Forces up for failure and ridicule when they do not meet these targets.
Mr. Williams: I am glad you do not believe me, because I was not clear if that is what you understood. Of the 16 years, the first nine is usually the amount of time it has taken us to get something to contract. I am talking about reducing to the first nine years to four.
We think we can do that in the ways that I have talked about. We need not take all the time we have taken to define our requirements. Our requirements are not unlike those of other countries and we can learn and borrow from them. Our approach has been that it would take two years to define requirements. Once that is done we think we can convert those requirements into specifications and work constructively with industry and get the contract in, roughly, two years after that. That is our standard, but we will probably not meet it each and every time.
In terms of culture change, it is important to get our organization — that is, our people — to understand that we expect things to be done differently. We do not expect things to be done in the long way they used to be done. If they cannot meet the four years, we do not say no. However, they must get special approval if a project might take longer.
We allow for exceptions, but the point is that the world is changing. We cannot afford to take the amount of time we have taken to get equipment out to our men and women. It is unconscionable. Equipment will be delivered. Since we are not doing developmental projects, hopefully, the length of time to produce it will be shorter. That will squeeze that part a bit.
As to the back end that I talked about, where we used to keep projects going forever — enough of that. If we are 80 or 85 per cent done, let us close the project office down and save those years. Typically, it would be three or four years. Close it down, identify the final issues and let the rest of the organization handle it as a normal course of business.
Senator Mercer: You are reducing the first nine years to four years. That would leave seven years of the 16, but will you cut years off that? What is the real number?
Mr. Williams: Our target is to cut 30 per cent. That is about five years.
Senator Mercer: So we are left with 11 years.
Mr. Williams: From 16 years to 11 years, yes. We must find ways of doing it more quickly. I set a target of trying to do it in half the time. If it is half the time, we are talking about eight to nine years. That would not be surprising because, if it takes four years to get to contract, many of our programs take four or five years to get to delivery stage. That is the ballpark we are looking at.
Senator Mercer: Those of us around the table are in a smoke and mirrors business. You need to be more exact about how you deliver your message. If the four-year message gets out, people will not take it seriously. If 11 years is the number, you should be using that term and sticking to it.
Mr. Williams: The four years has been articulated in writing by the vice chief and me. That is what we are working towards. The delivery schedule will depend on the product involved. That may be three, four or five years to add on. The close down can also be a lot faster.
We want people to reach for improvement. We need to change the culture. I do not want to have a benchmark of 11 years if that is longer than we should take. We will look at each program individually and force the project teams to try to give us their best judgment as to how we can shorten the time, to the extent possible.
Senator Mercer: If you try to squeeze that square peg into a round hole, I am concerned that you will continually set the department, both your side and the military side, into a spiral of frustration greater than what they already experience. You must be more realistic. However, there is no question that we all want to shorten the time.
Mr. Williams: We are not imposing a specific number on the project team. We have said to them, "This is how we want you to reshape and rethink a project. Do not necessarily do things today the same way you did them yesterday and the day before. Try to find a new way, and come to us with your proposed time frames. We will look at them, but keep in mind the order of magnitude we are talking about." We are not imposing time frames on them and trying to set a new benchmark or standard for them to work to. If they can convince us that it will not happen in four years because the project is too complex, we will not say no. We will listen, and if we think they are in line, we will say, "Fine, go ahead."
We will try to effect a change in culture. As you know, in any business, private sector or public sector, that is a very difficult thing to do. We try to do it by encouraging new ways of thinking and rewarding and recognizing people. The air-to-air refuelling example is a marvellous way of cutting the time from six years to three years or less. We did it because people did not think the old way. We looked around and found someone to help us shorten the time frame.
In other cases, we will find different ways of doing things by collaborating or short-circuiting. We have to rethink and reshape, otherwise, we will not achieve the kind of changes that everyone is asking us for. I have not found there to be a negative pushback by staff. They have not come screaming and yelling. They like to be empowered and to be recognized for being innovative and creative and demonstrating what they can do. I am hoping we can build on this kind of success.
Senator Moore: Thank you for being here, Mr. Williams. I want to ask you about the joint support ships. I presume that these would be vessels that would replace the HMCS Protecteur and the HMCS Preserver. Canada built those ships, and we have been operating that sort of ship for years. I presume that DND, the appropriate people in the navy, would be building a file as to the performance of the current ships and the desired capabilities of new vessels. You are not starting from zero in this instance. Where is that project in terms of concept and approach, years before the ships would be launched?
Mr. Williams: We are at the front end of process. The military have articulated their expectations of these ships and the capability they want to be delivered. We have had numerous discussions with industry and they know our thoughts in this regard. Frankly, we are now in the process of trying to get feedback from them as to whether they think our approach and method make sense and if there are ways of streamlining the process or doing it smarter, better or faster. Once we get a handle on it, we will be in the more solid position of knowing how best to proceed.
In general terms, I expect there will be a prequalification process where we will identify the consortiums that can design build the ship we want. We will probably provide industry consortiums with an opportunity to give us their bids. We will select one, and it will then build the ships that it committed to build. That is the general process. I am looking forward to hearing from industry, having been told that they think they can do it even faster. I told them that I look forward to their feedback as to how we can do it faster.
Senator Moore: How many years is your concept-to-launch schedule?
Mr. Williams: The typical process, through the phases I have talked about, would take, assuming no problems, three-plus years to get through. Then the actual production would probably start by, maybe, 2009-10, through to 2015 before delivery. That would be a guess
Senator Moore: You would start to build in 2009-10.
Mr. Williams: Yes, and it would probably be 2015-16 before we got the ships. That would be a guesstimate. If industry comes back with innovative options that allow us to do it slower, or if they say that is too fast and it will take longer, that factors into our equations.
Senator Moore: Why would that take so long? We knew that the life of the other ships was winding down. Why would there not be a concurrent identification of desired capabilities, looking at different consortiums, whoever will build components or whoever will build these ships? Why was it not going on concurrently? This just blows your "Getting It Right" theory all to heck. We are now talking about 2015-16, and we have been in the business of building ships and operating them for years.
Mr. Williams: It gets back to my initial point. Typically, the military tries to look at all their priorities and plan them. In this particular case, when looking at their priorities and the availability of existing equipment and its usage and what other equipment needs replenishment or replacement sooner rather than later in terms of scheduling, this is when this fit into their prioritization, on the one hand, with available funding on the other.
Senator Moore: Are you telling the committee that we do not lift a pencil to open a file on the replacement of a vessel until we have all the funding in place to see it through the whole life of that project, from concept to building to maintenance?
Mr. Williams: I am saying that the funding has not necessarily been approved for this program even today. We have it notionally allocated in our funding profile for the future. The question is, though: When do we start working on it? We are starting work on it now, even though we do not necessarily have the right kind of Treasury Board approvals.
We have limited resources. People have to be working on the immediate programs, and if they are working on certain programs, they cannot be working on others. You factor in dollars and people, and you prioritize the things you will work on in a certain year. When you consider all the priorities and the people that we have, both in the military and in my organization, every program gets it own slot. Some are today, and some are out to the right. Depending on what comes first or second, different programs have been shifted to the right. Now is the time this one is coming up for the kind of examination we have been talking about.
Senator Moore: I am amazed at the time frame required to do this. We need them "yesterday." We knew when the current vessels would be phased out. They were tied up sitting in Halifax harbour. We knew this was coming. Did someone around the table four or five years ago not say, "We have to start planning for this"?
Mr. Williams: It is not a question of people not having known about it. We are still operating a number of our replenishment ships. We will maintain those operationally, and we will continue to do that until these come into place. Would it have been nicer to do it sooner? Probably, but if we were doing these sooner, we would not have been doing something else. It is not a question of being able to do everything at once. You have to make those critical priority decisions. The military makes those decisions based on what they think, collectively, are their first, second, third, fourth and fifth priorities. This is how it unfolds, and in a time frame that, hopefully, meets their requirements.
The Chairman: The question that has not been asked is: Why are we getting these ships at all? Why does no other country in the world have ships like this? Why does Canada need a ship so unique that we have to design it ourselves? Given the constraints we have on our budget, given the number of things that our military does not have, why are you going out to design a one-off that no other navy in the world appears to need?
Mr. Williams: I will make two points. The first is due to the responsibility and accountability of the military. My job is to see, once we have specified that, how much risk there is in the design phase. The feedback I have received from industry so far, although it is early, is that they do not view this necessarily as something with extreme high risk. That may change. I have not received any direct feedback. I have met with companies that have shown me designs and do not seem perturbed by the kinds of requirements we have requested. However, it is early. If it turns out that there are very high risks, we will have to reassess whether the costs and implications in terms of schedule warrant a re-examination, and that will be done as part of the process that we undertake with industry, with their feedback.
The Chairman: What happened to buying off the shelf? Does no one else have one already? If someone does, why are we not just ordering another one to be made?
Mr. Williams: That gets back to the specific requirements of the navy. The main requirements that they have asked for are perhaps not seen on other vessels, but in Canada we cannot afford, as many other countries can, multiple platforms to do different aspects of a particular role. Therefore, we typically try to see if we can, working with industry, use one platform for many roles. We did the same thing with the maritime helicopters. We had both the support surface and subsurface responsibilities embodied in one helicopter.
The Chairman: Are you suggesting that is a model for this vessel?
Mr. Williams: I am suggesting that it is smart business to see whether we can get what we need in one platform through working effectively with industry and making the best use of our dollars. We were unquestionably successful with the maritime helicopters. It is too early to tell if we will be as successful here.
The Chairman: Can you suggest a witness to the committee who can best defend the acquisition of this vessel?
Mr. Williams: Absolutely. I would suggest the head of the navy.
The Chairman: Thank you.
Senator Atkins: One report of this committee recommended that we increase spending by $4 billion and increase the number of military up to 75,000. Senior offices who appeared before us told us that, even if they got that money, they could not spend it. Yet, at Petawawa, Gagetown and other military bases they constantly told us that they are short-handed. That said that they have no ammunition, that the artillery cannot go out in the field and fire a number of rounds.
Is it not true that there are ways in which that money could be injected into the system, either with off-the-shelf purchases or with the investment of the amount of money that we were recommending?
Mr. Williams: I would make two points. One I already made In terms of budget and funding, our job is to make use of whatever is given as best we can; hence some of the innovations we have talked about with regard to streamlining processes and being more innovative. If we were told that we would have X dollars more, we would try to determine our priorities and prepare a spending profile to make optimum use of those funds.
When you undertake major capital programs, there is a slow ramping up. One must be cognizant of those kinds of limitations with regard to spending money. Having said that, much depends on the particular circumstance in the particular year and whether we have opportunities for additional buys of spares or other items to make best use of money if it is offered to us.
Senator Atkins: Is that not one of the problems the military has had? After 1994, there was a levelling out of investment in capital purchases. Now you have a lot of outdated equipment and the requirement is substantially higher than if there had been a gradual investment over the last 10 years.
Mr. Williams: There is no question. We have a 15-year capital plan that has a lot of meat in it. We must buy many things over the next 15 years to spend, on average, $1.5 billion a year over 15 years. Without question, we have significant requirements to upgrade and update our forces.
Senator Meighen: You said that you have a lot of capital equipment to update. You have the Strategic Capability Investment Plan, but my information is that only about 13 per cent of the monies in that plan, over 15 years, goes to capital expenditures. Is that right?
Mr. Williams: No, that is not correct. That represents our capital planning program for 15 years. We expect to have funds in that approximate order of magnitude to undertake the projects in that plan.
Senator Meighen: I did not understand that.
Mr. Williams: I am saying that we would like to be able to accomplish exactly what is in those plans. If everything went exactly according to schedule, all of those monies would be spent exactly as earmarked.
Senator Meighen: That would be nice, but how much are you spending on capital replacement? I see that $1.6 billion is your total over 15 years.
Mr. Williams: It is $1.6 billion a year. We have a $12-billion or $13-billion budget, so initial capital acquisition and sustaining it is roughly one quarter of our budget.
Senator Meighen: Capital funding is roughly one quarter?
Mr. Williams: No, that would be one eighth. If you take the percentage of $12 billion or $13 billion, I do not know exactly what it comes to.
Senator Meighen: One eighth is not far off 13 per cent, is it?
Mr. Williams: If you are asking whether we are spending 13 per cent on capital expenditures from our total budget, I can say that we absolutely are.
Senator Meighen: That seems surprisingly low.
Mr. Williams: It may be low but, as I said, we are trying to balance paying people, paying for infrastructure, buying new equipment and sustaining existing equipment. You must make those priorization decisions. That number is often the one that is affected, because you must pay people, you must sustain the equipment, and you have to house the people as well as have proper facilities for the equipment. Therefore, it is not surprising that what must be affected most is front-end capital.
Senator Meighen: If someone gave you more money, as has been called for by all kinds of organizations, including this committee, one area that might jump to mind would be capital expenditures.
Mr. Williams: There is no question about it. How we would allocate it would be another question.
When we look at acquisitions, we no longer consider capital acquisitions in isolation. That is a mistake we used to make. We used to look at the cost of capital acquisition without recognizing that the cost to sustain the acquisitions would be more than the cost to buy them. Now our position is that, unless we have the full life cycle costs earmarked, we should not even start. It is foolish to continue to buy things if you cannot afford to sustain them.
Senator Atkins: Let us talk about maintenance and component parts. As the equipment gets older, those costs go up. Does that money come from the capital budget?
Mr. Williams: No, it comes from the national procurement budget, but it is still dollars, and we must ensure that we have the dollars to sustain it.
The other problem that we have pertains not just to the acquisition of these parts but to their availability. The longer the program has been around, what is the likelihood that the manufacturer will maintain the parts we need?
Both those go into affecting the risk and scheduling new acquisitions.
Senator Atkins: That was going to be my next question. Are some component parts no longer available because of the age of this old equipment?
Mr. Williams: We can sustain the equipment we have today. We are replacing the older equipment because, if do not, we will run that risk.
Senator Atkins: We had a tour of the signal unit in Kingston. A soldier in a truck explained to us how he wanted to connect with another truck but that he could not get the component part. He told us, "You know, if we went down to RadioShack, we could buy it."
Is there no way to speed up this process so that the military can get available parts on the open market rather than through a procurement process? As a former supply clerk, I know a little bit about this.
Mr. Williams: The answer ought to be yes. I would certainly be interested in getting specifics on this particular case because, if that were the case, that would worry me.
Senator Atkins: That is what he told us.
Mr. Williams: I do not doubt it, and if someone would give me the specifics, I will try to find out the facts. If something is inefficient or if we are doing something that is not the smartest, it is good for me to know about it so that I can try to change that. I would welcome that kind of feedback.
Typically, our parts are not available at RadioShack or Canadian Tire. They are very complex, military parts. As well, they are typically part of open, fair and transparent contracting. If we want to buy anything, it often has to be done in a competitive way, and that takes time. That is not an excuse. We must figure out a way to get parts on time and on schedule. We are doing a lot to optimize our warehousing and distribution and playing down those costs in order to reallocate funds to deal with the kinds of situations you talked about.
Senator Meighen: Mr. Williams, you have been very forthcoming in admitting that some changes are needed to your organization. You pointed to the "Getting It Right" strategic framework that you put into place. How long has that been operative?
Mr. Williams: For about four years.
Senator Meighen: You mentioned some successes that you had. Where does former minister McCallum's committee on efficiencies fit in when it reported that your acquisition process was inefficient and took too long for projects to move from acquirement to contract?
Mr. Williams: Much of what I have said is in response to that kind of critique.
Senator Meighen: Excuse me for interrupting, but I believe Minister McCallum's report was just over a year ago.
Mr. Williams: Yes, it was.
Senator Meighen: You have had this framework, "Getting It Right", in place for four years.
Mr. Williams: As I said — and I will not try to minimize it — we are trying to change the culture in our organization. The way of doing things has been done one way for over 20 years. That change will not happen overnight.
Having said that, we have made improvements. We have some examples here, and we can point to others.
As part of that efficiency report, we are in the process of undertaking a three-year plan to cull from our warehousing, distribution and supply system, approximately $50 million. Those savings can be reoriented and repriorized to other military needs. That was a key part of the minister's commitment to try to find $200 million. This is one quarter of that.
We are trying to be innovative in many different ways. We are reducing our inventory costs and our handling costs to try to do the things you are talking about.
I would like it to be done sooner, but I can see that this requires, day in and day out, person by person, forcing new ways of thinking, challenging and questioning, rewarding and recognizing. We are a big organization. We have over 4,000 people in my organization alone. These things have to filter down and different people need to know the different expectations. I would like to say that it could happen much faster than it has. I think it is happening. Hopefully, we will continue to build until it is something that we can all point to in a few years as being the norm of operation within the organization.
Senator Meighen: I encourage you to pursue that line. Much of what you are doing, of course, does not reach the public eye. What does reach the public eye is that we have one set of helicopters for search and rescue and now we have gone and bought another type of helicopter for the frigates. You would think that it would save a great deal of money if spare parts and whatnot were the same for both helicopters.
Mr. Williams: Let me comment on that because that would be an erroneous conclusion. The company that won the first contract did so because it submitted the best bid. The company that won the recent contract won it because it submitted the best bid.
Many of the savings you talk about could have been reflected in the company's bid price because they are the ones providing us with the spares. If the spares were much lower over the life cycle, they could have said "We can save money because we are accountable for the full life cycle. We can take that off our bid price and we will benefit by being able to win the competition." I have no doubt that they did that. In spite of that fact, their bid price was — and I have said publicly — hundreds of millions of dollars more than the winning bidder. Hundreds of millions of dollars is not trivial. It is much more than, perhaps, optimizing some spare parts over a life cycle, which I do believe they probably took into account in any case.
I think the way we approached it was great business practice, great for the military and great for the taxpayer.
Senator Meighen: I hope you are right.
The Chairman: As you have described, it Mr. Williams, it sounds like both bids were done on the same basis. Is that so?
Mr. Williams: They were both done on the same basis. The evaluation criteria were known. They both bid based on the same premise in the request for proposal. They both knew it was compliant lowest price. They both bid. One was hundreds of millions of dollars less than the other.
Senator Meighen: Why did it take so long, Mr. Williams?
Mr. Williams: In fact, it did not take very long. In December 2002, approval was given to go down to one contract. It was within two years from the official time we said "go" until we picked the winner.
Senator Meighen: That was not the first "go," was it? There had been previous "goes" on a multicontract basis.
Mr. Williams: We only received approval to proceed about two years before the selection was made. Up until then, there was a lot of discussion and debate, but no formal approval to the Department of National Defence to proceed with a request for proposals down the road.
Senator Meighen: You are not the right person to ask why there was a long delay.
Mr. Williams: I am saying that, from the time we got the go ahead, there was not a long delay.
Senator Forrestall: There was a long contract.
Mr. Williams: Initially, there was a lot of debate and discussion about having in-service support separate from the acquisition.
Senator Forrestall: My message is simply: You got it wrong, you got it wrong again, and you still got it wrong.
Senator Meighen: Time will tell, will it not?
I have a specific question on reports that I saw in the press about the maintenance per man-hour flight for the search and rescue Cormorant helicopter. Allegedly, that was about double the number stated in the contract. Can you bring us up to date on that? Is that accurate? Why is it so high? What has been done about it? Do you think you can achieve the level that was in the contract?
Mr. Williams: First, that is accurate.
Second, let me mention an important point called "total package procurement." I mentioned in my brief introduction that, as a general course of smart business, we are trying to bundle together the acquisition with the support. That would eliminate the problem that has now arisen. We did not do that with the search and rescue. We had one contract to buy the thing and another to support it.
You could have a difference of opinion between the original equipment manufacturer and the subsequent provider as to how many hours the equipment will keep flying. Where the truth lies is a difficult point, but the Crown is in the middle.
The way to get around that, typically, is to make one company accountable for the full life cycle, which is exactly what we have done with the maritime helicopter. We can then hold someone to account because there is nobody else to blame except the company that sold us the piece of equipment and also committed to providing the service at a certain price for the period of time.
Senator Meighen: Some time ago, we were told by the commander of the army that the new training centre in Wainwright was an integral part of army training and transformation. We also determined that, if we had the facility in Wainwright it could, perhaps, be used in discussions with the Americans. Because of its size, we could provide them with something that they do not have, except for one instance, I think, in the continental U.S.A. We, as a committee, certainly thought this was something of importance, and we underlined the hope that it would be completed and operational as soon as possible.
I am now told that the project continues to slip, and your own Web site says that the centre will not be operational until 2006. Can you tell me why it slipped, if indeed it has, and would you also tell us what happened to Gagetown's individual training?
Mr. Williams: Unfortunately, that is not under my purview. I cannot, with any degree of knowledge, speak to that. However, I can attempt to get that information back to the committee.
Senator Meighen: Restrict it to Wainwright if you wish, but if they have anything to say about Gagetown, that information would be helpful.
[Translation]
Senator Nolin: Mr. Williams, our military interventions in various theatres of operation are increasingly destined to work in close cooperation with our allies. When we undertook air operations in Kosovo, one of the first concerns raised by NATO forces was the interoperability of our instruments.
What changes has your group made to make such an operation as efficient as possible, both for you and for our multiple military operations?
Mr. Williams: Typically, when the armed forces provide their specifications, these things are thought of at the beginning of each project. In other words, if there are NATO standards, equipment standards, we make sure to specify the same standards in our specifications for industry.
[English]
I guess what I am trying to say is that, when we begin a project, we have one eye on what is out there. We do not have one standard across the board, but if there are NATO standards respecting parts or processes, we will try to embed them to the extent that we can in our particular programs. We are well aware of the need to be interoperable with the Americans, the British or other allies. Where we can do that, we do.
I would also emphasize that we spend a lot of time with allies in different training missions where, in fact, our assets, people and doctrine are merged with those to ensure that, to the extent that we can, we are interoperable. Where we see difficulties in doctrine, we attempt to regularize them to the extent that we can.
Again, if you want more detailed information, the VCDS would be the person to talk to you about the operational aspects.
Senator Nolin: We will keep that in mind. Not all of the NATO countries have agreed to create the NATO rapid response force.
Mr. Williams: Yes.
Senator Nolin: To what extent will that influence your side of the equation?
Mr. Williams: I am not sure. Again, the process would unfold in that the people accountable for that in the military would, at the appropriate time, be advising on the ramifications of that in terms of their requirements and their priorities. At that stage I would learn whether the creation of this kind of force would require different kinds of equipment with different kinds of specifications, and then I would act on it. At this stage, nothing has come to me to suggest a change in the kinds of equipment or the way we are to go about getting those.
Senator Nolin: In listening to all of the questions about time, I am reminded that in the proposed rapid response team of NATO, the word "rapid" is an important component of the effort.
Mr. Williams: Absolutely.
Senator Nolin: People listening to us tonight may question if the word "rapid" has the same meaning for your organization as it does for NATO. That is not my question.
Still on the international component of your responsibility, you have in your division a director general responsible for international and industry programs.
Mr. Williams: Yes.
Senator Nolin: Can you tell us the extent of the role of that person? I understand there is the international component as well as the industry component. Start with the international component, and I will have a follow-up question on the industry component.
Mr. Williams: As a national armaments director in NATO, I have meetings twice a year at NATO with the people of my equivalent in the other 25 NATO countries.
Senator Nolin: That means you know Mr. Billingsbridge in Brussels, the new materiel deputy general.
Mr. Williams: Very well.
Senator Nolin: You are aware of his vision of what will be needed for the theatre of the future for NATO.
Mr. Williams: Absolutely. We try to come together twice a year to map out those kinds of priorities, and to understand what we can do to expedite the key programs on behalf of NATO. Preparations for those meeting are made by his organization for me.
Equally important are the bilateral meetings that I have with members of NATO. I meet with a number of them, either in Canada or in their countries. We have the ability to examine each other's programs and priorities. We develop personal relationships. These are instrumental in, for instance, the air carrier refuelling project with our German colleagues. We meet, talk, and try to understand.
This becomes invaluable when you encounter difficult situations. For example, I dealt with my U.K. counterpart a great deal over the phone recently because, together, we are trying to make sure that the right messages are heard and people do not go off into areas that should be avoided.
My U.S. counterpart is a very close colleague. We often do things to ensure that there are competitive opportunities for our Canadian industries in the States and vice versa. When we hear of issues or circumstances, we can pick up the phone and speak to each other.
During the maritime helicopter issue, I had close discussions with my French counterpart about what was happening. These bilateral meetings take place throughout the year. Much work and preparation goes into making sure that the time is well spent. These are a couple of dimensions I would mention in dealing with the international aspect of your question.
One other point that I would raise, and it is a huge success story, is that we may want to participate in certain international programs where the international industry is in attendance. I would specifically refer to the joint strike fighter program, a program of which you may be aware. It is the largest U.S. procurement in their history at $200 billion. They are attempting to produce the next iteration of aircraft fighter, assuring a common platform between three different versions. What is unique about this is that they have invited international participation, and we have joined in.
We have joined in. We joined in virtually at the outset after the U.S. and the U.K. The U.K. is a multibillion dollar contributor. We are a level 3 contributor, which means we invested $100 million, plus $50 million in funding from Industry Canada. The objective in participating, for the Department of National Defence, is to be part of all of the studies and all of the work that is going into making this a leading edge program.
It is equally beneficial for our industry. Without participating, our industry would have no opportunity. However, in participating, there is no guarantee. You must be competitive, and you must win.
The good news is that we are probably the envy of every other country, no matter how much they have contributed. We have already won about $160 million of contracts in the particular phase we are in, the system design and development demonstration phase, not including low rate initial production and full production which would translate into over $1 billion already. We are winning one out of every four contracts for which we compete. We are trying to partner with other countries that have been less successful because, if you want the most dominant database of opportunities out there, we can tell our companies when some requests are coming out. We can tell them to go for it because they have a good chance. We hope that, by working collaboratively with colleague countries, we can form an even stronger force that cannot be denied in terms of business.
When these kinds of international business opportunities arise, it is this organization that is very much trying to push these initiatives forward. That gets into moving from an international perspective somewhat into an industry perspective.
I must meet or talk to industry almost every day. Tomorrow I am speaking before the Canadian Defence Industries Association. As I mentioned, we have a committee set up that meets three times a year with leaders in industry as well as academia. We pride ourselves in letting industry know that there is an easy window of opportunity to come to talk to the government. It is not complicated. We give them our phone number and we invite them to come and talk to us. We tell them that they do not have to spend a lot of money on third parties in order to talk to us. We suggest that we meet and talk about the issues. Having this kind of openness with Canadian industry is vital.
Getting them to better understand what motivates us and what drives us is crucial. We benefit because we get their feedback; and they can plan their business opportunities knowing what is down the road two, three or four years from now.
This organization does a lot of homework and a lot of the preparation in ensuring that industry knows that they can come in. If they have an issue or concern, we are willing to meet with them in our office.
Senator Nolin: Specifically because you meet and have thorough discussion with your colleagues from other allied countries, do you feel it is your responsibility to have Canadian technology better understood by your colleagues from other countries?
Mr. Williams: Absolutely. We are very proud of what our industry can do. The fact that they are so successful in these international fora with the joint strike fighter program proves it. When we see that there is an opportunity for our industry to be successful, we will do whatever we can for them. The perfect example is General Dynamics Canada. They spent over $1 billion providing us with a leading edge communications system. When my colleagues in the U.K. ran into trouble with their contractor, they looked around for opportunities. General Dynamics Canada won because they were the best, without any question.
Senator Nolin: They were informed that they were needed, probably.
Mr. Williams: Absolutely. We did our part. I know I did my part with people in the U.K. government — at least advising them of my experience, how good a contractor General Dynamics had been and discussing whether they had lived up to their commitments. We try to do our part in providing them with useful information. Companies that are successful within Canada can often get some leverage from that fact in order to be successful internationally because international companies and governments know that, in Canada, we typically do not give contracts to a company simply because it is a Canadian company. You have to win. You have to show that you are the best if we are going to give you the business. If you do win and you are a Canadian company, people usually sit up and take notice.
Senator Rompkey: Mr. Williams, I wanted to follow up on the relationship between industry and DND that you have told us has grown closer over the last few years. We have heard that DND cannot support some operations and have moved to something called contractors in support of deployed operations.
I must confess that I am more interested in the operations than I am in materiel, but you will be able to tell me what questions you can and cannot answer.
Over the years, DND has experimented with bringing in the private sector. Savings have been realized that, perhaps, could be diverted to other areas of the budget which is what you are looking for, namely, overhead costs that the companies can provide, pensions, all that sort of thing. I am thinking of instances, for example, at Portage la Prairie and Moose Jaw, where we have contracted with companies like Bombardier to do flight training. I must admit — and my colleagues will not be surprised — that the site I am most interested in is Goose Bay, Labrador, where we also have a private company operating and where we would like to have that private company operate even more if DND would see fit to approve that.
That has resulted in savings for the department and for the Armed Forces. How widespread is the practice, what types of jobs are civilian contractors doing, and what is the trajectory like? On a scale of one to 10, how would you assess the trajectory?
Mr. Williams: Thank you for the question. It allows me to expand on many different aspects.
Using contractors to complement us is a basic principle that we try to follow. It does not always save money. Very often, it increases the expenditure, but we are doing it for a valid reason. In other instances, it does reduce costs. However, in certain cases it makes no sense to do. Let me talk about all of them.
The Canadian Contractor Augmentation Program, CANCAP, is the program under which the private sector supports us in theatre. That program was not designed to save money. All the costs are totally incremental. It was designed because we recognized that we did not have sufficient people within the military to carry out the kind of support tasks that we needed to be undertaking in theatre operations without having a negative impact on their quality of life.
People would go on a rotation, coming back for only a short period, and be required to go out again. We recognized that it might cost us money to do this. It is not as if like we are reducing military personnel, we are not. We are complementing military personnel by adding a civilian capability. In so doing, we are enriching the lives of our people because they can now go out, come back and be with their families for some period of time before they have to go back again.
We have structured programs where industry has benefited us by providing invaluable services in Afghanistan and in Bosnia, doing myriad services and allowing our military limited resources not to have to redeploy as often. That is one situation.
In other situations we have found that allowing the private sector to do something may not have been the wisest decision and we have reversed the decision. A perfect example of that is when, in response to Senator Meighen's question before, I mentioned that in our supply business we had undertaken a program to cull about $50 million to reallocate. The decision was initially made to outsource this business to the private sector. When I got into my position, that decision had been made and we were in the process of identifying the private sector firm that could do it.
While this was going on, it will not surprise honourable senators to know that the kind of reaction I got from employees across the country was a rather angry one, in particular because they felt they were never given the chance to prove how well they could do the job. They were convinced that, if you only allowed them the opportunity, they could do it equally as well. As I was waiting for the final report from the private sector firm on their vision of the way ahead, I told our people that they had three months to get their act together and prove to me that they had the smarts, innovativeness and creativity to cull the kinds of savings that the minister was looking for. To their credit, they produced a report that, upon rigorous examination, we felt was lower-risk and provided larger returns than the private sector proposal. We turned around and told the private sector that we were sorry that we would not proceed with their proposal. We tasked our people within the department from coast-to-coast with a commitment and a challenge to cull the savings.
In the first year of the three-year plan we exceeded our targets. We are now in the second year and we hope to achieve those and, by the end of third year, we hope to be able to turn over to the military an additional $45 to $50 million to reprioritize.
There are times when it does not make sense to do this. The fact that we reversed the decision on this sent a positive message. We strongly believe in outsourcing only when the business case warrants it. Where it does not make sense, we will not outsource.
I would, however, cite the example of the NFTC with Bombardier where only through the innovativeness of the private sector could we launch programs such as NATO flight training. That is a huge, $3-billion program. You have to give credit to private sector firms that were smart enough to realize there was a window of opportunity in 1994-95, to seize that opportunity, to make an offer we could not refuse, and to provide us with the current capability and level of professionalism in flight training that is equal to or better than anything we have had in the past. Multiple countries from around the world participate in the program.
We have a wide range of different practices dealing with the issue of outsourcing. The bottom line is that it must make sense and there must be a good business case before we undertake it.
Senator Rompkey: What is the graph like?
Mr. Williams: We are always looking at opportunities to reduce costs.
Senator Rompkey: The concept of going to the private sector is relatively new. Is that correct?
Mr. Williams: We have been outsourcing for a few years.
Senator Rompkey: From the time you started, what does the graph look like? How much more of the private sector are you involving now than you involved 10 years ago?
Mr. Williams: I would have to add up all of the outsourcing opportunities. If you add the $3 billion to NFTC and amounts to CANCAP and others, then we are talking about a sizable percentage of business being outsourced. I could obtain the exact figures, but I can say that it has added up significantly. I always hope that it makes sense, and that it has reduced costs. There are times when it is done for other reasons.
Senator Rompkey: Is it important to do it not only for local operations but also for NATO allies? Would you deem it important to encourage the private sector to take over remote bases such as Goose Bay that were used for NATO training, even though it is not part of the core mandate of the Department of Defence or of the Armed Forces?
Mr. Williams: We are always looking at innovative ways to reduce our costs and to be seen as constructive and helpful with NATO allies. Goose Bay is one example, and NATO flying training is other perfect example. Doing things that make Canada the best at something appeals to me. It is great to be able to do something better than anyone else; and we should look for opportunities to do that. Doing that with the private sector is smart.
Senator Lynch-Staunton: In view of the testimony that you gave last week, I believe, before the House committee studying the submarine purchase, it was said for the first time that there was no barter arrangement and it was done on a cash basis. When the contract was signed, was there any mention of barter or a trade-off in the contract?
Mr. Williams: Yes, section 27.3 of the contract specifically allows that to happen. The memorandum of understanding between the U.K. and Canada provided for it, where practical. The notion of barter means that it is allowed without the demand that it be done.
Senator Lynch-Staunton: It was an option and not the only provision in the contract in terms of an exchange; the other being an exchange of currency.
Mr. Williams: Correct. Barter implies taking a number of different programs and netting out the difference in some way, shape or form. The fact that we are showing each program to the fullest extent to the public in our public accounts improves the openness, fairness and transparency of the program. Perhaps people should have been more aware of the fact that we had not netted things out. However, we are paying what we are expected to pay on one program for the submarines, while we are receiving payment from the United Kingdom for their costs for appropriate training. All of these different programs are open, fair and transparent for all to examine.
Senator Lynch-Staunton: Perhaps we cannot read but the impression at the time was that it was strictly a barter arrangement. That is evident from the press release of then Minister of Defence Art Eggleton. Did anyone read that press release before it went out? Did anyone say that it was incomplete because there was more to the contract than advertising a free purchase for services in return?
Mr. Williams: I cannot comment on what was said in that press release or the impression that it made. I would hope no one ever thought that the costs of the submarine program would not be in the order of $800 million. I never heard anything to suggest that the submarines would not cost that amount of money. How one accounts for it is another matter. Everything I have read ensured that the costs of the acquisition were known to be in the area of $700 to $800 million.
Senator Lynch-Staunton: It might have been known but it was not publicized.
Mr. Williams: I am referring to what was known in 1999, and you are talking about what happened in 1998 before I joined the portfolio.
Senator Lynch-Staunton: I am referring to the press release that did not mention a dollar figure, as I recall, but did speak to how proud and pleased we were to have this unique arrangement.
The Chairman: Thank you Mr. Williams for appearing this evening to assist us in our defence review.
For questions or comments please visit the committee's Web site at www.sen-sec.ca. We post witness testimony and confirmed hearing schedules. Otherwise, contact the Clerk of the Committee by calling 1-800-267-7362 for further information or assistance in contacting members of the committee.
Our next witness is Dr. Norman Hillmer who is a professor of History and International Affairs at Carleton University. He has published 24 books, exploring themes in Canadian politics, diplomacy and security issues.
Welcome to the committee. Please proceed.
Mr. Norman Hillmer, Professor of History and International Affairs, Carleton University: Thank you, Mr. Chairman and honourable senators for the invitation to speak with you tonight. I have followed your work with great interest over the years.
I came tonight to report on the findings of the latest inquiry of the Norman Paterson School of International Affairs at Carleton University which will be published early next year by McGill Queen's University Press as Canada Among Nations 2004, Setting Priorities Straight. This will be the twentieth edition of the Canada Among Nations exercises which bring together leading scholars, practitioners, journalists and graduate students. One such student was Grant Dawson, who has gone on to work with this committee.
The Canada Among Nations volumes, I am pleased to say, are widely used in foreign policy courses across Canada, in the United States and abroad and constitute an annual publication of record, the only one of its kind on Canada's policies and actions in international affairs.
The theme and thrust of the 2004 volume is priorities, proceeding from the belief that Canada's diplomatic defence and development efforts have become over extended in relation to the capabilities the government is willing to deploy. As the Prime Minister said, Canada needs to specialize in "what we do best and on what the world needs most." This has led us to an examination in the volume of what Professor Dennis Stairs, who writes the keynote chapter, has called "hard choices" in the making of Canadian foreign and defence policy. The aim is to magnify results by concentrating effort.
That is easier said than done because the forces, institutional and international, which will be arrayed against fundamental change are powerful and perhaps inexorable. Enormous effort and application of leadership will be necessary.
A minority government might choose to put great effort into the international arena which the Prime Minister, to judge from his speeches, believes is fundamental to Canada's future, or it may choose to do absolutely nothing, which would be relatively painless.
In the book's introduction, Fen Osler Hampson, David Carment and I attempt to bring together the disparate views of the authors. In doing so, we mount an argument for what we call smart power. This ties the selection of specific priorities to the amplification of Canada's influence in the world.
Smart power recognizes that there are more limits on the public purse than there were in the fondly remembered golden age of the 1950s, when defence and diplomacy were kings. Smart power suggests the mobilizing of the national experience in areas like water management, science and technology and humanitarian intervention, and calls for focused Canadian leadership in the search for alternative forms and procedures of global governance. Smart power goes beyond a more concentrated use of knowledge and skill to demand better coordination between all the arms of foreign policy, as well as the renewal of Canada's military.
The proponents of smart power do not sneer at the idea that Canadians have values they think important to protect and project, nor do they accept that Canada is a faded power.
Smart power begins, as Canada's international policies must, with the United States and with the understanding of the primacy of that relationship in all that we do, a fact implicated by the increasing intensity of indiscriminate threats emanating from a wide variety of largely non-state sources which threaten all of North America, not just one part of it.
Whether Canadians like it or not, and particularly so since September 11, the country is caught in the slip stream of American national security policy and action. There is no evading Canada's alignment to the United States which paradoxically allows Canada to do many of its good international deeds. Nevertheless, we do not agree with those who think that all of Canada's policies must be subordinated to North American imperatives or that continental partnership precludes international action which goes against Washington's grain. We believe it would be helpful to have a clear public articulation of North American priorities and policies.
We find that Canada's deeply rooted internationalism is not going anywhere, not at least since the Prime Minister is on the record as saying that Canada will be treated with more respect in the United States if it is influential in world affairs. At the core of the Paul Martin message, as we understand it, is the promise that his multilateralism will tighten and intensify the beam Canadians shine on the world. The overall aim, as the first of the 2004 speeches from the throne put it, is to find ways to work smarter in diplomacy, development, defence and international trade, all of which have become profoundly interdependent and are increasingly touching Canadians in their daily lives. What is left not fully said and perhaps not fully comprehended is that a resolute government will have to set clear priorities and make hard choices if Mr. Martin's smarter Canada is to be realized.
Senator Rompkey: Recognizing that smart power would involve some coordination on a number of different fronts to amplify Canada's influence in the world, I noted that in your comments you refer to Canada as a faded power.
I am struck by the relationship between the military and the other branches of government services, particularly in peacekeeping, the NGOs, the other branches of what we do, how we carry out our policy. I was at Valcartier some years ago when the Van Doos were preparing to go the Bosnia. General Dallaire was in charge at the time. He impressed upon me the necessity for having battle trained troops and battle ready equipment if you are going overseas, because if you cannot provide security, you cannot do anything else properly.
In the relationship between the Armed Forces and the other aspects of what we do, both civilian and non-civilian overseas in any particular venue, is it your feeling that we have to continue to provide that battle ready capability? Are you concerned that we do not have that battle ready capability in some areas today that we had some years ago?
Mr. Hillmer: You have raised a number of issues, senator. I will quickly say that at some point I would like to get across the notion that I do not think Canada is a fading or a faded power.
Senator Rompkey: You said, "...nor do they accept that Canada is a fading power."
Mr. Hillmer: At some point I would like to say a few words on the question of Canada sleepwalking its way to oblivion and all the recent polemics that have been written along those lines. I would also like to comment on the need for coordination of the three Ds to make for the kind of coordination on the ground, which the departments are now talking about, all of which is terribly important.
In terms of being combat capable, the underlying tenet of peacekeeping all through the Cold War years was that Canada would be combat capable. That was the sine qua non; it was the trained Canadian solder at the heart of peacekeeping achievements from Suez and before, right through to the end of the Cold War. As Dr. Calder said to your committee a few days ago, there is now no real distinction between the combat soldier and the peacekeeper. Those distinctions are now of another time.
We must have combat capable forces. We are all aware of the grave deficiencies that have become evident and the way in which our Armed Forces have been pushed to the limit. Yet, the achievements are quite staggering. All through the 1990s, we had one peacekeeping or one peace support operation after another until they totalled, according to the Department of National Defence figures, in the 40s, and then Kosovo and Afghanistan, and before that, at the beginning of the post Cold War period, the first Persian Gulf war. It is a pretty stunning military achievement against the background of diminishing budgets.
My hat is off to the soldier and the sailor and the air person of Canada, and my hat is only partially tipped to the government whose support of those people has been less than stellar.
Senator Rompkey: Would you agree that, in the allocation of resources, a substantial amount has to be put into the budget of repositioning and refurbishing the Armed Forces to be battle ready should they have to go into operations, whether they are peacekeeping or otherwise? Would you agree that that is an important part of the budget and it is important to keep them up to a certain standard, however that standard is defined? This committee has done some work on defining what the standard should be in terms of numbers, capability and equipment. Would you agree that, in designing foreign policy, that aspect must be taken care of?
Mr. Hillmer: Absolutely. The foreign policy of the country, as the Prime Minister defines it in speeches like the Gagetown, Montreal and Washington speeches, has more and more, as an integral part, a military component — nation building, for example, which is right at the heart of what the Prime Minister talks about. It is crucial, but it is not clear that it is happening or that it is going to happen.
The sustainability gap is large. There is no particular sign that the government will pour the kind of money that is needed to raise the Canadian Armed Forces to the kind of level that all of us in this room would like to see. There are other demands on the public purse. Although scholars, journalists and others write a great deal about how the Canadian military has been killed, it would be uncharacteristic of the government to put great money into the military because in peace time this has really never happened, apart from the early Cold War when we were on a war footing in the 1950s.
Senator Rompkey: Would you agree that we are in a different age now? Since 9/11 and the war on terrorism, are we not in a different sort of war now, and do we not have to be ready for that war in some way? Is there not a need to respond to that situation?
On another topic, one aspect of gaining more funds for anything is public opinion. How do you feel Canadians generally respond to the importance of the Armed Forces and the importance of supporting them and giving them the kind of equipment and training that they need to do the job? My experience is that there is a very small constituency for the Armed Forces across the country. Much of it is reflected around this table. Still, in all, politicians respond to the public. We serve the public. We are elected by the public. Those of us who are not elected by the public still serve the public and perhaps feel a greater responsibility to that.
Tell me about your assessment of the support that Canadians would give to increasing the role and the ability of the Armed Forces today.
Mr. Hillmer: One of the old saws of Canadian defence policy is that the Canadian people do not support it, so the government does not spend the money. There is some evidence that that has changed or is changing. The Polara poll, for example, in 2004, showed increased support both for homeland security and for national defence. Anecdotally, one sees a change in attitude at the doctor's office or the butcher's shop.
Senator Rompkey: Tomorrow night, for example, we will be watching an election that will be driven, to a large degree, by people's interest in security and safety and so on. Is that reflected in Canada, too?
Mr. Hillmer: No, I think that we think of this war on terrorism as not our war. When the United States went to war on September 12, we did not go to war with them — not in our mentality, and not in our psychology. We did go to Afghanistan and have distinguished ourselves, but I think that we can turn our backs somehow, particularly because we regard this current president of the United States as kind of a cowboy. We know how Canada would vote tomorrow if there were an ability to vote in that election. We would vote 60 per cent or more for John Kerry, because we do not go along with that kind of cowboy mentality. It makes it very difficult to induce the government to spend money when there is not the kind of support that there is in the United States for the military, for example.
Senator Moore: Thank you for being here, professor. In view of Senator Rompkey's question as to what the Canadian perception or support level is for defence, what do you think Canadians would like to see provided in terms of service and so on from DND? What do you think they are looking for? There is obviously pride in the past sacrifices and the need for some security and surveillance to provide for jurisdiction over our territory. What do you think they would reasonably expect the government to do and be prepared to accept?
Mr. Hillmer: The reaction to the tragic death of the sailor the other day —
Senator Moore: Lieutenant Chris Saunders.
Mr. Hillmer: Yes, and to the four deaths in Afghanistan illustrates Canadian sensitivity, but also our lack of awareness of the dangers of military life. We may not be ready for a great expenditure of the willpower and money that it takes to run a real military operation, but I think that we are certainly interested in homeland defence or aid to the civil power. Those efforts that the military carries out are tremendously valued. We are interested, in some vague sense, in continental security. We are also interested because of that internationalist streak that we have, that Pearsonian streak that we have had for more than half a century, in making some kind of a difference internationally. I do not think that the average Canadian would have much more of an idea than that about just what the military does or what the military should do.
Senator Stollery: I welcome Dr. Hillmer. I look at this more from a foreign policy or foreign affairs perspective. The phrase, "foreign policy," seems to be pretty overworked these days.
I have never thought that Canada was a faded power. I do not know where that thought came from. The 1950s was a different world: a colonial world. There were probably 300 million industrial workers in the whole world. I was in Algeria during the Algerian War in the 1950s. Canada was unknown in the 1950s. That would not be the case today in countries that I knew very well in 1950. I totally agree with you on that observation.
We had President Fox here last week. I am trying to come to a question here, but it is difficult because this area does not lend itself to such specifics. When the Foreign Affairs Committee was in Mexico, we determined that, every year, about 400,000 to 500,000 Mexicans cross the U.S.-Mexican border illegally, undocumented, and that there are roughly 10 million undocumented Mexicans in the United States today. In Canada we have somehow persuaded ourselves of the security issue with the U.S, but we have totally ignored the fact that the Mexican-U.S. border is a disaster for many reasons that I will not go into here.
It is a bigger world than just Canada-U.S. Of course, the biggest of our foreign policy challenges is how to get along with our neighbour, the United States. However, is it not reasonable to say that energy prices are affecting world affairs more than what happened to the World Trade Center? What do you think about that? Fifty dollar a barrel oil is making Russia a major player in the world, is it not?
Mr. Hillmer: I would agree. That helps to put 9/11 into some sort of context and into some kind of perspective. However, it obviously shook the United States in a way that is very difficult for us to comprehend. In the aftermath of 9/11, the President and Vice-president of the United States both said that they had never imagined that the United States would be subject to an attack. That they had just gone through a half a century of Cold War, when the United States had nuclear missiles by the thousands pointed at it, indicates something of the tremendous shock that that was to the system. Of course, it was not only a shock to the system; it was also a great political opportunity for the President. He grabbed both the shock and the opportunity and he turned it into that which we all know.
I say "yes" to your question regarding energy prices. A former Prime Minister of Canada said that if he were Prime Minister of Canada for five years and then President of the United States in 10 minutes, he could make a greater impact on Canada in that 10 minutes than he could as five years as Prime Minister.
Senator Stollery: I am not suggesting that the World Trade Center was not a great tragedy and a huge event, but it is just one part of what is taking place. There is the increase in oil prices. When we talk about Canada's foreign policy in this changing world, it seems to me, as I reflect on it, that it is very difficult to come to a kind of conclusion, because, as Macmillan said, "Events, dear boy. Events"
What do we do? We have the United States, but do we not also have the EU becoming as large a commercial power in the world as the United States, though not to Canada? We have Russia rising out of the chaos. We do not know how long the process will take, but it is certainly happening. China has become the second largest importer of oil, having overtaken Japan over the past several years. Will these events not have a huge impact also on Canada?
This is, of course, the Standing Senate Committee on National Security and Defence. I understand it is not the Standing Senate Committee on Foreign Affairs. I am sure the chairman believes that there must be a coherent foreign policy in order to make it easier to have a coherent defence policy. Given the nature of these dramatic changes outside of North America, but in the world that we are part of, does it not make it difficult for Canada and every other country to have a coherent policy because the events may be different next year?
Mr. Hillmer: Mr. Pearson is reputed to have said, when he was asked what Canadian foreign policy was, "Ask me at the end of the year and I will tell you what our foreign policy has been."
We are a secondary power. We are reactive by nature and by necessity. These events that you mention are tremendously important. They are tremendously important to the United States. It may be that the United States is the fading power and maybe we have hitched our wagon a little too closely to the United States. We will see. Foreign policy is a day-to-day affair in Canada.
Senator Stollery: It may be everywhere.
Mr. Hillmer: It is frequently said that we do not have a foreign policy or that our foreign policy is made elsewhere. Certainly, events in the world make it, and these events that you describe are largely unknown to most people because we so concentrate on North America.
I might just take this opportunity to say that one of our chapters is written by a Carleton University academic, Jean Daudelin. His case is that Canadian foreign policy has been a stunning success; that we have been prosperous; that we have been well-modulated; that we have succeeded in the only relationship that matters, that with the United States. His claim is that the vast majority of foreign policy has to do with our southern neighbour and that the rest of it is really peripheral activity.
Senator Mercer: Welcome, professor. I will probably demonstrate my schizophrenic approach to this committee and the military. I grew up in Halifax, a military town. I have a great deal of respect for the men and women who serve in the Armed Forces. My brother is retired from the air force; my father served in the navy.
I also note Senator Rompkey's comment about the size of the constituency. Would you not agree that, since the 1960s, or at least since the early 1970s, Canadians have elected consecutive governments who have only been willing to pay lip service to support in numbers and equipment for the military and have realized Senator Rompkey's statement that it is a very small constituency and have played to the much larger constituency that does not serve that?
I do have a second question.
Mr. Hillmer: I would agree with that, absolutely. The last Prime Minister of Canada who took the military seriously was Lester B. Pearson who ceased being Prime Minister in 1968, which is a very long time ago. As I said earlier, that neglect of the Armed Forces is a Canadian tradition in peacetime.
Senator Mercer: You do call it neglect, though.
Mr. Hillmer: I do.
Senator Mercer: To refer to your opening statement, you said that there is no evading Canada's alignment to the United States. You then go on to say that you do not agree with those who think that all of Canadian policy must be subordinated to North American imperatives. You go back to the theory of us sleeping with the elephant.
Based on those statements, I am interested to hear your opinion on our decision not to go to Iraq. I would also be interested to hear your advice on whether or not we should participate in missile defence.
Mr. Hillmer: First, with respect to Iraq, whether or not it seemed like the right thing at the time, our decision certainly seemed like the right thing to most Canadians, and it has turned out to be the right thing. One must keep in mind that at the time the United States went to war in Iraq we were serving in Afghanistan and the Persian Gulf.
Senator Meighen: In secret with the U.S. I might add.
Mr. Hillmer: Indeed, and perhaps that was not done in quite the right way. Perhaps the Prime Minister should not have played to the crowd in quite so ostentatious a way.
However, I think that was the right choice. It helped to make the point that we are different from the United States, that we do see problems differently and that we do things differently.
As for missile defence, the argument could be made that we are already part of missile defence as a result of the August 2004 decision to accept the transmission of NORAD data. We are inching into missile defence. It is inevitable. The consequences for our participation in NORAD are quite large and, frankly, unacceptable. Missile defence is a done deal, and it ought to be a done deal.
Senator Mercer: I take exception to what you said earlier about us not going to war on September 12 with the Americans. I suggest that we went to war on September 11. We were the first ones there. We were the first line of defence. We took in everybody who needed to be taken in. Canadians demonstrated their generosity and their friendship to our American neighbours.
I have a nephew in the American army who is currently somewhere in Iraq. I agree with you that the war in Iraq is wrong. There were no weapons of mass destruction. They have never been found and probably they never will be. I would say that Canadians have been there shoulder to shoulder with our American neighbours.
As Senator Meighen said, it is a well kept secret that we were in the Persian Gulf and Afghanistan. As but one Canadian, I recognize the contribution made by our Armed Forces in the war on terror, and I recognize the contribution they continue to make.
Senator Atkins: Professor, you say that the authors do not accept that Canada is a faded power. Are we a faded influence when we talk about Canada-U.S. relations?
Mr. Hillmer: I find myself saying "Well..." as President Reagan might have said. Influence is the most difficult commodity to measure. It is literally undefinable.
When a group of Canadian policymakers were asked whether peacekeeping conferred influence in the international community, overwhelmingly they said yes. At the same time, the question was asked of a number of international policymakers. Overwhelmingly, the answer was no.
We overrate our influence. We value it as a kind of honey of international politics. Was Brian Mulroney influential in Washington because he was very good at the Canadian-American personal relationship, or was Jean Chrétien right to buck against the grain? Those are impossible questions to answer.
Senator Atkins: On occasion when we travelled to Washington, when we discussed Canada-U.S. relations, we were informed that we might not be taken seriously at the table if we did not invest significantly in our military. My impression is that the politicians may not take it seriously, but those who have worked with the Canadian military are very impressed, so there is that diversion of influence and analysis. Would you comment on that?
Mr. Hillmer: My view is that the Canadian-American relationship is not simply a dependent relationship but an interdependent relationship. I think the Americans need us, not as much as we need them, but they need us a great deal. I do not think that what we do at a given moment about the military or even, frankly, missile defence, matters all that much. We are, after all, the leading trading partner of 39 American states. We all know the figures. We all know the level of interaction that takes place on a professional level and on a personal level in trade and culture and all the rest. It is an enormously complex and interdependent relationship. Sure, they get mad as hell at us from time to time, just as we get mad as hell at them from time to time but, in the final analysis, as an old historian said, we are the Siamese twins of North America who cannot separate and live. That is a fact of life for them and a fact of life for us.
Senator Atkins: I would agree with that. Although we are the neighbours of the big elephant, it is my view that they need us as much as we need them, for different reasons. It is obviously not military power. It is the fact that we can do some things for them that they cannot do for themselves in terms of international negotiations or discussions.
Do you think it matters who wins tomorrow? Bush's position in relation to Canada is pretty clear. We have been watching it. We do not know Kerry's position.
Senator Meighen: We do on trade.
Senator Atkins: Yes, but I would argue that, even on trade, it is one thing to argue rhetoric in a campaign; it is another to take over the presidency.
Senator Stollery: Twelve per cent of our exports go through a pipeline. How are you going to stop the pipeline?
Mr. Hillmer: I accept what you say when you indicate that Senator Kerry is in some ways a bit more worrying on the day-to-day issues. I think it is important who wins tomorrow. If Senator Kerry does not win, I think we will be exposed to the danger of Bush and Cheney for another four years. I think that Bush and Cheney are not only dangerous to us but to themselves and to the United States. I think that George Bush has demonstrated the limits of American power. If you are a North Korean or an Iranian, you have every reason to be less worried about the United States than you were prior to the invasion of Iraq.
Senator Atkins: Do you think the election of Kerry would defuse international polarization?
Mr. Hillmer: Yes, I do not think he will know how to get out of Iraq, and that will continue to be a quagmire and a very difficult problem, but I do not think that he will threaten the world in the way in which George Bush has threatened the world.
Senator Meighen: Welcome, Mr. Hillmer, this is a very interesting discussion and as usual when I go down the list, I see that other people have asked my questions. However, I want to go back, if I may, to this business of why we are doing what we are doing, or why we are not doing what we should be doing in the terms of the military.
I was intrigued by your anecdotal evidence that people were asked whether it made any difference whether we were active players on the international stage militarily, and some say yes and some say no. If it does not make a difference, why are we doing it? Why should we do what I hear you advocating, that is, having a more robust military capability? I could answer the question as I think you would, but I would like to hear it in your words.
Mr. Hillmer: I am an historian so I keep taking refuge in history. The traditional reason that we have had — perhaps a robust military is bit strong.
Senator Meighen: It was the third largest navy in the world in the Second World War.
Mr. Hillmer: It was very briefly, and it ceased to be pretty quickly; but, generally speaking, we have not had a robust Armed Forces, but we have spent as much money as we thought we needed to spend so the United States would not move in and do the job. That is the old saw about Canadian defence policy.
Obviously, we need to defend ourselves in the most fundamental ways. Homeland security has a national security component, but it also has a military component. There is aid to the civil power; there is continental defence. Then there is this internationalist streak which I spoke about, which makes quite a difference to Canadians. I think, in some vague sense, Canadians think of themselves as connected to the world. Now many Canadians, of course, are recently from another part of the world, so they are even more connected to the world. A military is useful in all of those senses.
When I said earlier I thought we were vague about it, I think it is because we are traditionally an unmilitary people. We think of ourselves as peaceful folk, a peaceable kingdom. It is no coincidence that our greatest military achievement in the eyes of most Canadians is that we are peacekeepers. Johnny Canuck keeps the peace; Uncle Sam makes war. It is another one of those wonderful little additions to our self image.
Senator Meighen: Where did that come from? It must have grown up in the last 30 years. That was not the belief in 1945. I accept your point that we totally neglected our Armed Forces between the First World War and the Second World War, but did we think of ourselves as a non-warring nation in 1945?
Mr. Hillmer: Not in 1945, but we quickly demobilized and then we mobilized with a vengeance after the Chinese attacked South Korea.
Senator Meighen: Why did we not offer to send peacekeepers? We did not; we said we would join.
Mr. Hillmer: If you look at a list of peacekeeping operations now, Korea is frequently listed.
Senator Meighen: That was a euphemism for the United Nations.
Mr. Hillmer: It may be, but it appeals to a lot of scholars and a lot of Canadians. Sure, it is an invention of the last 30 or 40 years. It is an invention of the Suez and the Nobel Peace Prize. The idea that Mr. Pearson was a peacenik is, of course, a misreading of history. He was a hard man as well as a peaceful man.
Senator Meighen: Senator Rompkey pointed out, and it seems frustrating to me, that the constituency that responds favourably to the need for a stronger military remains depressingly small. As you pointed out, many people come to this country from parts of the world that have been deeply troubled, where there has been all kinds of violence and war.
Senator Stollery: That is why they came here.
Senator Meighen: Why have we not succeeded in transmitting the idea that we have a responsibility as a nation to not only defend ourselves to the extent we are capable, but also to be able to play a substantial role around the world in making it a safer place, so that we do not end up in this country in the situation you find in many countries around the world?
Mr. Hillmer: We think that we do those things.
Senator Meighen: As Senator Rompkey says, and you agreed, there are very few people who believe that in this country.
Mr. Hillmer: It is not that we do not believe that we are out there doing good things — I think I got caught up in my negatives — we do believe that we are out there doing good things.
Senator Meighen: As long as we do not have to pay very much for it, and as long as we do not get into any trouble overseas.
Mr. Hillmer: Exactly, and our political leaders have played shamelessly to that prejudice. Mr. Trudeau, Mr. Mulroney, Mr. Chrétien and others all carry some of the responsibility for that.
It might be interesting for a prime minister to say that we need to put substantial new money into the military. I do not think it will happen, but it would be very interesting to see that phenomenon and see what the reaction of Canadians would be. It might surprise us all.
Senator Meighen: It is called leading public opinion or moulding public opinion rather than following it.
In another part of your text you say, talking about Canadian policies and their subordination or not to North American imperatives, that you believe it would be helpful to have a clear public articulation of North American priorities and policies. I am not sure in what forum we would do that. Would it be in an academic forum, a political forum or both? We might be able to establish some common priorities, but I suspect there are differences between Canada and the United States in terms of priorities.
Mr. Hillmer: Yes, and I was referring there to a Canadian articulation of our North American policies. We have a tendency in this country in our foreign policy to have a kind of secret life. We could say that 85 per cent of our trade is with the United States, and probably 85 per cent of our foreign policy is with the United States, but we like to put on masks and talk about our values and our internationalism, partly as a way of saying we are not Yanks.
What I thought would be useful there, and I think my coauthors agreed, was that if the government were to clearly articulate our continental interests and what we think those are. If we could have a clear political direction as the beginning of an overarching analysis of our foreign policy and of Canadian-American relations, that might put a lot of things into perspective. As an example, how much do we value interoperability between Canada and the United States in the armed forces of the two countries? If we value those things, there are investments that need to be made to keep those up to date and consistent. Because we do not articulate the policy, then the money and the resources might or might not follow.
Senator Forrestall: Because of the common reaction to this kind of a forum, and because, while we would like to start out with a clean sheet of paper, I think we recognize that there is only one to the argument that there are very few options.
I have spent virtually all of my adult life in the political field, starting with Robert Stanfield back in the mid-1960s. Then we had a lot of young Norman Hillmers and young Jack Granatsteins around. Mr. Pearson was a younger man when he was working in external affairs.
Are there young men and women academics today who will rise to levels of influence in Canadian thinking? If there are not, is that to some degree the responsibility of the universities? Are we teaching only one side of the story? If you were not a historian but in some other academic field I might not ask you this, but I ask you as a historian: Are we locked into a very common debate in which we are asked to pursue very few avenues? Is there any hope for us in articulation? I am addressing why there is not a greater interest. Why is this particular community so small? To my knowledge, after thirty years in politics, with half a dozen in the House of Commons, the last military minister we had was Léo Cadieux.
Are there young people in the academic field who are ready to replace you elegant gentlemen with your rhetoric? I spend most of my life reading and following you. What little I do know I have garnered from you. Is your area of expertise a growing field of younger people?
Mr. Hillmer: Not in the history field. However, military history attracts enormous numbers of students, but it is hard to get any history department in the country to hire a military historian. Roger Sarty, the former deputy director of the Canadian War Museum, has just been hired by Wilfred Laurier University. However, on the whole, military history is not done by established academics or those upcoming, but it is interesting to students.
In the fields of political science and international relations, we have all kinds of defence and military experts in the academic community. We always make sure we have at least one graduate student writing in Canada Among Nations. This year, Philippe Lagassé wrote an unorthodox piece, which I sent over to the committee the other day. It makes a number of against-the-grain arguments about Canadian defence. I am perfectly content to leave our future in his and other people's hands.
The Chairman: I would like to return to Senator Meighen's line of questioning. I was struck when you responded to Senator Moore that, for half a century, Canadians have exhibited a streak of internationalism, which I think was the word you used. I, for one, thought of Canadian defence policy as being an expeditionary policy, that we have been of the view that we should fight the wars "over there." We have a history of citizen warriors, if you will. I go back to the Boer War, World War I, World War II and Korea. That is a different history from the one you describe. We are a history of warriors who go "over there," fight, come home and resume our lives. Does that square with how you see it?
Mr. Hillmer: Our military record in the twentieth century — by my count, six wars and six distinguished performances — was stellar. I was referring to government neglect of the Armed Forces.
The Chairman: It is an issue of motivation. It is not the business of this committee to defend the government. We are here to hold it to account, but people went overseas because they had a need. They saw an interest.
What threats do Canadians see these days? How would you describe the threats that the average Canadian perceives?
Mr. Hillmer: Mr. Martin, in one of his speeches, said that the greatest threat to Canadians was terrorism. I do not think that most Canadians think that is the case. Most Canadians think the greatest threat to their security is George W. Bush, which is why he would get so few votes in Canada.
Another famous line by another famous historian, George Stanley, who wrote Canada's Soldiers, is that we were an unmilitary people, and to that, the great historian Charles Stacey added we were an unmilitary people who fought war extremely well. The government and politicians appealed to the unmilitary side, and it is from time to time when a threat becomes very palpable that your citizen soldiers and the very fine core of Canada's soldiers step up to the plate, and the two run in contradiction right through Canadian history.
The Chairman: Then, if you are between wars, how do you explain to the baker, the automaker or the farmer the need for national security or the need for defence? How would you tell them that having a robust military capacity is important to their lives?
Mr. Hillmer: I would begin in the way in which Prime Minister Mackenzie King described the situation in the late 1930s. When President Roosevelt put pressure on Canada to start rearming and rather threatened us that if we did not, he would do something about it, the Prime Minister of Canada stood up and said thanks but no thanks. We will take care of ourselves. It is a matter of self respect.
That seems to me to be the argument that we have to make. If we do not have a military that can do anything more than deploy a few hundred or a few hundreds for a few months, is that a situation of self respect in the world? I think not. That is the argument that has always struck me as the most important one that you could possibly make.
It is hard to say to the farmer or the butcher that national defence is crucial to him or her because it just does not seem to be. However, self respect is something that we can all understand, and that is what that little rather fat unmilitary man, Mackenzie King, said in the late 1930s, and it is not what any Canadian Prime Minister has said in the modern era.
The Chairman: You talked about foreign policy as something Canadian leaders best determine looking backwards, and then you talked briefly about national interests. The one national interest you touched on — and I think it was just as an example — was the question of interoperability with the United States. Could you suggest to the committee other national interests that we should be concerned about?
Mr. Hillmer: When we thought about what we might say in this book, we tried to make the case that we need to establish some priorities. For that matter, we need to establish our national interests. We are not very good at spelling these things out. We are not very good at making choices, so we think that we can do it all with very little. We want the best of all worlds. As Henry Kissinger said of us in his memoirs, we want to be the peacekeeper and we want to be the alliance member. We want to be close to the United States economically but we also want to have our independence. A clear articulation of the national interest would be a very helpful way to begin.
I think you could argue this in two ways. You could say, "Listen, the national interest of Canada is the United States, period. We have become completely North Americanized. That is the beginning and end, all that matters." Alternatively, you could say, more traditionally, that a balance between bilateralism and multilateralism is crucial to an understanding of us, to our psychology and to our balance in the world. It is the way we avoid the stifling bilateral embrace.
We are the world's greatest joiner of international organizations. You have heard the rhetoric, but it is more than that. It, too, is the reality and that dominates our thinking. When Mr. Martin delivered all those speeches at the end of 2003 and the beginning of 2004, he did not talk for very long about the United States. He talked about the Canada core, about nation building and about our multilateralism. That is the way he said he we were were going to count again in the world. It is clear that the policymakers — and we have included some of their work in the volume — are still very much tied to this internationalist streak. The viewpoint that it is the beginning and end down South is not the dominant point of view that I see in this case.
The Chairman: There has been talk tonight about lack of political leadership, lack of political will. There has also been talk that the politicians have it right, they are reading the electorate pretty accurately. Can you suggest to this committee a process for developing an order of national interests?
Mr. Hillmer: What we would like to see would be the kind of analysis which is going on today, namely, the international policy review, but with a difference. We would like to see a clear direction from the government about its priorities — that is, its sense of Canada in the world — so that the departments, for example, National Defence, Foreign Affairs, International Trade and CIDA, have a clear idea of just how they should render their advice. As far as I know, that is not happening and the international policy review is being batted back and forth between the departments. There is one pen and there is another pen, but there is no clear articulation of national interests from the people who are the elected representatives. I think that is the most important thing.
The Chairman: That suggests entirely a top-down process. What about a bottom-up process? How does one talk to Canadians about what their interests are and determine where they want to go and what they think is important?
Mr. Hillmer: That is devoutly to be wished. Mr. Axworthy talked about the democratization of foreign policy. I think he believed it and he acted on it to some extent. His idea of public opinion was often that of an NGO. It is not easy to know exactly how you do this through a method like yours of going across the country and listening to Canadians and letting them talk. That is one possibility. However, I do not think it can come from the bureaucracy or from the people. It comes from the people when they elect a government.
This government ought to have made it very clear as the first order of business just where it wanted this policy review to go so that priorities would be established and then resources and decisions about money and all of the rest — that is, what weapon system to stand down, what weapon system to emphasize, what embassy to close or what base to close — could proceed from some kind of leadership.
The Chairman: That is a good note on which to end. Thank you very much, Professor Hillmer. We appreciate having you here. I am sure that the committee has found the discussion stimulating and we look forward to hearing from you again in the not-too-distant future.
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This meeting is suspended and we will reconvene in camera in the adjacent room in two minutes.
The committee continued in camera.