Proceedings of the Standing Senate Committee on
National Security and Defence
Issue 6 - Evidence - May 25, 2009
OTTAWA, Monday, May 25, 2009
The Standing Senate Committee on National Security and Defence met this day at 2:28 p.m. to examine and report upon the national security policy of Canada (topic: state of the Canadian Armed Forces).
Senator Colin Kenny (Chair) in the chair.
[English]
The Chair: I call the meeting to order. My name is Senator Colin Kenny. This is a meeting of the Standing Senate Committee on National Security and Defence. Before we begin, I would like to introduce the members of the committee.
Starting on my far right, we have Senator Rod Zimmer from Winnipeg. He had a long and distinguished career in business and philanthropy. He has been a member of the Senate since 2005. He also sits on the Standing Senate Committee on Transport and Communications.
Beside him is Senator Munson, a well-respected Canadian journalist from Ontario. He was CTV's bureau chief in Beijing from 1987 to 1992, reporting on events in China such as Tiananmen massacre. He also served as bureau chief and senior correspondent in Halifax and London, England. He covered the Iran-Iraq War, the Gulf War and the Philippines. He is a member of the Standing Senate Committee on Human Rights and the Standing Committee on Internal Economy, Budgets and Administration.
Beside him is Senator Meighen, from Ontario. He was appointed to the Senate in September 1990. He is a lawyer and a member of the bars of Quebec and Ontario. He currently chairs the Standing Senate Committee on Banking, Trade and Commerce.
Next is Senator Grant Mitchell. He was appointed to the Senate in March 2005 and is from Edmonton, Alberta. He has had careers in the Alberta public service, the financial industry and politics. He is the deputy chair of the Standing Senate Committee on Energy, the Environment and Natural Resources and is a member of the Standing Senate Committee on National Finance.
To my immediate right is Senator Tommy Banks from Alberta. He was called to the Senate in April 2000. He is known to many Canadians as an accomplished and versatile musician and entertainer. He is a member of the Standing Senate Committee on Energy, the Environment and Natural Resources.
On my left is Senator Pamela Wallin, from Saskatchewan. She was appointed to the Senate in January 2009. After a long career in journalism, Senator Wallin went on to serve as Consul General of Canada in New York and also served at the request of Prime Minister Harper on the special Independent Panel on Canada's Future Role in Afghanistan. She is the deputy chair of this committee and also a member of the Standing Senate Committee on Foreign Affairs and International Trade.
To her left is Senator Fabian Manning. He has dedicated his career to serving the people of Newfoundland and Labrador at all three levels of government. He was appointed to the Senate in January 2009. He also chairs the Conservative government's Atlantic caucus and is a member of the Standing Senate Committee on Fisheries and Oceans.
Finally, we have Senator David Tkachuk from Saskatchewan. He was appointed in June 1993. Over the years, he has been a businessman, a public servant and a teacher. He is the deputy chair of the Standing Committee on Internal Economy, Budgets and Administration and is a member of the Selection Committee.
Honourable senators, we have before us today a distinguished group of gentlemen. I have not seen such a large force in a number of years. We have the Deputy Minister of National Defence, Mr. Robert Fonberg. He was appointed Deputy Minister of National Defence on October 1, 2007. Prior to his appointment, Mr. Fonberg was Associate Secretary, Treasury Board Secretariat of Canada. Before that, he was the Deputy Minister of International Trade.
Beside him is Vice Chief of the Defence Staff, Vice-Admiral Denis Rouleau. He graduated from the Royal Military College and became Canada's first naval officer to join NORAD in Colorado Springs, where he served as a missile officer in Cheyenne Mountain. He subsequently joined the initial Canadian Military Staff to serve in the United States Space Command at Peterson Air Force Base. Upon his return to Canada in 2007, he was promoted to rear-admiral and appointed Chief of Programme at the National Defence Headquarters. In the spring of 2008, he was promoted to his current rank of vice-admiral and appointed Vice Chief of the Defence Staff.
At the far end of the table, we have Mr. Dan Ross, Assistant Deputy Minister (Materiel). Mr. Ross has extensive experience in leadership management, policy, procurement, information management and strategic planning, gained through various positions he has held with the Canadian Forces and the Department of National Defence, the Privy Council Office and Public Works and Government Services Canada. Mr. Ross was appointed to his current position in May 2005.
We also have with us Mr. William F. Pentney, who was appointed Associate Deputy Minister of National Defence on January 7, 2008. Prior to that, he was Assistant Secretary to the Cabinet, Priorities and Planning, at the Privy Council Office where he had served since 2006. Mr. Pentney is a graduate of Queen's University and he has represented the Canadian Human Rights Commission in human rights and equality cases in the Supreme Court of Canada, the Federal Court and the provincial courts of appeal.
We have Rear-Admiral Bryn Weadon, Assistant Deputy Minister of Finance and Corporate Services. He immigrated to Canada in 1965 and enrolled in the Collège militaire royal de Saint-Jean in 1974 and graduated with a degree in business administration in 1979. He was then posted to Victoria to complete training as a MARS officer. In October 2004, he was appointed as director general, financial management, and promoted to his current rank in April 2006. In February 2007, he assumed his current duties as Assistant Deputy Minister of Finance in Corporate Services and Senior Financial Officer for National Defence.
Mr. Fonberg and Vice-Admiral Rouleau, you both have brief opening statements to make. Who would like to go first?
Robert Fonberg, Deputy Minister, National Defence: Mr. Chair, we have opening statements. Mine is a bit longer than I had hoped, but we sent them to your office on Friday. They are on the table today. I am prepared to forgo actually making the statement in the interests of moving on with questioning; I look to you as to how you would like to proceed. This team may be big and a bit unprecedented, but we are delighted to be here to answer any questions you might have. I have nothing to add to my opening statement, so I am perfectly happy to have it read and not speak to it.
The Chair: Okay. Colleagues, we will take it as read.
Senator Tkachuk: Could you please give us a short summary? It is pretty short as it is.
Mr. Fonberg: I am delighted to do that. You have my text.
Senator Tkachuk: We will have you on the record.
Mr. Fonberg: My opening remarks were, fundamentally, about the Canada First Defence Strategy, which was approved and published by the government in May 2008, I believe. In many ways, it represents our guidepost as an organization, both on the military and the civilian side of the organization, for the next 20 years. It is a 20-year road map with a committed 20-year funding envelope, which is certainly unprecedented in our time in Canadian fiscal management.
It is balanced across the four key pillars of military capabilities — the people piece, the infrastructure piece, the equipment piece and the readiness piece — and those are the questions that we are prepared to take on. The Canada First Defence Strategy, CFDS, which I am sure you have all had some chance to look at over the last year, gets specific in a number of areas, including the people side of the equation, the growth in the Canadian Forces up to 70,000 regulars and 30,000 reserves.
It gets quite specific in terms of renewal of the major capital fleets, from the next generation of fighters to the replacement for the Canadian surface combatants. It is quite specific in terms of investments in infrastructure and renewing the real property portfolio, and also in terms of national procurement and readiness.
It is a document that, over the last year and continuing to this point, we have worked to align from the level of strategy and vision down to the level of annual business plans for each of our L1s in the organization. You have met with generals Leslie and Watt and Admiral Robertson and talked to them about their sense of their piece of that. It is guiding us through both our short-term actions and our medium- to longer-term planning piece.
It is a document and a policy that we are delighted to be getting on with. It is the benchmark for basically everything we do, senator. I will leave it at that, and see whether Vice-Admiral Rouleau would like to speak to it.
Vice-Admiral Denis Rouleau, J.A.D., OMM, MSM, CD, Vice Chief of the Defence Staff, National Defence: From a Canadian Forces perspective, we have been and continue to be in an operational tempo, as we call it, the highest I have ever seen in the 35 years that I have been in the service. In addition to answering that call and implementing the CFDS, my role is to ensure that prudent and rigorous planning takes place through the leadership and the department to bring to bear all the CFDS resources and to ensure the capability we have in the Armed Forces right now to answer the requirements of the government — mainly in the six missions and levels of ambition that have been expressed by the government. It is up to us to make that happen.
In all four pillars, the first one being personnel, we do have challenges there. We have taken them on and are addressing them as we go. On the issue of capital projects, it is the same thing. Mr. Ross has all the details on anything to do with how we are going forward and implementing the CFDS.
Infrastructure is also a key component of what we have, and we are planning equally across the four pillars. The fourth one is operations and readiness, where we do have to maintain the readiness of the Armed Forces to be able to deploy, whether internationally or, as important, domestically for domestic operations. This is the context of my brief remarks in complete support with what the deputy minister just stated.
Senator Wallin: Mr. Fonberg, as you mentioned, we had two generals and an admiral here and we took testimony. We discussed a full range of issues, but the concerns that came out were personnel and procurement. I will ask you, and if you want to hand off the question to someone else, please do that.
On the personnel question, there seemed to be relative ease or lack of concern about the recruitment — that those numbers still are relatively good — but that retention was becoming a serious problem. I would like to hear from you on that. We know the circumstances, obviously — we are at war and it is a difficult time — but how do you intend to address that?
On the question of procurement, I will not site all the sources because we have been going through newspapers and everything, but there does seem to be a concern about the slowness of the process. With the notable exception of getting airlift into Afghanistan, everything else seems to be very slow. The question is whether the two tempos of procurement and actual need and usage will meet or whether we have some times where things will be touch and go; we are thinking of the Olympics and other things. Could you tackle those two questions?
Mr. Fonberg: The retention issue is essentially on the Canadian Forces side, so I will ask the vice-admiral to speak to that.
On the procurement side, I suspect you are referring to a certain number of fairly high-profile procurements. There are two things. One is that in a 20-year plan, we see a lot of this as fundamentally being about a marathon. There are challenges with high-profile or large procurements frequently for a variety of reasons that we can talk to you a little bit about.
I would ask Mr. Ross to talk about how much has been procured over the last year. Certainly, it is far beyond just the lift in Afghanistan and the UAV, the unmanned aerial vehicle, piece in Afghanistan. A couple of procurements have been in the newspapers. We obviously follow that as well. It is a pretty limited number, but if you want to get specific, we can talk about the specifics there. Let me turn to the vice-admiral on the retention question, and then ask Mr. Ross to recount a bit on procurement over the last 12 months.
Vice-Admiral Rouleau: You are right, senator: when it comes to recruiting, we have been doing very well from an overall recruiting perspective in the last few years. As was mentioned by the environment commanders when they testified here, while we have met our overall numbers, there are still military occupations — MOCs, to use the proper acronym here — where we do have challenges. These are being addressed through the use of targeted recruitment initiatives, specific media announcements and specific additional attraction methods to get those people, mainly the technical MOCs, all three elements. We are seeing progress in that direction right now.
The issue of retention is the one that is of great interest to us. In fact, Chief Military Personnel, CMP, has launched a full retention campaign plan, where we look at what we have to do to increase the retention and reduce the attrition. We are looking at the places where the two main peaks of people are leaving the Armed Forces. It is mainly at the front end, zero to three years, and also when we get to the gate of 20 to 25 years. That might be familiar; some of our predecessors here mentioned that.
On the front end, from a recruitment perspective, it is the people who are basically in shock after joining the Armed Forces. This is something new; it is a completely different culture. Now the CMP is addressing that by bringing in an easier adaptation process for those new recruits who join the forces, to show them more about the forces as opposed to the shock that is immediately there. We will take that over time. Already, we have seen a little bit of a difference in the number of recruits in the midst of boot camp who decide to drop off. We have less of that happening right now.
The other one, which is more important to us, is those who are leaving at 20 and 25 years. They are the ones with the experience. They have 20 years under their belt of doing their work as a military person. In order to address the attrition there and increase the retention, we have to go on many prongs. As many people know, money is not the number one item they are all looking for as a better enticement to stay. It is things such as having career options, when you get to that point — having more than just the next 10 or 20 years to sign on, having something smaller with more flexibility, having better professional development available to them as they pass those gates and proceed into the Armed Forces.
We recruit individuals, but we retain families. Therefore, we have to look at it from a family perspective. The CMP campaign plan looks at a variety of issues, including housing, spousal employment, education and medical service, in order to ensure that members are well looked after and have better options than before. They can get professional development, either in their education goals or military professional education.
Senator Wallin: You indicated that attrition is about 9 per cent. Is that now lower?
Vice-Admiral Rouleau: It is 9 per cent currently. It was a little higher than that a few months ago. We are tackling that and it is on a downward trend. I am not telling you we are down to 8 per cent, but it is on the right track.
Senator Wallin: Mr. Ross, we have heard testimony on the cost of lapsed funding. If the item is not procured, the money is essentially put back into the kitty. We know the cost of missed targets, if you need a piece of equipment in theatre and you do not get it there.
Dan Ross, Assistant Deputy Minister (Materiel), National Defence: There are urban myths surrounding that, which can be clarified with some hard facts.
When I took over this job four years ago, we were in a business of very detailed technical specifications and lowest price compliant bids. It was a process that took four or five years to release a request for proposals, RFP, with an average of eight to nine years to get to the contract-award stage.
Our recent experience has reduced this to one to three years. We have gone to performance-based procurement, as other NATO nations do. We state high-level performance requirements except for the simplest things. We are pursuing a best-value solution that takes into account the total cost of ownership of an asset, not only the cheapest price, which then perhaps has an expensive ownership situation. We are minimizing the risk and cost of development and taking commercial off-the-shelf solutions.
I will give you a complex example. The Halifax Class Modernization program is $2.9 billion. It was on a developmental path with no solution apparent and extreme risk. Today, that is under contract with a low-risk command-control solution by Lockheed Martin. That contract was signed last year. They are on budget and ahead of schedule. The other half of that program is for proven solutions to upgrade the weapons systems — guns, harpoon missiles, et cetera — with two shipyards on the East and West Coasts. It is still a very complex program, but it is not developmental.
I would like to follow up on what the deputy minister suggested and give you a sense of what contracts were achieved for actual products over the past 16 months since January 2008. We procured high-performance UAVs, the Heron, for Afghanistan in less than eight months. We acquired surplus Chinook D helicopters from the United States Army in service ahead of schedule following the Manley report last January. We procured small UAV services from Boeing, the ScanEagle, and we recently renewed that service for Afghanistan.
These are all fully competitive processes, not sole source. We acquired and delivered expedient route clearing vehicles for Afghanistan and for training in Canada. Perhaps you have seen some of them in service in Afghanistan. We chartered commercial helicopters in less than four months. We delivered, and we continued to deliver, large numbers of survivability upgrades on vehicles. We spent $300 million on those upgrades during the previous 12 months; some of that is classified. We acquired competitively and delivered 96 armoured heavy logistics vehicles for use in Afghanistan costing about $150 million.
We delivered the two programs I gave as an example in the Halifax Class Modernization costing about $3 billion. We put a $1-billion in-service support contract in place for the remaining life of the Victoria-class submarines. We delivered our last dozen Orca-class training vessels produced by Washington Marine Group on the West Coast under budget and 12 months early. We contracted for 17 new CC-130J Hercules aircraft and secured a contractual amendment to deliver the first two aircraft four months early. That is a $3-billion program and was achieved in about 18 months. We delivered our last Boeing C-17 strategic airlifter on schedule and well under budget.
We resolved contract and performance issues for the Sikorsky H-92 helicopter to bring that program back on schedule. We procured targeting pods for our F-18s, a program that cost $200 million. We determined a way ahead for our Aurora P3 modernization and have taken a decision to extend the life of 10 aircraft. We have procured the new wings for the 10 aircraft and delivery is under way.
We achieved Treasury Board approval and contract for 25 additional M777 Howitzers for the army that will bring them up to their full requirement of 37. We achieved Treasury Board approval and contract award for 1,300 militarized commercial trucks. We acquired 100 surplus Leopard 2 tanks from the Government of the Netherlands.
Those were the significant achievements over the past 16 months.
Senator Wallin: Are all those vehicles or pieces of equipment operative?
Mr. Ross: These are all contract awards in various stages of delivery.
Senator Wallin: They have not all been delivered. Do you have an explanation of the lapsed funding? How soon does the money go back if it is not spent?
Mr. Fonberg: Is that the $300 million from the Auditor General's report or a broader question?
Senator Wallin: That and more general. We have heard specific cases of small amounts of money. We are trying to figure out when it happens and how it happens.
Rear-Admiral Bryn Weadon, Assistant Deputy Minister — Finance and Corporate Services, National Defence: The $300 million specific to 2007-08 was not capital dollars. That was money associated with the personnel program and the operations and maintenance program. We did not need to spend at the end of the year. We did not have a legitimate expenditure to put against that appropriation from Parliament. Therefore, that money was returned at the end of the year.
We had $500 million remaining. We are only allowed to carry forward $200 million. We have the smallest carry- forward across government. Most departments operate in the range of 5 per cent. Given the size of our budget, we have been limited by the Department of Finance to about 1 per cent or 1.5 per cent of our budget. We operate within that space. Therefore, $200 million stayed and was carried forward into 2008-09, and the $300 million we did not spend was returned and became part of the final fiscal position of the government.
On the vote 5 side of the house, which is what we use for capital procurement, most of the large projects are now being done under accrual accounting rules. We will draw investment cash, which is done as part of the normal vote 5 parliamentary appropriation. We are still on a cash-based appropriation. At the end of the year, if that money is not spent for some reason, it automatically rolls over to the year when that capital project will deliver.
Senator Wallin: I am sure there will be other questions on this.
The Chair: Thank you, Senator Wallin. For clarification, Mr. Ross, you said you brought the Sikorsky helicopters back on schedule. Are not they two years behind schedule?
Mr. Ross: We have confirmed the first delivery for November 2010. We had a technical issue with Sikorsky. We negotiated wait, delivery timeframe and certification process changes with Sikorsky.
The Chair: The net result is that the helicopter is coming later than was originally anticipated.
Mr. Ross: It will still be two years later than was envisaged in the contract award.
The Chair: Rear-Admiral Weadon, you said 1 per cent or 1.5 per cent as opposed to 5 per cent. Why does the Department of National Defence, DND, get the short end of the stick compared to other departments, which can keep 5 per cent of their lapsing money?
Rear-Admiral Weadon: I am afraid that is a question I am unable to answer. The department has been dealing and living with that situation since the mid-1990s.
The Chair: Does someone not like you?
Mr. Fonberg: There are two legitimate sets of issues: the need for the department to have flexibility in carrying its operating budget forward and a concern on the part of the Department of Finance that 5 per cent of a budget our size can affect their overall fiscal forecast from year to year.
The Chair: It is about $1 billion and about 1 per cent of the overall play.
Mr. Fonberg: In a world where you forecast the deficit to precise limits, allowing DND to make a determination in the last two months of the fiscal year to roll $1 billion forward can have an effect on the Department of Finance's ability — the government's ability — to meet their overall fiscal forecast. That is a legitimate concern, because missing a fiscal forecast can move markets and the exchange rate, et cetera. We continue to talk to them. I think the Auditor General recognized our concerns around the policy issue of 1 per cent versus 5 per cent. The Department of Finance has legitimate concerns about being able to meet its own fiscal forecast.
The Chair: I would be more interested in hearing your legitimate concerns about having such a low limit.
Mr. Fonberg: We are very concerned. That is why we lapsed $300 million in 2007-08. We have looked at this from every direction. There are not many $20-billion-per-year corporations that you would ask to work in that way. It is akin to landing a 747 on the back of an aircraft carrier at $200 million. Given the way in which the appropriations work, we have zero flexibility to miss by $1. We cannot miss on the other side by $1 or someone is in very big trouble, as you know, as a result of blowing the parliamentary vote. That is not a good thing.
We have a $200-million space. I worked carefully with the CFO this year week after week beginning at the first of March and watched him try to land this big plane on the back of this aircraft carrier.
The Chair: It is a standard that no one would contemplate trying to meet in the private sector or anywhere else, and yet DND is expected to do it.
Mr. Fonberg: We actually do it brilliantly, with the exception of that year because of a number of external intervening factors. Given the cost associated with missing above the $200 million number, we take great care in making sure we land inside that number. This year we will be a fraction above zero.
The Chair: Taking that kind of care brings with it a series of negative consequences.
Mr. Fonberg: I would not say they are negative, but they take more time and attention. The CFO will be canvassing people through the last months of the year to ensure that we have on-ramps and off-ramps depending on how the numbers are unfolding. In some ways, although I would not want to make the Department of Finance's arguments for them, it forces us to pay even closer attention to exactly how the numbers are playing out at the end of the year. It puts pressure on people like Mr. Ross, Vice-Admiral Rouleau and others to ensure that we have opportunities to off-ramp or to on-ramp projects when we see that we are getting a little outside the $200 million zone.
Senator Meighen: I have a supplementary question. Mr. Fonberg, there is quite a spread between 1 per cent and 5 per cent. Does that mean other departments do not have to budget with anywhere near the care that you have to take? That does not compute. It means that not only are you a department like every other department, which this committee is on record as questioning, but also that you are worse off in an area where it is more difficult. You seem to be taking it like a good soldier, shall I say, and making some of the arguments for the Department of Finance. As the chair said, this need to not miss by even the slightest amount has all kinds of negative consequences. Surely between 1 per cent and 5 per cent there must be a meeting ground.
The Chair: Tell us what is on your mind.
Mr. Fonberg: I will tell you exactly. It makes us plan to a much tighter bottom line. We are in discussions with the Department of Finance. Prior to my time, the issue was raised that we would like to have more flexibility. I am not suggesting that we are perfectly happy at 1 per cent, but I understand the Department of Finance's constraint. If they miss their fiscal forecast when things are very tight and if $1 billion were to mean the difference between a surplus and a deficit in any given year, markets would react. All the way back, we were talking to the department. I expect to see a little bit of movement, in particular after the Auditor General's report came out. There is external evidence to suggest that the plan number is too tight, but we will not miss it.
The Chair: Do you have a plan to change it?
Mr. Fonberg: We have a plan to talk to the Department of Finance, and if they are willing, we will get it moved up.
Senator Banks: Mr. Ross, you mentioned that we bought 100 tanks. When was that?
Mr. Ross: We bought tanks from the Dutch in September 2007.
Senator Banks: Can you tell us where they are?
Mr. Ross: We have 20 loaned German tanks in Afghanistan, which are called the A6s; 40 of the older version A4s in climate-controlled storage in Montreal; 40 more A4s in climate-controlled storage in Holland; and 20 Dutch A6s en route back to the German government. They will be brought to the same standard as the loaned German tanks. We will then own the ex-German tanks in Afghanistan.
Senator Banks: Those 20 tanks are a trade-off to the Germans.
Mr. Ross: It is an exchange in kind. We will save a great deal of money by taking battle-used German A6s and making them pristine to give back to the German government.
Senator Banks: We have 20 new tanks in storage in Montreal?
Mr. Ross: There are 40 tanks in Montreal.
Senator Banks: We have 40 tanks in storage in Holland?
Mr. Ross: That is right.
Senator Banks: Why is that?
Mr. Ross: The program had two phases, and I have a very small project team. Their first requirement was to get combat-ready the loaned German tanks with additional protection against mine blasts, against IEDs — improvised explosive devices — and against RPGs — rocket-propelled grenades — and upgrade to armoured recovery vehicles with cooling systems in the tank and Canadian communications. They took those from the German government and got them into combat. That was achieved in about five months.
Senator Banks: Are those 20 tanks now in Afghanistan?
Mr. Ross: They are in service in Afghanistan. They have provided outstanding support to the army in Afghanistan.
That same team, having got the tanks, had to play catch-up to provide all the support that it takes to run a brand new tank, given the technology capability, training of technicians and operators, and spare parts logistics, and get them out to the four operating bases. That was a huge preoccupation. At the same time, we were beginning to think about bringing the older A4 models to operational service. We went to Treasury Board last year and said that we would like to trade the Dutch newest tanks for the German ones. Last May or June, Treasury Board approved the exchange. We are about to release the contract to execute that exchange and another contract that will have the first 20 A4s brought up to full operational capability in the near future.
Later this year, we will release a contract with a Canadian firm to begin the overhaul of the remaining tanks to bring them up to a training standard. Lieutenant-General Leslie will be able to use those in Gagetown and Wainwright. We should achieve the remaining phase two contractual activities this year.
Senator Banks: When will they be completed?
Mr. Ross: The main squadron, which will be an operational squadron, will be done by summer 2010, which will allow the ex-German tanks in Afghanistan to be rotated back to Canada for reset and maintenance. This squadron will go into Afghanistan.
We expect that the repair and overhaul process of the training tanks will take about a year and a half, partially because we do not have any Canadian firms that have any experience with Leopard 2s. They have never seen one or worked on them. So they will have a learning curve before they are effective in doing that repair and overhaul work.
Senator Banks: Is that timeline okay with you and with the people who drive them and use them?
Mr. Ross: I would say probably not, but these are not simple machines. These are very complex machines, full of computers and high-tech technology. The lead time alone on getting a new thermal imager for a sight is about eight months, so whether there is a contract in place or not, you will wait eight months to get a replacement.
Senator Banks: Is that because the supplier cannot deliver?
Mr. Ross: That is because they are produced in small quantities by European high-technology firms. It does not make sense to go to a Canadian firm and build half a dozen thermal imager night sights for our tanks.
Senator Banks: We do not need half a dozen, do we?
Mr. Ross: No. I am saying that the flow-through of those types of technologies will be so small that it would not be economically viable, so we have to continue to work with the original equipment manufacturer, and the lead times are quite long.
Senator Banks: Do we not need a hundred of those?
Mr. Ross: I am not talking about building a hundred. I am talking about if you break one, you have to replace it, and that flow would be a fairly low number per year.
Senator Banks: I will address my second question to the deputy minister, if I may, Mr. Chair.
I know that you know this, because you have heard it before, Mr. Fonberg. When we are in Ottawa, we hear everyone telling us that everything is fine and it is all working fine and everyone is happy and all of the goals are being met; and when we go elsewhere, when we go to Gagetown or Afghanistan or wherever we go, we hear other stories from corporals, sergeants, captains and sometimes colonels. Everyone accepts that there is a certain amount — forgive the language — of bitching at head office. We take that very much into account.
However, there seems to be a disparity with respect to personnel. If I read it correctly, the environmental assessment does not say that everything is okay and that we are meeting our goals. In fact, it says we are not meeting our goals. It says, with respect to the army, that we are 25 per cent below the goal. With respect to the Canadian Forces Marine Command, MARCOM, we are short the equivalent of four ships' companies if they were all to be assigned to sea duty, and the same is true in the air force. With respect to project managers, we are short by two thirds of what appears to be required.
How do we reconcile that information with what we hear in Ottawa, that everything is fine and we are meeting our goals and everything will be okay? How do we do that? We are asking you because this is the horse's mouth.
Whom do we believe? I want to believe you, because you are saying everything is fine and we are meeting our goals and it is going to be tickety-boo. Then strategic assessment says no, we are not, and we are short all these people and we are short all this stuff. What do we do? How do we reconcile that?
Mr. Fonberg: Thank you for the question, senator. We have spent a lot of time trying to get ready to explain how we reconcile that, because I think the testimony you have heard from the generals and the admiral in the last couple of months may sound as though they are in conflict with what we are telling you.
First, I am not suggesting that everything is just fine. I guess what I am suggesting, and I think it is in my opening statement, is that in the strategic assessments you have reviewed, first you have to acknowledge a pretty transparent way to make a budget. We are a $20-billion organization. I have 22 strategic assessments inside my department. The interesting thing is that not one of them is without asks, suggesting that everything is not okay. I need more money this year or I will have to do something next year that will not be terribly pleasant. That is actually what I would expect. If I was not looking at a whole series of needs and requests that were above our budget line, I would probably ask people what it was that they were doing in a planning context.
The Chair: Could we have the other 19?
Mr. Fonberg: However you got the first three is probably the same way you could get the other 19.
I find it a little unfortunate that we budget in this way. I do not think it makes a lot of sense for the organization, but we tend to do our budgets in full public disclosure. I am not sure how Senate committees do their budgets, but we are out there, unfortunately, pretty much baring it all and we do not have a whole lot to hide.
What you get from the army, the navy and the air force is that there is never enough money. My challenge, as the accounting officer for the organization, along with the vice, as the key planner, and the Chief of the Defence Staff, is to deliver a plan for the minister that actually reconciles all those competing demands. Every year there is probably $2 billion above the budget line of evidently irreconcilable demands.
I would have you ask the Chief of the Air Staff or the Chief of the Land Staff or the Chief of the Maritime Staff whether they have problems that are actually not manageable next year or the year after or the year after. I would encourage you to bring the Chief of the Defence Staff here, or the vice chief on his behalf, who argued vehemently, after a lot of work on the way to cabinet with the Canada First Defence Strategy, that there was absolutely enough money in a budget.
By the way, the budget is not just growing at 2 per cent a year; it is growing at 2 per cent a year on top of a budget that has increased by about 55 per cent over the last six years. It is not just that it is 2 per cent against this year's $20 billion; it is 2 per cent against a budget that was only a fraction of that: $12 billion in 2002-03 and $19 billion this year. So it is 2 per cent on top of that starting in 2011-12.
We were convinced, after all the work we did through the Chief of Force Development, through the planners, the costers and all the service chiefs, that there is absolutely enough money on the table to be able to deliver the three key roles the government set out in the Canada First Defence Strategy and the six missions, and that there was nothing out there that would prevent us from doing all of those with a full commitment to excellence.
Does that mean that everyone is getting exactly what they want? No. However, I have to tell you that if people were not here saying that they are not getting exactly what they want, someone somewhere probably would not be doing his or her job.
Senator Banks: I was not actually talking about the chief or the heads of the services, although they have made some of those points too. I was talking about others.
I have to ask you, though, just to pick one example in terms of not what people want but what people need. Where are we with the JSS? What will we do about the Joint Support Ships? That is not something that someone wants; that is something that we have to have or we will not have a navy that works. Where are we with that?
Mr. Fonberg: We will have a Joint Support Ship. We went out with a particular budget and certain specifications. As you are well aware, the pricing came in at a significant premium over that. We do not have that space in the budget, so we are looking at the capabilities associated with that platform. Obviously, we will need a Joint Support Ship, but will we find ourselves in a position before we get it where we actually cannot support our missions? I would be surprised if the vice-admiral or the Chief of the Maritime Staff suggested we would put ourselves at risk in our ability to refuel and move things out there, but I will let the vice-admiral speak to that.
Vice-Admiral Rouleau: The Chief of the Maritime Staff has gone back on the actual requirements for that capability, and the requirements have come back with various options. You have to introduce the issue of shipbuilding at large here as to where the JSS will fit into the shipbuilding policy, and now it is in the hands of finding out what are the options and methods to actually acquire this capability.
Senator Banks: Once those are determined, how long will it be before we can actually get a ship?
Vice-Admiral Rouleau: It will depend on the acquisition process.
Senator Banks: How long does it take to build a ship like that?
Vice-Admiral Rouleau: About 18 to 24 months. Keep in mind that when the full infrastructure was in place, as it was in the 1990s, and with Irving, we were pumping out entire frigates within 12 months of each other.
Senator Banks: But the length of time from laying down the keel to finishing the ship is not the same as the length of time for determining what kind of ship it will be and getting a ship. It will be closer to five years.
Vice-Admiral Rouleau: It will take closer to six or seven years.
Senator Banks: Will we be okay between now and then?
Vice-Admiral Rouleau: We will have to do one more refit of a tanker. We have two tankers. We are about to put one through a major refit, which is normal for major ships; and then we will have to do a second one.
The Chair: How long will it be?
Vice-Admiral Rouleau: It is a year to refit — 12 months.
The Chair: Will we have three Joint Supply Ships at the end of the day?
Mr. Ross: I do not know whether anyone here is prepared to state what the outcome will be. We are looking very hard at the things that drove the costs: the things that the government asked for, the things that represent risk to the contractors, the things that we asked for and the complexity of our specifications, and the things that the Department of Public Works and Government Services asked for in terms and conditions.
Whenever you create uncertainty for a major firm such that there is risk for them, they pass it back to you in the price. We need to understand all of those parameters better. It has been over 12 years since we had a ship contract. We have done a lot of work on that. We will go into the re-procurement of JSS in a better position than we were about two years ago.
Senator Manning: Welcome. This has been an informative session. As a follow-up on the JSS contract, my understanding is that the specifications are being prepared to ensure that the ship is built here, within Canada. Was some concern raised about the possibility that the ship might be built outside of our country? Is that the plan, or are the specifications and all the design work that were put forward still in place?
Mr. Fonberg: A plan to build in Canada?
Senator Manning: Yes.
Mr. Fonberg: We see nothing in our planning framework that would see these ships built outside of the country.
Senator Manning: What types of supply vessels are currently being used? When you look at the design of the JSS, you are looking at other NATO countries, I guess. What would we be looking for in a ship with regard to its type? Is there one in existence today that would be similar to the one that we want here with some minor specifications? Could you elaborate on the planning?
Mr. Fonberg: I will ask the Vice Chief of the Defence Staff.
Vice-Admiral Rouleau: I commanded the NATO fleet for 12 months in 2006, deployed at sea. It was a NATO fleet and did not have a Canadian tanker or JSS type. Basically, we fuelled for the entire year from a list of 15 to 20 different tankers — all different types, all different capabilities, and all additional joint capability. At the end of the day, we were looking for a ship that could provide us fuel and ammunition, if that is what we were trying to transfer. Many designs exist today; some are older, some newer. That does not mean that we will go for any one of them. The options are being looked at right now. There are certainly many designs operating out there right now for fuelling warships at sea.
Senator Manning: The deputy said that the last consideration came in much over the planned budget. Can you give us some feedback on what you learned from that process that is assisting you in the second phase with regard to what we went through in the last process? There is a lot of hype in the country, especially in the shipyards. I am wondering what you have learned from that process, because it appears to have been a learning process.
Mr. Fonberg: There were a number of key factors, given the design of that ship and the requirements that were built into it. Let me turn it over to Mr. Ross, who was involved in going through the entrails of that particular process. He can relate some of the lessons learned and some of the cost drivers.
Mr. Ross: We looked at the cost drivers in three broad areas, the first one being budgeting and being more capable of predicting the effect of inflation and the cost of materials. You are helpless to those factors because the world market drives them — that is, the fluctuation in currency exchange between the European, U.S. and Canadian dollars.
The second major area is actually our shipyards, their labour forces, the hourly cost of labour and the experience of the shipyard itself. They have not done a large ship for a long time. What is the state of the infrastructure there? Will they have to invest several hundred million dollars in upgrading facilities, for example slips, and so on, to be able even to bid?
The third major area was the whole area of how the contract is managed in terms of passing on risk to the contractor, insurance, the liabilities, and financing. No matter what you are talking about — ships, aircraft, and so on — when you push that to a contractor, they charge you back and put it in their price. The greater uncertainty you have in all three of those factors, the greater risk percentage is passed back to the government in the bid proposal prices.
We worked hard at all three of those areas to understand what was driving what we felt were surprising prices back to us on JSS. We have to go out and procure Arctic patrol ships soon, and we need to think about the first class of warships. We need to break the code here and get a better handle on these major pieces going forward. I have a small team of smart navy officers who are highly motivated to understand this because they really want to deliver some new ships to the commander of the navy.
Senator Manning: From conversations that we have had, especially in the shipyards across our country, there is always an element of boom and bust in the industry. One of you mentioned the fact that we have not built a large ship in many years. It takes several years to design and engineer a ship and put the plans in place.
I want to follow-up on your comment on warships. When do you expect to have the first warship commissioned?
Mr. Ross: With the current investment schedule it would take us seven or eight years before we would deliver, for operational testing, our first warship.
Senator Manning: How does that stand with the navy's capabilities to service at the present time?
Mr. Ross: It is programmed that way. As I said, we are spending almost $3 billion in bringing the Halifax class up to a high level of operational capability. The Halifax Class Modernization program is a 10-year program. It is fully under way this year and will go on for 10 years. During those 10 years, we will begin to replace the service combatants with the navy. It is sequenced that way.
Senator Manning: Going back to the JSS for a moment, the number of shipyards is limited. Is it the plan to have specifications to have a ship built in one shipyard? There were discussions last year about spreading the work out across the country for the different components of the ship. You said, however, that the infrastructure needed to do so may not be present in all shipyards. Is that still a consideration?
Mr. Ross: Clearly you would want to build a single class of ship at the same shipyard. The incremental cost of multiple shipyards for the same class, say three ships, is very high. That obviously drives more cost pressure, which is difficult to manage. We have about three shipyards that could build a very large vessel like a JSS. We need to understand what relationship we want to have with which shipyard to do complex ships and non-complex ships and so on. However, you could not split a class between multiple shipyards. It would be unaffordable.
Senator Manning: Would you be at liberty to put forward the possible shipyards that will be available to build a ship the size of a JSS?
Mr. Ross: I believe the association has strong views on where they would like to see a large ship built.
Senator Mitchell: Thank you. It has been very interesting. It is true that you are one of the biggest if not the biggest group that I have seen appear before a committee and it has been very effective. I would say, however, that one thing is obvious: there are no women amongst you. I wonder if you monitor the pace of women's inclusion in the three branches of the military, whether you have figures today that would indicate what percentages and whether you have some particular focus in recruiting women and in retaining them. I think the vice-admiral alluded to this earlier in his comments about rebuilding and getting the people you need
Vice-Admiral Rouleau: I have the statistics here for you. If we think about women in general in the Armed Forces, we are looking at 13.8 per cent. That is overall; officers are 16.2 per cent, and non-commissioned members, 13 per cent. We are in fact within the target goal we wanted to have. Right now we wish to increase those numbers, but we are already seeing success in some elements, not only air force, but land services as well. Recently the first woman has taken command of a major warship on board HMCS Halifax. From a naval reserve perspective, we have had women on board those ships for quite a few years now, dating back at least the last 10 years. We are certainly moving in that direction. These percentages that I mentioned are higher than they were five years ago.
Senator Mitchell: There is progress then.
The point was made by previous witnesses, I believe by one of the generals, that he was able or his branch was able to absorb the increased cost of fuel, which really spiked last year, without extra budgetary request. Is that true, and if so what suffered as a result?
Mr. Fonberg: The three service chiefs have significant operating budgets. I will let others speak to this in more detail. In any given year, depending on what their particular pressures are, they have some flexibility to move from longer- term investments, say in infrastructure, rebuilding a road or a sewer system, to put it into straight operating. They have some flexibility around their maintenance and repair budgets. My guess is that they would have been speaking to their ability to manage within that larger operating budget.
Rear-Admiral Weadon: When the budgets were allocated in April, we were starting to see the trend up in fuel prices. Through the April to September period there was that spike. Prices then fell quite significantly. On the average cost-out across the year, the two large, primary ones that are most affected — the air force and the navy — were able to mitigate that through the year so that when they did their planning in April for what they needed to set aside for fuel they knew what they had in their fuel tanks and when they did their purchases. By the end of the year, as we were doing our normal year-end transactions and getting ready to make sure they would end the year with full tanks, we looked at that area, and both of them came to us and said they did not need any specific amounts.
Senator Mitchell: Did you see anything significant that suffered as a result of that?
Rear-Admiral Weadon: I am not aware of their bringing anything forward or saying that if they do get more money for this they will have to take it from that. In the event that happened, there would always be the resource trade-off. We look at that from a departmental perspective and say we can afford to give you that money or if we do not have that then we look to a lower priority item to take it from. It may not necessarily be from the navy or the air force. We might go to another area of the department and look for those funds.
Senator Banks: May I ask a short supplementary? Was steaming time not affected by fuel costs?
Rear-Admiral Weadon: Not that I am aware of.
Vice-Admiral Rouleau: The deputy minister described the budget management process and how closely and carefully we have to watch this throughout the year. In fact, we have quarterly reviews during which we review with all 22 L1s their demands, and in some cases also what they are returning. Some will come back and say they are returning X amount of money for whatever reason, including not being able to hire the people they wanted or having fewer requirements than expected. They voluntarily return money, so at each one of those quarterly reviews we can do an assessment. The navy and the air force will come to those reviews if they have a demand, such as needing $4 million because of a fuel price spike. Their requirements can be addressed during those actual reviews.
Senator Mitchell: I would like to follow up on Senator Banks' earlier question about the tanks. Of the 80, the 40 here and the 40 in Holland, how many are destined for Afghanistan? If they are, and I assume they are, how can we countenance any delay whatsoever? Given that there is one, when will it be over? When will you actually deliver more tanks to Afghanistan?
Mr. Ross: September 2010. At the point when we need to rotate the ex-German tanks back to Canada for reset and maintenance, we will have the first upgraded ex-Dutch tanks going into Afghanistan — 20 of them.
Senator Mitchell: We have 100 tanks, there are 20 there now, and there will be 20 there a year and a half from now, and there will never be more, it seems to me, than 20.
Mr. Ross: Not to make it more complicated, but we actually have more than 20 because we still have some old Leopard ones.
Senator Mitchell: My point is that you have 80 sitting somewhere over the next year and a half, which will have been sitting there for two years, and the best that we will get out of those 80 is 20 to replace the 20 that in effect are already there. Are we going above the 20?
Mr. Ross: We will have 20 upgraded to a combat status with additional belly protection, RPG all-around protection, Canadian radials, cooling systems — totally what we call a peace support operation optimized, a Leopard 2 tank. That full squadron of 20 will be rotated to Afghanistan. We will bring our ex-German tanks, which are very high standard as well, back to Canada for major reset and maintenance. Of the remaining 60 tanks, 40 will be brought to a training standard, fully serviceable and given to the army for training, and the remaining 20 will be used for armoured recovery vehicles, armoured engineering vehicles and specialists.
Senator Mitchell: Out of these 100 tanks, will 40 be in Afghanistan at a given time, or is it only 20?
Mr. Ross: Only 20.
Senator Mitchell: Out of 100 tanks there will be only 20. Should I be surprised about that?
Mr. Ross: That is exactly what the army's operational concept was from the beginning: four full squadrons, two full squadrons that could go to combat operation. One is in combat; one is in reset and maintenance. Two training squadrons are in the Gagetown and Wainwright high-readiness cycle. The rest are specialists or variants.
The concept was always to sustain a squadron of 20 and to have another available for maintenance and reset and to cycle them. That will occur in September 2010.
Senator Mitchell: Of the 60 tanks, 40 will be for training, so that is two squadrons. What are the other 20?
Mr. Ross: They are specialist vehicles, for example, the tow trucks and the armoured engineer variants.
Senator Mitchell: It takes 100 Leopard 2s to have 20 in the field on a consistent basis?
Mr. Ross: You could look at it that way, yes.
Senator Mitchell: Do you need 40 training ones?
Mr. Ross: Absolutely; about half of them are used for basic and advanced individual training in places like the Combat Training Centre, and the other squadron of 20 is used in high readiness, integrated in the battle group at the Wainwright training facility.
When a battle group goes from Canada to a place like Afghanistan, the whole fleet of equipment they use in an operation is replicated in the high-readiness training cycle in Wainwright.
Senator Mitchell: The implication of General Leslie's frustration was that the tanks are sitting there and cannot be used. You are saying why worry, General Leslie, because you will not net more anyway.
Mr. Ross: No, his concern is that he does not have Leopard 2s for training now. He is frustrated that the contracting process has been slow to bring the training tanks up to serviced condition.
Senator Mitchell: You are fixing that, however.
Mr. Ross: He has to send crews to Germany prior to every rotation to Afghanistan for the advanced Leopard 2 training.
Senator Mitchell: Can you give us a quick rundown on how we are doing with submarines?
Mr. Ross: We have four Victoria-class submarines. The Corner Brook is still fully operational. Two are in major repair cycles, one in Victoria and one in Halifax. The Chicoutimi has been transferred from Halifax to the primary contractor for the new Victoria-class in-service support maintenance contract. She will be the first boat that goes into a deep maintenance cycle in the new contract.
Next year, we will have the other two boats come to full operational service, and we will have two that are operational. In about three to four years, we will have a cycle in which one will be in deep maintenance and three will be operational.
Senator Zimmer: I want to thank all of you for your presence here today. It is quite impressive. Sitting here, I feel pretty safe with all of you there.
Vice-admiral, I want to have you pass on some wishes. Last July, I was on a frigate during an exercise. We went out into the ocean, came back in and ended up in Quebec City on the 400th anniversary of that city. I was inspired by the experience and the adventure, and it gave me a full appreciation of the role that the Armed Forces plays in the grand scheme in our country and around the world. I was inspired by the professional conduct and the commitment of the Armed Forces to our country. The next time you are in their company, please pass on my good wishes and those of Senator Nancy Ruth, who accompanied me. It was very inspiring to be with them.
Also, please pass on my apologies to your daughter, Claire. When we took the picture with General Dallaire, I promised to send it to her, and I will shortly.
Having said that, vice-admiral, compared to other nations, Canada has a relatively small force, so it is important that everyone plays a significant role in contributing to the overall effectiveness of the force. Considering Canada's need for specialized personnel, are there any requirements for aptitude tests in addition to the fitness tests required for all new applicants?
Vice-Admiral Rouleau: There is a full battery of aptitude tests for every applicant coming into the Armed Forces, in addition to the physical fitness. We now bring people in and bring them up to speed when it comes to physical fitness. We look after that aspect ourselves with a step-by-step method. They are extremely well looked after once they join us. Indeed, there are aptitude tests we have to go through. There are minimum education levels that are looked at as well. These are applied across the board from a recruiting perspective from coast to coast to coast.
Senator Zimmer: Rear-Admiral Weadon, Minister MacKay recently stated the following in a video message:
Afghanistan is Canada's single largest recipient of Canadian development aid and our programs for Kandahar are getting more than half those funds.
Can you tell me the monetary value of these funds and explain some of the programs?
Rear-Admiral Weadon: Those aid funds do not come out of the appropriation of the Department of National Defence. They would come out of Canadian International Development Agency. CIDA officials would have to provide you with an answer to that question.
Senator Zimmer: There is talk about having a hotline for soldier complaints to better the working conditions, which would assist with retention. This exists in other countries. Does Canada currently have a similar system in place? If not, please explain your stance in terms of adopting such a system.
Vice-Admiral Rouleau: We have a system whereby every soldier in the Armed Forces has direct access to the chain of command and dispute resolution capability. That is in addition to having access to the ombudsman, should they decide to do so, if their requests, requirements or demands are not satisfied in any other way.
Senator Meighen: Vice-Admiral Rouleau, let us go back to the retention question, because that seems to me to be the essence of the problem.
As has been said earlier, your recruiting is going well and those ads are attractive. They are obviously drawing the response that you had hoped for.
However, for as long as I can remember sitting on this committee, we have heard that you are working on the problem of retention. I do not seek to minimize the difficulty; I know how difficult it is. I know you have taken some steps, but can you elaborate a little more? Unless you get it solved, you are spinning your wheels in terms of raising the numbers in the Armed Forces. You are at a standstill.
The families are one component of the solution, and you mentioned that you are working with them. I am concentrating on the 20- to 30-year veteran, not the two- to three-year veteran who might be there not knowing what else to do in life, a young person who wants to see the world with no intention of staying. However, 20- to 30-year veterans are people who have given the best years their lives, as some would put it, to the military, and they might be experiencing the need to seek a second career, as happens in civilian life as well. Nonetheless, they have made quite an investment in the military.
How much time and effort is your operation putting into finding a solution to this problem? In terms of flexibility with respect to stress and strain, is additional leave a solution? There are sabbatical leaves in civilian life. There must be something to keep those people in whom you have invested and who have invested a large amount of time, sweat and tears.
Vice-Admiral Rouleau: I want to make clear that when it comes to the issue of recruiting, we are doing fine. There is no problem at all in recruiting.
As I said at the beginning, overall we might be meeting our numbers when it comes to recruiting quotas and we are growing the force, but they are still military occupations. Again, all three environment commanders made the point when they came here to testify that some technical MOCs — not all of them — are having difficulty. We are dealing with the same companies; corporations on the outside are looking for that level of expertise. In fact, some of those people have very attractive skills for which they are sought after.
Our job, then, is trying to retain those people. You mentioned quite a few of the items we have implemented. In fact, sabbatical leave is an option being made available to people, because people will want to do something different and then return. That is a fact.
I mentioned earlier the availability of better career options and plans so that after the 20-year mark you do not end up having to sign up for another 10 to 20 years. Now we have reduced the term so they can pick a shorter commitment while still enjoying it. I might sign up for another five years as opposed being caught for another 10. We are trying to provide more flexibility in career patterns. We will give them better career management.
Not only the family but the members themselves want to have a proper tempo of work, and — as you mentioned — to be able to manage stress. When it comes to the family, family housing is very much directed to the places where our military members will have difficulty. It is a challenge to find housing wherever they are posted in our country.
In terms of education for the family, it is not only focused on children. We want to engage with provincial education boards so that we can come up with a method whereby kids moving from one province to the next will not miss anything or be forced to repeat anything as a result of provinces not having the same systems. That is being addressed as well.
With respect to spousal employment, we are addressing, when possible from a government perspective, to make the transition easier. With respect to medical support for our members in uniform, we want them to feel confident that they will be very well looked after, no matter where they get posted, whether in Canada or overseas. In Afghanistan that is one good thing they have. They do not mind going outside the wire and doing patrol because they know that if something happens, they will go and get them. That is a guarantee.
Senator Meighen: Resigning bonuses?
The Chair: We have not had to bring up the 25-cent fine for a while, but "MOC'' is an acronym that some of us might not know, and perhaps people watching may not know. Could you explain that, please?
Vice-Admiral Rouleau: It means "military occupation.''
Senator Munson: When I sat on this committee on a permanent basis four years ago, the same arguments were being made before us. There were actually younger-looking gentlemen, at the ages of 55, 56, 54, and we asked similar questions about that. They seemed to be in an exuberant mood because they were leaving the military to others, yet they had served their 30 years. They had put their time in. They have their pensions.
At that time, listening to them a few years ago, it seemed to me that here you are at the pinnacle of your career where people are really looking, now that you have attained leadership, you want to take it another step forward, keep it and use all of that institutional knowledge to continue to help others. I am hearing the same arguments of four years ago.
For example, yourself, how long will you stay in the military? Are you committed to staying longer than that level where everyone gets their pensions and is happy? Then they move on to the private sector and seem to make more money.
Vice-Admiral Rouleau: If they would allow me to sign up again and do it all over again, I would. For the time being, I will serve for as long as the Chief of Defence Staff wants me to be his vice.
Senator Munson: Should it not be encouragement for the rest of them? The chair talks about sabbaticals and reenergizing people, going to conferences or going back into the field of battle to understand that. We have gone through a generation where many men and women in the military never saw or experienced a combat area. Now we will have these men and women in Afghanistan and elsewhere in the world who are coming back. Not only do we have to be good to them because they have been good to us, but here is an opportunity, with all of that experience in the field — and I think there must be more innovative ways — to say stay on for five more years, even stay into your sixties.
Vice-Admiral Rouleau: That is already in place. You can opt to retire at age 60. Even though 55 is the normal retirement age, that is already in place for that very purpose. In fact, those gentlemen who appeared before this committee, making that argument, made it happen. That is in place right now.
Senator Meighen: What was your answer to retention bonuses? Have they been looked at? Are they employed? If someone signs up for another 10 years after 30 years, do they get a bonus?
Vice-Admiral Rouleau: There were some in place for recruiting.
Senator Meighen: For a tour?
Rear-Admiral Weadon: We have had bonuses in the past for bringing people into the Canadian Forces, but the Canadian Forces has never had — as far as I am aware — a retention bonus, where you would get money, other than possibly for pilots. At one point we had a program for pilots, but other than that we have not paid people to stay other than the generous pay and pension plans we do have.
Senator Meighen: Maybe that is something to look at again.
Vice-Admiral Rouleau: The plan the admiral mentioned with respect to pilots was not a success. As I mentioned previously, money is not the issue. We did that in the past in order to fill that gap of trained people. As you correctly mentioned, it is those people who have had this time in the forces who have the experience, when we talk about reengaging people who have had qualifications before in some of those MOCs that we are short of. There has been some enticement there.
Senator Meighen: I commend you for your efforts. I think it will require some thinking outside the box, perhaps something for the education of their children if they stay in. I do not know. However, we cannot continue to spin our wheels the way we are doing now. I suspect you may agree with me.
I have one further question. I will put on another hat, the one of Chair of the Subcommittee on Veterans Affairs. My question is directed to the deputy minister or Rear-Admiral Weadon. In the subcommittee's report in June 2008 we recommended that the government immediately cease the practice of reducing SISIP long-term disability benefits awarded to veterans by the amount received in a Pension Act disability pension. This paralleled a recommendation of the Armed Forces ombudsman made earlier. This report was tabled in August or July of 2008.
During his testimony in April, Mr. André Bouchard, the president of SISIP Financial Services, Canadian Forces Personnel Support Agency, agreed to provide the committee with the figures asked for in my question. My question to Mr. Bouchard was as follows:
You have given us an estimate of $300 million roughly as the cost, following up the ombudsman's recommendations.
That was going back to 2000, in terms of the so-called clawback. That is allegedly what it could cost to make that up. I went on to say, referring to if we went back to 1976:
Can you give us an estimate of the figure involved in that event?
Mr. Bouchard replied:
We can provide that. It will require a bit of research.
I am sure it would, but I ask you the question because it is a Department of National Defence situation rather than a Veterans Affairs situation. It being now May 2009, I wondered whether work was still being carried out on that question. You could get back to us.
Mr. Fonberg: You did not get an answer to that?
Senator Meighen: No. Nothing.
Mr. Fonberg: I suspect it would be a question that the Chief Military Personnel would have an answer to, so let me ask the vice whether he knows of the work.
Vice-Admiral Rouleau: I am not aware of this, but we will follow up and provide an answer.
Senator Meighen: I can give you more information after the session. Thank you.
Senator Wallin: I have a couple of follow-up questions for Mr. Ross. Once the mission in Afghanistan begins to morph in 2011, we are not exactly sure what that means. Is this permanently moved to off-the-shelf purchases? Is it a more effective way of doing it anyway so it will stay in place?
Mr. Ross: Absolutely.
Senator Wallin: What about the procurement process in general, and whether it needs to be centralized or decentralized — do you have a thought on that and the difference between when we are at war and when we are not?
Mr. Ross: The first part of the question is that we share those responsibilities with three departments and work with the three central agencies on a day-to-day basis, and clearly we work with Public Works and Government Services Canada, who are experts in the contracting function. Our teams are hugely integrated. We work with Industry Canada on the industrial regional policies and benefits, but not as closely because it is not required on a day-to-day, minute-by- minute basis; and both those relationships are full of professional people who work hard at it. It is somewhat different in other nations, but other nations have challenges in defence procurement. It is a very tough business.
The second part of your question, about whether things should change when you are in combat, I think you need to be as absolutely responsive as you can be to get the right types of materiel to your troops when lives are at risk, and we have successfully done that generally throughout this mission.
Could it have been faster on a case-by-case basis? Perhaps it could have. I would offer the view that when you clearly know there is only one supplier, the use of sole source is not necessarily a bad decision, and Treasury Board regulation does allow for that when it is in the public interest and when there is only one supplier and when there is risk to lives at stake. Current policy allows you to do that. I would personally probably have done it a bit more.
Senator Wallin: How much does that speed it up? We keep coming back to this recurring theme because it is about slowness. Eventually you will get it.
Mr. Ross: We have delivered half a dozen major capabilities to Afghanistan in less than one year and achieved it fully competitively. That is not bad, but there was a huge amount of effort and a collective will that certain processes and double-checks and safeguards were still done. I will be the first one to tell you that not every "i'' was dotted and every "t'' crossed, but all of the appropriate approvals were achieved. We would post high-level mandatories on MERX, the Government of Canada website; we would go out with statements of interest and pre-qualification.
In some cases none of them would actually fully comply and we would release the request for proposals to the same people because they are the only suppliers in the world, and eventually we would pick the best possible solution but fairly rapidly. Helicopters, armoured vehicles, Nyalas, armoured trucks, Leopard tanks, UAVs, electronic warfare equipment, survivability upgrades — all of those things were done in less than a year each.
Senator Wallin: The process you describe with the JSS, that you go out, cannot get it and then have to rethink all the whistles and bells you want — is there a way to short-circuit that process?
Mr. Ross: I do not think so. We need to think carefully about how we will do it and what we ask for, under what terms and conditions that imply what risks to the main interested contractors, to which shipyards, to what standards, commercial or military standards. I think we really need to take a few months and think that through.
Senator Wallin: Lieutenant-General Leslie told us when he was here that the out-of-service rates for some kinds of vehicles are over 70 per cent. I do not know whether it is one kind of vehicle or one hundred kinds of vehicles. How common is it to have 70 per cent out of commission at some point?
Mr. Ross: It is a snapshot in time. On any given day the numbers of light armoured vehicles, LAVs, or Leopards that are technically off the road will change. In some cases, I have provided all of those spare parts and he is short some technicians for installation.
Sometimes my engineering staff ask the army to install certain upgrades and modifications to vehicles. They are not broken but have been taken out of the available fleet for, in many cases, safety modifications to be done, just like a recall from General Motors. You have to take your vehicle into the station and they execute that recall.
Senator Wallin: How common would 70 per cent be?
Mr. Ross: I would not want to express an opinion. That would be a bit of a guesstimate. The vehicles are being used hard. They are carrying a lot of weight. We regularly rotate them back for reset, the same as the tank example where you have 50 to 70 LAVs on a ship coming back to Montreal or London, Ontario. They will go through a complete reset or rebuild and come out brand new. You would not recognize that LAV from a brand new LAV. That is an ongoing, continuous process. It reduces the available fleet that Lieutenant-General Leslie has to train with.
Senator Wallin: Mr. Fonberg, my colleague touched on ensuring Canadian-source procurement, when you can. Do we have what you would call any kind of defence industrial strategy in this country?
Mr. Fonberg: We certainly have an industrial and regional benefits, IRB, policy. In some cases, depending on what we have been procuring over long periods of time, it has encouraged the development of an in-Canada presence for some of the major suppliers. A committed funding line was hinted at in the Canada First Defence Strategy, and we have done a lot of policy work on this issue. A committed funding line is extremely important and actually allows us to think out 20 years, to plan out a whole series of procurements, to give Canadian industry a better sense of what we will procure and when.
We have an investment plan that we expect to have approved by the Treasury Board sometime in the next month. Elements of that will be public, so Canadian industry can see how we are scheduling our procurements over the next five to ten years. That allows them to start to get ready for those procurements. It allows us to begin using IRBs in a more strategic way, when we are buying offshore, to get those primes to invest in the right kinds of activities in Canada to help Canadian industry get ready for those procurement opportunities. It also allows us to work on our own early- stage science and tech spending that we often partner with the private sector to help Canadian companies grow to be able to participate in the domestic side of procurements in five, six, seven years. We are also working with Public Works and Government Services Canada on some contracting issues to allow for or enable us to pull some of that early-stage development through into procurement contracts.
Have we been hugely successful in the past? We have had a purely ad hoc approach to defence spending, and it has been, through the 1980s and 1990s, up and down. I do not think we have been great. It has been a bit hit and miss, slightly ad hoc. We have used our industrial and regional benefits policy as effectively as we can.
It is the same as on shipbuilding, Mr. Chair. We have how many billions of dollars of committed funding for ships out of the Canada First Defence Strategy between ourselves, the Coast Guard, and Fisheries and Oceans? A lot of shipbuilding money has been committed by the government. We have a shipbuilding policy, which is the Structured Financing Facility, and a build-in-Canada program. This will actually allow us to look more seriously at streaming the build program out over a 20-year period, avoiding a boom and bust cycle in the ship-building industry, as one of your colleagues referred to. If we are smart about it, this will allow us to minimize the boom and bust cycle over the next 20 or 25 years in the shipbuilding industry. That is a long answer to a short question.
Senator Banks: I will follow along Senator Wallin's line of questioning. I will ask the shortest possible questions in the hopes of getting "yes'' or "no'' answers. I will address them to you, deputy minister, so you can have them sent to whomever you want.
With respect to that last question, this committee is on record as saying that military procurement ought not to be a device used for regional economic development. Do you think we are wrong?
Mr. Fonberg: I guess I would ask why you think that.
Senator Banks: We think the efficiencies that should be attendant on military procurement, particularly when we are at war, as Senator Wallin says, ought not to address that problem. There are other means of addressing regional economic development than by military procurement. I know, and you know, that if we went to a place and put into place that long-term, 25-year process you are talking about and committed to it, we could get a certain efficiency that would not happen if we have to ensure that the buttons come from over here and the zippers come from over there. Everyone knows that.
Mr. Fonberg: I apologize for my quick response on the question.
Senator Banks: I asked you for one.
Mr. Fonberg: However, it was not a "yes'' or a "no.'' My associate would dearly love to speak to you for a few minutes and may want to jump in on this question. I would simply say that if we believed that sacrifices had to be made in the name of regional economic development around the equipment piece, around CP and effectiveness of the Canadian uniforms, then I do not think we, as an organization, have a particularly strong view. We just need the equipment.
Senator Banks: How about sacrifices in terms of the length of delivery?
Mr. Fonberg: On that question, as well, there is a capability issue. With a committed funding envelope over the next 20 years, we believe we can work with the Canadian supply base to get them more ready to participate in the procurement business in as effective a way as offshore folks will be.
Will we get 100 per cent of the way? We probably will not; we will not be building our own next-generation fighter aircraft, but we believe we can get a lot of Canadian companies into position. In that case, they already are. However, even in the shipbuilding business, we can get a lot of companies a lot more prepared to participate in procurements that are actually built locally than are ready today. However, we have to be smart about it.
Senator Banks: I will go quickly. With respect to the JSS, my understanding is that we put out specs and the bids came in higher than the budget had allowed for that project. There are two ways we can do this: increase the budget or lower the specs. Which are we doing?
Mr. Fonberg: I think we are looking at all of the above. If we were to raise the budget, we would not be doing something else. We have enough of a funding envelope; we are living within it. We are trying to ensure the navy has the ability to supply at sea and to keep task forces and fleets moving.
Senator Banks: In order to do that, might we need to have less of a ship than we wanted?
Mr. Fonberg: Less of a ship. We are looking at the capabilities to see what in the design was driving up the price, and if that were to be removed from the design, what would that actually mean for the navy's ability to operate the way they need to in order to deliver on the three rules and six missions the government has set.
Is that an option to look at? Absolutely, it is an option to look at, in my view.
Senator Banks: It is an option to look at if you are talking about building a road or a bridge, but I am not sure about building a warship.
You talked about Public Works and Government Services Canada being experts in contracting for the procurement of things. Are the same contracting requirements that Public Works and Government Services Canada applies to every other aspect of what it does applied to DND?
Mr. Fonberg: Yes.
Senator Banks: Is that right?
Mr. Ross: I do not see anything that would be different between service contracting for Transport Canada and service contracting for me.
Senator Banks: I do see a difference but, as long as they are applying it straight across the board, we know that.
We sent advance notice of some questions, deputy minister. I am sure you have those questions. One was about equipment. How many pieces of equipment exist in the Canadian Forces inventory? I expect this is a question best for Mr. Ross: How many are immediately operational? How many are not?
We gave a list. We have already talked about submarines, supply ships and tanks, but do you have on hand or would you undertake to send us in short order the answers to the rest of the questions we asked about numbers and availability?
Mr. Ross: Perhaps I could give you a summary without going into every small detail.
In terms of the navy, 10 out of 12 frigates are available. We have all three Iroquois-class destroyers, one submarine out of four, two Protector-class AORs out of two, and eight of the twelve Kingston-class maritime coastal patrol vessels. That is a total of 21 out of 33.
Senator Banks: Those are good proportions. And the air force?
Mr. Ross: For the air force, I will cover only eight fleets. Of the Griffon helicopters, we have 49 out of 85. Aircraft fleets, of course, have cyclical, mandatory, major maintenance cycles you cannot vary, obviously. The Cormorant search and rescue helicopter: 7 out of 14. Sea Kings: 10 out of 28. For our Chinooks in Afghanistan, the number varies day to day; today, it is 3 out of 6. Our Hornet fighters: 60 out of 94. Hercules: 16 out of 27. Globemaster C-17s: 3 out of 4. Aurora maritime patrol aircraft: 9 out of 20.
Senator Banks: What are the numbers in the army?
Mr. Ross: I cannot give you availability dates on a day-to-day basis. I can give you totals of the exact; you asked for how many we had. VOR rates change on a day-to-day basis.
Light armoured vehicles — the LAV fleet of vehicles: 644. Light trucks: 5,000. The tanks: a total of 169, which includes the 100 Leopard 2s and the surviving Leopard 1s. There are 2,500 medium trucks; 199 Bisons, which is the eight-wheeled one that does not have a turret on it; 1,300 heavy trucks; and 198 Coyotes, which are reconnaissance vehicles. In terms of artillery, they have a large variety of very old 105 guns. There are 181 of those. They were built during the Korean War, so all but 28 of them are extremely old. We have 16 brand new M777 lightweight howitzers, which are 155 millimetres.
Senator Banks: How many?
Mr. Ross: Sixteen. We took delivery of four this past week.
Senator Banks: Those are mobile, are they not?
Mr. Ross: No, they are towed, or you can lift them with a Chinook helicopter and move them around. Perhaps you have seen them in action in Afghanistan.
Senator Banks: I think we did. Do you have a rough estimate about what proportion of the army list is serviceable at a given time? We have heard that in tanks, it takes 60 to ensure you have 40 that are fully operational. Is that an approximate across-the-board number?
Mr. Ross: I think it is similar to the conversation we had about people; if you commit 100 to combat, you will need another 500 that are moving, resting, been there or training up to replace the existing contingent; a ratio of one in five is normal.
Senator Banks: For people and stuff?
Mr. Ross: Yes.
Senator Mitchell: Of the 20 Leopard 2 tanks that are in Afghanistan right now, not all are operational, are they? What is the attrition rate, and how many are not operational?
Mr. Ross: If I give you detail here, I am giving you classified battle damage information.
Senator Mitchell: I am not looking for that. Assuming there might be some that are not operational there, and we still have the 80 elsewhere waiting for various contracts, what is being done to make sure that the contingent in Afghanistan is replenished as quickly as possible? It is one thing to say 20 is okay and you need all this backup, but if we do not actually have 20, what are we doing about it?
Mr. Ross: I would just say that the availability rate of the Leopard 2s in Afghanistan is high. We work hard to ensure there are no power packs or sights or anything deficient on that fleet. Initially, we were going to go to Afghanistan with the Leopard 2s for two years. The mission was extended to the summer of 2011, and with no major maintenance, that is not realistic.
We rotate most of our light armoured vehicles, LAVs, every year and a half to two years for major maintenance back in Canada. Obviously, we will have to rotate those ex-German tanks for major maintenance; that is due next summer. We will begin to put upgraded former Dutch tanks in next summer.
Senator Mitchell: You cannot assume that no tanks will be damaged irreparably between now and next summer.
Mr. Ross: I am not making that assumption.
Senator Mitchell: Do you have a contingent to replace them between now and next summer if that was to occur?
Mr. Ross: The commander will have to manage that on the ground.
Senator Mitchell: He has only 20 there, so if one is destroyed and cannot be resurrected on the ground, what does he do?
Mr. Ross: We will still, through major prepared overall, do battle damage replacement and repair, as we do with LAVs and other vehicles. Wheels are blown off LAVs routinely; they have come back for reset and they are returned like new. If road wheels blow off a Leopard, it will be refurbished and brought back like new.
Senator Mitchell: I was there and I saw a Leopard that had way more than just a tread or a wheel blown off.
Mr. Ross: A Leopard is a complex machine. The chassis is the cheapest part; the turret is what is important.
Senator Banks: I will ask one more question. I have to observe parenthetically that this committee is happy that the original plan to scrap tanks and go to mobile gun systems did not happen, as we said at the time.
We sent you one other question, having to do with personnel. We asked that, as of March 1 or a later date, which would be even better, could you please provide Canadian Forces personnel figures that clearly indicate the shortfalls or surpluses of Canadian Forces regulars compared to authorized establishment staffing levels in calculating navy personnel, to use the equivalent rank. Have you undertaken to find those answers and can you send them to us or can you tell them to us now in respect of the various ranks, beginning at captain?
Vice-Admiral Rouleau: I cannot provide that right now, but I can certainly take it on and get it to you.
Senator Banks: We asked that it be broken down on the basis of captains, majors, lieutenant-colonels, master corporals, sergeants, and most important of all, warrant officers. You can get that list from a transcript of this meeting. If you would send those to the clerk of the committee, we would be grateful.
Senator Tkachuk: I have a couple of follow-up questions on issues raised by Senator Wallin and Senator Banks. On the question of the out-of-service rate, which has taken up a considerable amount of time, the Chief of the Land Staff said that in some cases, it was up to 70 per cent. Do you have a sense of how the out-of-service rates for Canadian vehicles used in Afghanistan compare with the rates for other NATO allies in the theatre? I do not know who can answer that.
Mr. Fonberg: I could not give you any specifics with regard to allies there. Perhaps the vice-admiral can, but I do not know.
Vice-Admiral Rouleau: No, I do not have this.
Senator Tkachuk: Does the military keep track of that kind of stuff or do you follow that? Do you want to know how you are doing compared to the other guys?
Mr. Ross: I am not sure the other allies would share that information. Our availability rate of our equipment there is very high. We maintain it to a very high level, and we have operational stock and maintenance stock to replace a vehicle that is broken on an immediate basis.
Senator Tkachuk: The war in Afghanistan has had a considerable impact on the military in terms of training and equipment. Could you tell us how has it reshaped our military, and will these changes be long term? Will they be helpful in the future, or do they meet needs that are unique to the current mission?
Mr. Ross: That is a very interesting question. We have tracked, from effectively January 1, 2006, every incident that has affected our equipment with a technical detailed report, with digital photos and so on. We want to understand the threat as it evolves — what the threat was, what damage effect it had on our equipment, the effectiveness of our personal body armour, helmets, weapons and so on.
Lieutenant-General Leslie's operational requirements staff have worked hard in thinking through those insights into the requirements going forward. We are factoring those into future equipment statements of requirement, effectively because what is asymmetrical there is symmetrical. It is there and you will see it many places you go around the world in the future. For equipment that was designed for the Cold War, for direct fire, the direct fire is an issue in this requirement, but the threat is much more complex. It adapts rapidly and it is very dangerous.
That has huge impacts in vehicle design, in personal body armour design, in night vision equipment and information technology. I would have to say we are learning a lot and we are thinking about it very hard.
Senator Tkachuk: How about in terms of training?
Vice-Admiral Rouleau: In training, it is the same thing. We do have lessons-learned capabilities right now that start immediately in theatre. Whenever there is an incident, there is a lessons-learned initiative that starts immediately so that we capture that. We can impact the training of those who we know are currently undergoing the collective training to be the next rotation. Everything, as soon as it happens, is brought back to Canada and has an impact on how they will train. Whatever they need to change in the training is put in place with not only those in theatre, who actually change whatever they have to change based on that, but those training here at home.
Senator Tkachuk: Can you give an example or two?
Vice-Admiral Rouleau: I would say probably the evolution of the medical capability that the troops have when they go out on patrol. I am sure that when we started we were not at the stage where we are now, where every patrol goes with a certain number of people, with certain abilities well beyond what we would normally do in first aid. These people are trained, and that has been put in place because of lessons learned. Unfortunately, the first ones got hit. If we had had that ability, we would have done better. That is already in place.
Senator Tkachuk: It has been a long time since Canada was in a war where we had many troops coming back to face new challenges and who have given great sacrifices for the country. What have we learned with regard to the wounded and disabled? What did we assume that was untrue and what are we doing about it? What changes are we making to adapt to today's medical knowledge?
Vice-Admiral Rouleau: That would cover mental health issues of soldiers coming back with post-traumatic stress disorder, PTSD, and also our ill and injured soldiers who have lost a leg, two legs or two legs and an arm. Quite a few soldiers are coming back after being seriously injured. We have put in place a Joint Personnel Support Unit in addition to the medical care they receive when they return to Canada.
JPSU is a system that will look after them because of their special status of injured. They have to go to rehabilitation. Someone will be following up on them and ensuring they get the maximum possible rehabilitation to be able to carry on. That was not in place before. In terms of lessons learned, we have to look after those people.
Senator Tkachuk: If a soldier is from Saskatchewan, does he get treated in Saskatchewan when he comes home? What happens to an individual soldier? Does he go to a particular hospital?
Vice-Admiral Rouleau: We have found that soldiers who have to get into a rehab environment react and do better when they are with their home unit. This is the approach taken currently. We keep a close eye on their specialized requirements and make sure they receive them with the aim of keeping them within the environment of their home unit as much as possible.
Senator Tkachuk: At the beginning of your presentation, you said retention methods were changed so that people would not leave during training during boot camp. Has it been made easier or were the changes more substantial?
Vice-Admiral Rouleau: We have not made it easier. We have not lowered the standards. We have not reduced the demands on recruits. We have simply changed the approach with new recruits, young Canadians who join us, to ease them into the requirement of what boot camp and military life are all about.
Senator Tkachuk: How are they different?
Vice-Admiral Rouleau: How?
Senator Tkachuk: Yes. If you had to change your approach to retain recruits, how are the methods different from those you had 10 or 20 years ago?
Vice-Admiral Rouleau: If you were to picture the older days of boot camp where recruits were yelled at as soon as they walked off the bus, that is not the approach taken currently.
Senator Tkachuk: It is more tender loving care?
Vice-Admiral Rouleau: It is a more personal approach without lowering requirements, standards or the level you want to bring them to physically and emotionally.
Senator Mitchell: To return to the discussion of the tanks, assume we have 20 currently. If three are absolutely destroyed between now and the time these others are up and running, what could be done, or is being done, to replenish those? If nothing is being done, is that because the contracts have not been let? Is there just not enough urgency to it yet?
Great effort is being done on the ground, but we were there and I saw one tank that probably would not be fixed.
Mr. Ross: Several have been damaged, as you know. We will work with the German government and the original manufacturer to do a detailed assessment of whether the hull or part of the hull could be replaced. There is no battle damage to the turrets on those tanks, and that is where 80 per cent of the value is. We have not taken any final decisions on whether economically that is the right course to take.
For example, we have criteria for badly damaged light armoured vehicles to determine whether to write that vehicle off or whether it is economical to repair it. If you twist the entire structure of a LAV, you have largely lost it all.
Senator Mitchell: There is much talk and probably some drive, although I am not sure how much, about using the military more to establish a greater presence in the North for Canadian sovereignty. We would not be using the military for defence purposes there, so why not defer to the Coast Guard as we have recommended? Are you experiencing pressure or requests to begin to look to an increased military presence in the North? Would you recommend deferring to the Coast Guard?
Mr. Fonberg: We are clearly anticipating a role for Canadian Forces in the North going forward, given not only this government's commitment, but the statements about Arctic sovereignty and the need for a presence there. The debate is around the Coast Guard versus the navy. We are currently planning on being engaged in the Arctic. We are looking at the Arctic patrol ships that the government committed to in 2006.
In terms of the overall presence plus the issue of the Coast Guard versus the Navy, I will turn to my associate who focuses on those files.
William F. Pentney, Associate Deputy Minister, National Defence: Regarding the roles that the forces will play and will be expected to play in the Arctic, it is important to understand from the beginning that we already cooperate with the Coast Guard and many departments and agencies off both coasts and will continue to cooperate with them in the North.
For example, we have primary roles with respect to search and rescue. With more activity in the North, there is the likelihood of more opportunity and requirement for search and rescue and the need to have the capabilities to do that. We need to maintain a presence and the capability to operate in the North. The Arctic warfare training centre was created to enhance training so that Canadian Forces can operate either in a defensive posture or if needed in humanitarian and other roles they play in the South. The capability we are enhancing is the ability to go to cold places far away and live on the land for a period of time to do the kinds of thing that Canadians expect the forces to do.
Building the deep water facility in Nanisivik will serve the Canadian Forces and others as well. Investments in basic infrastructure will not see the Canadian Forces eclipsing the role that others can play. They will allow us to continue to cooperate with others in a substantive way.
The key question around the Coast Guard has been the extent to which there will or will not be multi-year ice and the capability to operate in a multi-year ice environment. The projections you, other Canadians and the world have seen about the extent to which multi-year ice is receding in the North makes it a prudent planning assumption that multi-year ice will continue to be a challenge, and that challenge will be met by the Coast Guard primarily in terms of supply and accessibility.
It is also a fair planning assumption, by 2015 or 2020 and onward — which is our time horizon now — to start planning for a requirement to have patrols, to have a presence and to be able to operate in a context where multi-year ice is not the primary impediment.
We will continue to watch as all of this evolves. If you brought a panel of scientists equally large in front of you, they would have had a set of projections two years ago that will look dramatically different from projections from this year or last year.
Senator Banks: If we brought a panel of scientists in here, there would be five people and 11 opinions.
Mr. Pentney: We could try economists after that and finish it off with lawyers.
We are continuing to monitor it. Building capability, making investments to ensure that we have the infrastructure, training and capability to operate and looking at how we effectively cooperate with the Coast Guard are the planning assumptions that we are making. For us and for the Coast Guard, it is not an either-or proposition. Rather, it is about how we can operate more effectively in the North.
Senator Mitchell: There is a consistent disconnect that is inevitable and widespread in all governments, I am sure. In this case, it is evident between the level of political demand, the level of policy demand on the forces and what the forces can actually execute and deliver. The question arises as to who makes the decision and who does the triage when something has to give as a result of being asked to do more than the platform for which you have been funded. This is a general question. Would the Chief of the Land Staff agree with the funds that he or she receives? When they cannot meet the demand, who decides that what has been expected or requested will be met at only 60 per cent, 70 per cent or 80 per cent? How is that reconciled?
Mr. Fonberg: That is a great question. I will start and then perhaps turn it over to the vice-admiral. At the end of the day, those at this level who did not agree with their budget allocation likely would be in a position, if the issue were severe enough, to resign their jobs because they would not be able to deliver what they were being asked to deliver. That is back to the point we talked about earlier. In some ways, these are irreconcilable but ultimately reconcilable demands, because Parliament appropriates certain amounts of money. We have committed to the government that we would undertake to be excellent at home, to be a strong partner continentally and to show leadership abroad. We undertook in the Canada First Defence Strategy to go through these six missions, some of them simultaneously. We, as a senior cadre, agreed with cabinet and the government that the funding would be adequate to fulfill that commitment.
Therefore, how do you make a budget reconcile what appear to be contradictory demands overall by effectively making choices to deliver on what you commit to deliver on but not necessarily having everything you want in that context? In my view, it would be a key role for the Chief of the Defence Staff.
The vice-admiral can speak to this because he supplies military advice to the government through the minister and to the Prime Minister of Canada. When the Prime Minister looks at sending uniformed Canadian Forces abroad, the Chief of the Defence Staff will provide military advice as to the ability of the Canadian Forces to undertake such a mission. I am not sure that I would want to be in a position where the Chief of the Defence Staff is saying we cannot do the mission while the Prime Minister is saying that we can do it. I would not have any problem being on either side of that fence. It is the responsibility of the Chief of the Defence Staff and the Prime Minister, as the head of government, to decide where he would like to send Canadian Forces. If they cannot be sent in a way that is safe and sustainable, then I suspect the Chief of the Defence Staff would say that we could not do it. Vice-Admiral Rouleau is better able to answer that than I.
Vice-Admiral Rouleau: The Chief of the Defence Staff would do that based on advice coming from ministry environment commanders who say whether and to what level they can accomplish the task being asked of them. The Chief of the Defence Staff would make the ultimate decision to go back to government on the issue.
Mr. Fonberg: If I may, I will add one more small detail. Who decides on the dollars? At the end of the day, as the accounting officer, I decide on the allocation of the budget based on the planning process that the vice-admiral presides over, including the reconciliation of the competing demands. As the accounting officer, I am ultimately answerable for the entire appropriation. My chief financial officer, under new Treasury Board policy, is the critical point person in terms of keeping us within our funding envelope, as you would expect.
Senator Meighen: I will explore that further and ask you to explain something for my benefit and that of our listeners. You have explained about the Prime Minister and the Minister of National Defence. Going down the ladder, we come to you and the Chief of the Defence Staff. Who carries the ball at that level and is ultimately responsible for a decision? The Chief of the Defence Staff presumably indicates the kind of military equipment required for a mission, within the budget envelope. If I am wrong, tell me. What decisions does he make? What decisions do you make? When the error occurs, who says, "Oops, we will do better next time''?
Mr. Fonberg: Again, I turn to Vice-Admiral Rouleau to talk about the planning process. It is not a question of the Chief of the Defence Staff saying that he needs a certain kind of equipment. These are sophisticated planning processes for large capital investments based on the capabilities required by the Canadian Forces. Someone in a document said that we are making 10-year, 20-year and 30-year bets about what we will need to be a combat-ready, flexible, modern fighting force. The military does capability-based planning based on the various scenarios and various threats ahead. We bring that back as how we see the world unfolding, and the investment process is driven by what we have today and what we need in the future.
Out of the planning process, we went through the governance changes required to be fully compliant with Treasury Board policy on financial management governance. It is clear that with a rigorous, transparent planning process, I, as the deputy minister, advised ultimately on the planning piece through the vice-admiral and on financial availability and sustainability through the CFO, will always end up making the right decision. If I make an apparently wrong decision, the Prime Minister can ask me to leave my job, and the Chief of the Defence Staff can go to the minister and ask for that to happen. The minister or the Prime Minister can do that. I serve at pleasure, as you know.
We are essentially two independent organizations with two distinct sets of accountabilities under the National Defence Act. They come together by exercising accountabilities and, ultimately, by understanding one other and by having an integrated headquarters with a rigorous, transparent planning process built on a long-term view, given that we are making long-term investments.
Senator Meighen: Are you satisfied that you have that?
Mr. Fonberg: Absolutely.
Senator Mitchell: On finance, the Auditor General made a comment about certain oversight issues. I understood that there has been discussion within DND about establishing a CFO and a defence finance committee. I notice that you refer to the rear-admiral as your CFO. Has that been partly established or is the reference to something else?
Mr. Fonberg: First, the rear-admiral's CFO position has traditionally been the assistant deputy of financial services, who has been a civilian. The civilian who preceded Rear-Admiral Weadon was promoted to become his predecessor in the department a couple of years ago as we cast about for a capable chief financial officer, although he was not named as such at the time. The good admiral stepped into that breach and did a remarkably good job. He is retiring in less than three weeks. It will be a huge loss for us.
Senator Banks: How about retention?
Mr. Fonberg: We have tried everything. To answer the question, we knew that the Treasury Board policy on financial management governance was coming into effect on April 1. The Auditor General had done her audit going back to 2007-08. In the context of finalizing that audit, she looked at our structures and expressed concern that we were not in a position to be compliant with that policy because we did not have someone who was vested with all the authority required under that policy as a chief financial officer. We moved to that model, which we announced about one month ago, and created a departmental finance committee, which I chair. I am supported by the vice-admiral and the CFO. My associate sits on that committee, and the Chief of the Defence Staff is ex officio on the committee. In that capacity, I discharge my responsibilities to make the resource allocation decisions, but it is based on an extremely rigorous long-term and short-term planning process.
Vice-Admiral Rouleau: You described that very nicely. In fact, this is what makes the level of credibility that we have with central agencies when we come up with our submissions and our processes as to how we go about that. The work that I do as a chief of staff of the headquarters for both the deputy minister and the Chief of the Defence Staff is, as I mentioned a minute ago, how we decide what we want to buy. My team does the planning aspect of it to support the environment and the demand of major capital acquisition, human resources and infrastructure. We put the plan together and work very closely with the CFO, from a financial resource management perspective, to the deputy minister. If it has something to do with Armed Forces issues and capabilities, the chief gets involved in that as well.
Senator Moore: I want to ask about the Arctic and the JSSs that Senator Banks touched on. Nowhere in the Canada First Defence Strategy is there a commitment to maintaining Canada's naval capabilities off our coasts and around the world as well as increasing our presence in the Arctic.
You mentioned, Mr. Fonberg, that the budget is not increasing. If it is not getting larger, particularly at a time when our vessels are aging, can you tell the committee how Canada's naval presence will not diminish elsewhere if it starts focusing on the Arctic?
Mr. Fonberg: Yes, I am a little surprised. Was there not a reference to the Arctic in the Canada First Defence Strategy?
Mr. Pentney: There was not with respect to the Arctic.
Mr. Fonberg: I will turn it back to those who know the navy very well, the vice-admiral, in particular.
Regarding the funded programs in the Canada First Defence Strategy, along with those platforms that were funded prior to the strategy, including the Arctic patrol ship program, and then on top of that the Coast Guard icebreaker that was announced and funded, which is not exactly a naval presence, I believe my colleagues would argue that those will ensure the kind of presence we need without diminishing the navy's ability or presence elsewhere in the world.
Mr. Pentney: The Canada First Defence Strategy document itself committed to recapitalizing the navy by a new class of ships, Canadian Surface Combatant. Previous to that, the government committed to Arctic offshore patrol ships.
The defence strategy also talks about the next generation of capabilities. We have talked about the Polar Epsilon project in terms of space surveillance. We have RADARSAT abilities. The ability to know what is going on off the coast and in the North will be enhanced in the next 10 to 15 years.
The commitment to excellence at home in the Canada First Defence Strategy is contingent on being able to maintain a naval presence on both coasts while also operating in the Arctic. The commitment to excellence at home requires that these missions — the search and rescue mission, the naval patrol mission and the naval support mission — continue to be played in support of other departments and agencies. All of these are contingent on rebuilding the navy over the long haul: the Halifax Class Modernization, the creation of the Arctic offshore patrol ships, the JSS and then, over the longer haul, the commitment to recapitalizing the core naval fleet, namely frigates and destroyers, all of which will maintain a presence off both coasts and in the North, as well as the subs, Polar Epsilon and whatever comes next in the next generation. In 10 years, goodness knows what kind of satellite technology we will have available to maintain the situational awareness.
Senator Moore: We have had evidence in the past as to the number and the types of vessels required by the navy. I do not have that brief with me, but you would know what was in it as you are the people who procure this equipment. Will all of that happen as well as what is supposed to happen in the Arctic?
Mr. Pentney: My understanding is that the Canada First Defence Strategy represents what is viewed as necessary over the long haul to maintain the naval presence within that constellation. It will not only be a naval presence. It will also be air and land. One of the inherent choices in the defence strategy is to maintain a balance among the three elements to fulfill the missions.
Senator Moore: Being from Nova Scotia, I would like to focus on the navy requirement. Regarding the Atlantic coast, as I said before, we had detailed evidence about the vessels required. I have not heard of any contracts being let. I do not know who will build them, where or when. I do not know when all that will happen. Is the Arctic the priority over them? Where is all of that?
Vice-Admiral Rouleau: Are we talking about additional ships? I think the assistant deputy minister described that the Canada First Defence Strategy was all about the long-term view when it comes to coast to coast to coast going north. We have increased our presence there, and it is now routine to see warships heading up to the Arctic. All of our classes, including frigates, coastal defence vessels and submarines, have been up there. Auroras regularly patrol up there, and there is an increase in the land element as well. That is routine right now.
Senator Moore: I want to quote Foreign Affairs Minister Cannon. On May 14 of this year, he said that recent steps taken by Canada to bolster its military and marine infrastructure in the North "will ensure that the Canadian Forces are prepared to address future challenges and respond to any emergency'' that unfolds.
He went on to say that the defence strategy will help the military "take action in exercising Canadian sovereignty in the North,'' highlighting plans for a fleet of Arctic patrol ships, a deepwater docking facility at Baffin Island, an Arctic military training centre and the expansion of the Canadian Rangers.
Can you tell the committee the status of each of those important four projects?
Mr. Pentney: I will provide you the status. Arctic offshore patrol ships are at the development stage. We are finalizing the plans. We will be coming forward with proposals. It is a unique ship we are creating.
The Canadian Forces Arctic Training Centre has been stood up. The first training activities have occurred at the centre; full operational capability is expected for that facility in 2014. The Nanisivik berthing and refuelling facility has had initial site studies done. Construction work will begin in 2011. We expect it to be operational initially in 2012 and fully operational by 2015, appreciating that Arctic seasons are short and there is a fair bit of work to be done to ensure we are meeting the environmental and planning standards as well as developing something that will be effective.
In terms of the expansion of the Arctic rangers, efforts are underway now to expand the rangers by 500, according to the plan. I do not know the date of the final expansion. There are efforts underway expand both the Canadian Rangers and the Junior Canadian Rangers program.
Vice-Admiral Rouleau: I do not have specific dates for those, but it is under way.
Senator Moore: Mr. Pentney, I heard you say something about a 2015 to 2020 timeline to have a presence. You mentioned something about the docking facility being ready between 2012 and 2015. What is going out to 2020?
Mr. Pentney: Mr. Chair, I was speaking about our planning horizon for when we will need to have a greater presence in the North building toward what is anticipated there. In the North we anticipate more people, more ships, more development and more activities that will impact both the people already living there and those who will be moving there. Our planning focuses around that, as I think others do, in terms of resource development and other things.
Our time horizon is looking at building capabilities now with a view to the longer term as well. I was speaking about the planning and operating assumptions that one would need for multi-year and single-year ice as well as with respect to search and rescue and other capabilities and presence.
Senator Moore: It seems that Canada and the United States of America have a mutual interest in the Northwest Passage. I know that we dispute one part of the boundary by Alaska, but are we working together at all in terms of providing military surveillance and regulation of use of the waterway? Is there any kind of mutual approach to this?
Mr. Pentney: Canada cooperates with the United States to a great degree in search and rescue and Coast Guard activities in the North and otherwise. The two countries have had discussions about resolving the dispute about the Beaufort. We will see how that unfolds. Canada is an active member of the Arctic Council. We cooperate not only with the United States but also with the other members of the Arctic Council in trying to advance our interests.
Senator Moore: I was thinking more about cooperation on facilities, equipment and mutual interest, rather than everyone spending their dollars doing the same thing. Is there a North American approach to that?
Mr. Pentney: NORAD, the North American Aerospace Defense Command, is probably the best example of North American cooperation to ensure surveillance in the North. There may be other ways in which we could cooperate, but NORAD is probably the best example of working together for defence of the North.
Senator Moore: Are our American colleagues encouraging us to build a base there to which they could send people for training? Is any of that sort of cooperation happening?
Mr. Pentney: I am sure we would be happy to welcome the American military, and perhaps other militaries, to our base in our internal waters to refuel and undertake training. I am not aware of whether the Americans are encouraging the building of a base there. We could undertake to check on that. I am not aware of whether we have conducted cooperative training with the Americans. I know that they conduct training in Alaska.
Senator Moore: I want to touch on the joint supply ships. It has been nine months since the Minister of Public Works announced the termination of the initial procurement phase of the JSS. It was recently reported that DND stated that the project is not cancelled and that they were conducting an options analysis to determine the way ahead.
Given that this capability is already late, can you provide the committee with the status of your options analysis and tell us when you envisage the first JSS to be ready for naval operations? I would like to know when we will start building it, where, and when it will be fully operational.
Vice-Admiral Rouleau: We are currently reviewing the capability options we want. At the same time, we are reviewing the acquisition options we want, all in the context of the overall shipbuilding strategy in Canada that was discussed here with regard to the long-term impact that will have in Canada. JSS is part of that.
Senator Moore: Would you not have already decided on the options you want? I thought that was done. I thought it was delayed due to budget.
Chair, I thought we heard evidence in the past of the capabilities these ships were expected to have. Are we still looking at that?
Vice-Admiral Rouleau: That is correct. We are reviewing those capabilities in light of the shipbuilding context in which we found ourselves when we received two bids for JSS that were overpriced. We are now looking at that from a capability perspective and also within the context of the discussion that is taking place at the national level with respect to establishing a proper shipbuilding capability in Canada. That will play a role in that domain.
Senator Moore: How long have we been looking at that? Has it not been a couple of years for the JSS? I think it has been a couple of years since we first had this before this committee.
Vice-Admiral Rouleau: That is correct.
Senator Moore: I have no feeling of comfort from you or from the intervening witnesses that we are closer to the reality of having those ships built, operational and crewed.
Vice-Admiral Rouleau: You are absolutely correct. That is why, when we received two non-compliant bids, we had to ensure that we had the correct capability options, and we had to find a way to acquire those vessels.
Senator Moore: If you were at the point of deciding between two final bids, would most of the options and acquisitions work not have been done? Everything you did before was not wasted, was it?
Vice-Admiral Rouleau: No, far from it.
Mr. Ross: When you have an unsuccessful process with bids dramatically exceeding your budget, you need to do a comprehensive review of your process. You need to think about whether you had your budget right, for what ships and with what capability. You need to review whether your process was right, whether you passed on too much risk to prime contractors who passed it all back to you in their prices. You need to review what you were asking for in terms of commercial and military standards and what you were asking for in terms and conditions and, in some cases, very detailed plans. You need to consider whether you should be asking the prime contractor or the shipyard for that, or whether you should have an engineering study to provide that internally.
Those are eight or ten things that we need to think about before going out with another budget and another specification for the navy ship, because we cannot risk having another unsuccessful process.
Senator Moore: I realize that. How much of the planning and background work that you did to get the two bids was good? Was 80 per cent or 90 per cent of it good?
Mr. Ross: It was all good and extremely useful in the context of that ship requirement with that budget, with the terms and conditions and risks that we had asked for. It is very useful to think about what it would look like if we did it again. We need to be sure we really understand the choices.
Senator Moore: This process always seems to come up with the various elements that appear before us. What is the timing now? I want some dates. What is the timing for getting the request for bids back out, for commencement of construction and for completion?
Senator Manning: I wish to raise a point of order, Mr. Chair, if that is allowed. Senator Moore, we asked many of those questions earlier in your absence, so I am not sure our witnesses need to answer those again.
Senator Moore: I did not realize that. Nobody told me. Is there a reason you did not jump in, guys, and tell me?
The Chair: In fairness, we did not know how long you would stay on the subject.
Senator Manning: I bring it up just to save some time. We are getting down to the wire now.
Senator Moore: So the dates and so on are all in evidence? I do not have to worry about that?
The Chair: Nothing is clear particularly, other than there was a problem with the price and now they are trying to work through how to find a solution.
Senator Moore: What about a date?
Mr. Ross: In a fairly complex navy program, from contract awarded, it normally takes you about five years to bring a ship into service.
Senator Moore: Are we looking at awarding the contract this calendar year?
Mr. Ross: I would hope that if we see our way through in terms of policies, next year we would put a request for proposals to industry.
Senator Moore: What does next year mean?
Mr. Ross: 2010.
Senator Moore: Within that calendar year or the fiscal year 2010-11?
Mr. Ross: Simply perhaps calendar year would be easiest.
The Chair: He did not say that the contract would be let. He said a request for proposals would be put out. Do you have an answer to the first question that Senator Moore had?
Mr. Ross: From the request for proposals to a contract for complex programs can take up to a year.
The Chair: So next year would be the request for proposals and a year after that —
Senator Moore: It would be 2011 to start construction and then four to five years to complete for the ship to be crewed and sailing.
Mr. Ross: You will find that is quite typical in all navies around the world with major ship construction.
The Chair: Just to follow up on some points that have come up in the past, we talked about off-the-shelf items earlier with Mr. Ross. Navy and ships do not come off the shelf. We are talking about two new classes of vessels: the Single Class Surface Combatant and the Arctic coastal patrol vessel.
It seems that the design of these vessels will be very risky, very difficult, and I would be curious to know how you are going about mitigating the risk for these two new classes rather than looking for a class of vessel that already exists or for plans to build this type of vessel that other countries are successfully using.
Mr. Fonberg: That was for the surface combatant and the patrol ship?
The Chair: Arctic coastal patrol vessels.
Mr. Fonberg: And?
The Chair: These you have described I believe as being a brand new class of vessel; and obviously if we are going to some hybrid between frigates and destroyers, that is a new class of vessels too, not off the shelf. Nobody is building them. We are inventing them in Canada, which does not seem like a good thing for the Department of National Defence and the Canadian Forces to do. Time after time when we decide to come up with something new in Canada, we end up paying a high price.
Mr. Fonberg: I will turn it back over to the vice. I have heard a number of people in the organization argue on the surface combatants, the destroyers and the frigates, the new class that the Canada First Defence Strategy refers to as "common hull, differently configured top sides,'' and people in the organization have said there are designs out there that we could go out and pretty near buy, bring home and build here; so my understanding is this is not a completely new class of vessel, but I obviously stand to be corrected. Patrol ships may be a different issue.
The Chair: At the same time, perhaps we can discuss the risk periods we will go through, the number of years we will be at risk when we do not have the same capabilities that exist in destroyers.
Vice-Admiral Rouleau: When it comes to the CSC, the surface combatants, yes, building a brand new class from scratch is an expensive proposition and very risky. Having said that, I think we have built in the past the Halifax-class frigate, a brand new ship, Canadian-made and very successful, so there is nothing to say it cannot be done.
The Chair: And very expensive.
Vice-Admiral Rouleau: And very expensive, you are absolutely correct, Mr. Chair.
An Hon. Senator: It could not be sold to anyone else.
Vice-Admiral Rouleau: That is also correct.
Looking around at what other ships are being built by other nations, other navies are using ships of the same type we are looking at to replace our frigates and our destroyers. Other navies are using quite an array of existing designs, but this does not mean that you can go and buy that design and say this is what we will use for Canada here.
The Spanish F100 vessel is being purchased by the Australians. It is a different environment to operate those ships from a Canadian context in the waters off the North Atlantic. It is completely different and the ships have to be able to operate safely in that environment in conditions they that may not have to face on the other side of the ocean or down by Australia.
Environmental issues are also part of what needs to be looked at, so a design would have to be "Canadianized,'' but that is an option. We cannot simply take a design and bring it to Canada and say we will just put a Canadian flag on the back and it will work.
The Chair: This is the same process we did with the submarines we bought five years ago?
Vice-Admiral Rouleau: That is correct.
The Chair: Turning to the Arctic coastal patrol vessels, and we are not the first committee to come to this conclusion, it looks like we are heading towards a disaster with a piece of equipment that cannot do either job well. If it will spend four months in the Arctic and eight months on the coasts, it will be problematic in terms of its design. If it can deal with first-year ice, what happens when ice conditions change? Will it be fast enough to deal with patrolling the East Coast or the West Coast? Navy sailors do not have experience with ice. The last time the navy was near ice was in 1957. Since then, you have spent all of your time avoiding ice.
We have a Coast Guard that is very skilled with ice. Tell us how you can come forward with something that can deal with the Arctic effectively and also be fast enough and effective to work off of our East and West Coasts. Also, where will you get the people who have those skills?
Mr. Fonberg: I do not want to let stand the notion that we are headed for disaster. One of the reasons this has been taking time is that we are trying to ensure that we avoid those kinds of problems. We know what the challenges are in trying to build a sort of "Frankenboat'' that does both offshore as well as first-year sea ice in the Arctic. The vice may want to comment on the design side of the equation the navy is working on.
Vice-Admiral Rouleau: The navy is already working on developing what that ship will look like. You are correct that if I were to compare with surface combatants, the designs that already exist are much more limited than what we have on destroyer and frigate, that type of class. However, there are nations that operate some of those vessels. Norway is one of them. Denmark is another that actually operates up to the North. We see them quite regularly. However, at the end of the day, it will be a new design.
The first ship is to be delivered in 2014. That will be the first AOPS, Arctic offshore patrol ship. It will be fairly capable of operating up North and will also be able to operate along the coast. It is a compromise that has to be met. A ship like this cannot be able to operate in first-year ice and still do 25 or 30 knots on the open water. We cannot have that.
The Chair: Six years from now you said we will have the first one delivered?
Vice-Admiral Rouleau: 2014.
The Chair: That is five years. Pardon my math. You do not have a design yet and you do not have a contractor yet.
Mr. Ross: We have fairly well-advanced concept designs, and we have a relatively well-developed request for proposals.
Senator Meighen: Thank you all very much for your evidence today. It has been very helpful and you have been as frank as you can be.
I do not think there is an answer to this today, but I am still concerned about the procurement process. I am not satisfied that we have made significant changes that will result in a quicker process. I am cognizant of the fact that these things are highly complex and do take time.
Whether it is the authority to approve up to a certain level, this committee has recommended that it be increased. The Minister of National Defence, at least, should have that authority, we suggested. I do not know if it is a different authority for you, Mr. Fonberg, or whether your authority has been increased. There has been some inflation over the years, and at the very least it would seem to me, in the interests of time without sacrificing quality, we have to cut out some of the lower-level staff work and move on this.
Mr. Ross gave an impressive list of items and contracts that have been concluded. My only concern would be that in some cases struck it seems we went out, found someone who had a UAV, for instance, and said, "Will you provide the UAV for us?'' They said, "Certainly.'' "Will you get it up in the air and bring it back down?'' "Well, it is up in the air, we will fly it around and send it where we want to send it.''
Forgive me, but that does not sound wildly complicated. I am not surprised that that could be concluded quite quickly. If, on the other hand, we were buying — as I am hopeful we would be, at some point — that would be a little more complicated and take more time.
Many of the things you mentioned were things that go back a long time, like the Aurora, or a lease like the UAVs. However, leave that aside and end by telling me where we are with the fixed-wing search and rescue contract. When will we have that plane?
Mr. Fonberg: One contextual comment, if I may.
Senator Meighen: Only one? Be fair.
Mr. Fonberg: It is worth putting in context that in the mid-1990s, I think, the procurement shop under the assistant deputy minister (Materiel) was probably at 13,000 people. Today, it is a shop of about 4,000 people. In the 1990s, it had a run rate on the procurement side of about $1 billion to $2 billion a year. I think we are now hitting stride at about $6 billion a year.
Now, within $6 billion, JSS is not done yet. We would all like to see it done. Fixed-wing search and rescue, SAR, which you are asking about, is not done yet and we would like to see it done. However, just in context, understand what this shop actually delivers on behalf of the Canadian Forces.
Senator Meighen: Forgive me for interrupting, but would you not like to leave the committee with the thought that you have a vastly increased workload with a vastly decreased number of people to do it?
Mr. Fonberg: They do it unbelievably well, with full accountability. You should look at a strategic assessment. A big argument was made for a whole lot more people. We said, "Mr. Ross, you are doing a heck of a job. Keep up the great work.'' However, we actually are staffing up his shop because we have some challenges, and some of these contracts are getting increasingly difficult, or the procurements are getting difficult and complex to get out there.
I will let Mr. Ross speak to fixed-wing search and rescue. There have been a number of dialogues around the high- level requirements because this is a high-level requirements, performance-based specifications approach to procurement.
We are about ready to go as soon as there is consensus on how to proceed. It has been a fairly noisy environment out there with many different people offering up many different aircraft. However, we would look forward to having a public dialogue before very long on the high-level requirements because, by and large, that has been done through various means less than fully public. We would hope to be able to move into that forum quickly, and move from there not long after that to a request for proposals and into a contract situation not long after that.
Mr. Ross: Perhaps I can come back to leased UAVs, which was a fully competitive process, with a full request for proposals, in terms of conditions and contract terms that are equally complex to any purchase. We are the first country in the world that has actually done it. The British and the Australians want to take those terms and conditions and contract structure. MacDonald, Dettwiler and Associates in Vancouver actually buy the same services in Kandahar. The Manley report was delivered in January and they were in operations in the summer.
Senator Meighen: Let me understand, because I did not understand before, that obviously a lease agreement is just as complex as the purchase agreement. Is that correct?
Mr. Ross: Absolutely. It is different, and it is a performance-based lease. Therefore, your basis of payment and all those things are different. You get paid when you deliver something; you get paid when you deliver something every day. I could go on.
Senator Meighen: That may be the way to go. There are pieces of equipment you can get off the shelf.
Mr. Ross: For technology that changes extremely rapidly, it is a good idea, actually.
Senator Moore: May I have a supplementary?
The Chair: It has to be very brief.
Senator Moore: Mr. Fonberg, as part of the process, did you say public consultation? What is that?
Mr. Fonberg: We would like to move into consultation with industry.
Senator Moore: With industry. It is not like Joe Citizen, is it?
Mr. Fonberg: Joe Citizen would certainly have a good look at what kinds of high-level requirements, performance- based specifications, we are looking for.
Senator Moore: Do you want the citizens of Canada to give you ideas and their "yes'' or "no'' on the types of equipment that Senator Meighen was talking about? I do not know bombs from butter. I do not understand that.
Mr. Fonberg: Citizens seem to offer their opinions whether we seek them or not and we actually tend to listen to them because they often have value. Industry will move on that.
Senator Moore: You are the experts. That is your job.
Mr. Fonberg: We will go out with a set of high-level performance specifications we think are appropriate to do the search and rescue mission. Many people will have views and a lot of those views have been expressed in the media over the last six to twelve months.
Mr. Pentney: To be clear, senator, we are not proposing a cross-country, village-by-village discussion. However, it will not simply be a closed-door session with industry. That is not the proposal either.
Senator Moore: I am not concerned about the industry part. I respect that.
Senator Meighen: I have two Senator Banks-type questions, very short.
The Chair: He has not asked a short question since he has been here.
Senator Meighen: Can we do brigade-size exercises? Do we have the budget?
Vice-Admiral Rouleau: The Chief of the Land Staff has his collective training that he requires. He puts in his budget demands to accomplish that. That is what the whole process will call for, if he wants to do that. He is doing that right now in preparation for rotations to send in Afghanistan.
Senator Meighen: It is my understanding we did not have the budget here to indulge in what the army, at least, thinks is very useful. I was wondering whether that budget was in place now or not.
Vice-Admiral Rouleau: We fulfill the complete collective training requirement for the brigade as they prepare to deploy for Afghanistan right now.
Senator Meighen: Senator Banks asked you about various pieces of equipment that were operational compared to the total number of items in that particular equipment slot. Do we have in each and every case people to fly, steer or drive the pieces of equipment, or are we short in some cases? For example, the navy tells us that they are short one or two ships' complements — or four ships' complements, rather.
Vice-Admiral Rouleau: Ships are not staying alongside because they do not have the crews to sail them. Aircraft do not stay on the ground because they do not have the crews to sail them, and the army is certainly pulling their weight in Afghanistan right now. Yes, they are using mitigating strategies to fulfill the missions that they need to do, but they do not have ships or aircraft in Trenton or any base in this country on the ground, unable to fly, because they do not have the personnel to do it.
Senator Zimmer: Vice-admiral, when I think of NATO, I think of Switzerland, pablum and porridge, and none are related. In your vision, what is Canada's vision for how that multilateral security organization should evolve and what should NATO's priorities to be in the 21st century? Should NATO continue to be engaged in security operations outside its traditional sphere, or should it focus on inside?
Vice-Admiral Rouleau: When I commanded the NATO fleet, we were pushing the envelope, basically showing how we could deploy outside the known area of operations of NATO. That was back in 2006, the 12 months I was there. It was one of the first times that we, from a navy perspective, deployed outside of the area.
When I was out there, Canada was deeply involved in Afghanistan, where our current mission is. HMCS Winnipeg is currently doing piracy ops and is part of the NATO deployment well outside the regular NATO area. I think this is the direction we are going. In order for that alliance to remain viable, this is what they will have to do and they are doing it right now.
Senator Zimmer: Earlier this year, France's President Sarkozy confirmed that France will be rejoining NATO's military command, 43 years after former President de Gaulle pulled his country out. What impact do you think that will have on NATO, if any?
Vice-Admiral Rouleau: France is returning officially to the alliance, even though they were present ex officio as part of the alliance. Right now, France is fulfilling its mandate by placing people from their armed forces and also civilian public servants in the various NATO headquarters, to fill their mandate like any one of the other NATO countries. For one thing, it will ease the burden of providing people to fill all those positions when one more nation, and a significant nation, rejoins NATO.
The Chair: On behalf of our colleagues here, I would like to thank the panel very much. Mr. Fonberg, your suggestion to vary the format has paid off in a very useful discussion for the committee. We have had an opportunity to hear views in a more probing way than we might normally, so I am grateful to you and your colleagues for coming today to assist us in our studies.
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Colleagues, just to give our guests an opportunity to depart, we will suspend the meeting briefly and continue in five minutes.
Mr. Fonberg: May I provide two or three closing comments?
The Chair: Certainly.
Mr. Fonberg: First, I would like to thank you and the committee for accommodating a big group here. We welcome the dialogue. These are a number of issues that we could spend more time on and we would be pleased to come back and do that.
There are three little issues I did not have a chance to raise. We talked a bit about the budget and the Canada First Defence Strategy. The other piece of that, which we did not talk about, was that we have this funding envelope that grows by 2 per cent a year, up to $30 billion. In addition, if you look at the Canada First Defence Strategy, the government is committed to fully funding deployed operations. We do not cannibalize our Canada First funding envelope as a result of deployed operations. The incremental cost of being deployed in Afghanistan is paid over and above the envelope.
Second, we are also a large civilian population. You asked about gender balance in the Canadian Forces. Over the last 10 years, out of the deputy ministers who have been in the department, about 43 per cent of those have been females and a little bit under half of my senior executive team are females. I wanted to put that plug out there.
The last thing, although Rear-Admiral Weadon will not say it, I mentioned he will be retiring in three weeks. He is thankful for all the questions he has gotten. In all the committee appearances he has made, he has never been asked a question, so he thanks you for that.
Finally, we look forward, with this group of people, to a report perhaps entitled "Two Admirals, a Couple of Deputy Ministers and an Assistant Deputy Minister.'' We look to you for being innovative. Thank you very much.
(The committee continued in camera.)