THE STANDING SENATE COMMITTEE ON NATIONAL SECURITY, DEFENCE AND VETERANS AFFAIRS
EVIDENCE
OTTAWA, Monday, November 14, 2022
The Standing Senate Committee on National Security, Defence and Veterans Affairs met with videoconference this day at 4:01 p.m. [ET] to examine and report on issues relating to security and defence in the Arctic.
Senator Tony Dean (Chair) in the chair.
[English]
The Chair: Honourable senators, welcome to this meeting of the Standing Senate Committee on National Security, Defence and Veterans Affairs. I’m Tony Dean, senator representing Ontario and the chair of the committee. I’m joined today by my fellow committee members, Senator Jean-Guy Dagenais representing Quebec, Senator Peter Boehm representing Ontario, Senator Donna Dasko representing Ontario, Senator Marty Deacon representing Ontario, Senator Clément Gignac representing Quebec, Senator Victor Oh representing Ontario, Senator David Richards representing New Brunswick. We will be joined by more colleagues who I will introduce later in the meeting.
For those watching today’s session, we are continuing our study on security and defence in the Arctic, including military infrastructure and security capabilities. The topic we’re exploring today is the procurement of Arctic-capable assets.
We welcome to the committee Dr. James Craig Stone, who is Emeritus Associate Professor at the Canadian Forces College, Department of Defence Studies, joining us by video conference. Here with us in the room today we have Dr. David Perry, adjunct professor military and strategic studies at the University of Calgary and President of the Canadian Global Affairs Institute. Thank you for joining us today. We begin the session by inviting you to provide your opening remarks, to be followed by questions from our members.
With that, Dr. Stone, you may begin when you are ready.
J. Craig Stone, Emeritus Associate Professor, Department of Defence Studies, Canadian Forces College, as an individual: Mr. Chair, distinguished members of the committee, I would like to thank you for the invitation to appear before you and speak about procurement of Arctic-capable assets.
I would begin by noting that my academic training or discipline is as a defence economist and in that capacity I have generally written about defence procurement, the defence industry and defence budgets. The focus of that research has not been the Arctic but Canada more generally, with one notable recent exception where I looked at the economic benefits of the North Warning System Modernization.
In preparation for this session, I went through the previous minutes of the committee meetings on this subject area of security and defence in the Arctic. You have been provided with lots of information, some of which is contradictory, and that speaks to the challenge in a democracy of finding the right balance when there are multiple views.
Based on what I know you have already heard from prior witnesses, I thought I would focus on three issues that will build on some of the common questions that members asked during the previous sessions. I know you are aware from previous witnesses that there is already a significant amount of work being done to improve our Arctic defences based on the initiatives that were identified in the 2017 defence policy and the initiatives that come from the NORAD modernization announcement of Minister Anand in June.
Previous witnesses have spoken about these initiatives, and my first point will be to deal with the process and timeliness of those initiatives. All of this investment will be carried out with a requirement for economic benefits to Indigenous communities and businesses in the North. The recent award of a contract for maintaining the existing North Warning System, to Nasittuq Corporation, is a good example of what is likely to happen with the new initiatives. This process included direct engagement with Inuit firms. The scoring of proposals from industry were scored based on 45% for technical merit, 35% for Inuit benefits and 20% on price. The 35% criteria for Inuit benefits was aligned with the Nunavut Tunngavik Incorporated directive. My point here is to emphasize the point made by Mr. Page about getting the process correct in order to get the best value for Canadian taxpayers. Engaging with northern communities to meet the government’s desire for economic benefits in the North will take time. This specific contract for maintaining an existing system required almost two years after the funding and scope of the requirement had been approved by the government. New initiatives will likely take longer. A number of you have asked questions about this lengthy process, and I would note that the process can be significantly faster when there is a recognized urgency. Canada acquired equipment very quickly during the Afghanistan mission because we had soldiers in harm’s way. Canadians have concerns about the Arctic but there is no real sense of urgency so competition and economic benefits for Canada and Canadian industry become part of the process.
My second point is to build on the information provided to you by Dr. Lackenbauer about the need to leverage this investment so that it benefits the civilian communities as well. I think it is important to note that even before the illegal Russian invasion of Ukraine, there were multiple perspectives on what Canada needed to do in the Arctic. Protecting its sovereignty, dealing with climate change and the environment, dealing with resource extraction, controlling northern shipping and ensuring effective Inuit consultation are all areas of concern, and all of this is in addition to the primary requirement to modernize the North Warning System. The Russian invasion has perhaps made some of these issues more urgent, but ultimately the government needs to make some decisions on whether it will deal with some of these issues as part of the overall modernization plan or as separate activities. A related, but perhaps separate, issue is that some of these requirements are not related to the modernization requirement, and the U.S. will be within its rights to not have those funding requirements included in the cost-sharing arrangement. All that to note that while I agree with Dr. Lackenbauer’s point about an integrated whole-of-government coordinated plan, and I believe most of the investment will likely be for infrastructure, the more requirements that are included in the plan, the more time it will take for the process to ensure taxpayer dollars are achieving the most benefit and the more expensive the initiatives will become.
My third point deals with the contradictory views you have received about buying submarines versus investing in underwater sensors. I think you need both in the Arctic, but those submarines need to be nuclear powered. There would need to be a very open engagement with Canadian society about nuclear-powered submarines. As you know, nuclear-powered does not mean nuclear weapons, and I know that as part of the narrative problem with the 1987 defence policy, the biggest challenge was the nuclear weapons issue.
The biggest challenge in operating nuclear-powered submarines is not the initial capital cost of acquisition but the cost of the infrastructure required to sustain them. There may be ways to deal with this with our allies. My own view is that despite the environmental issues that can arise with nuclear power, it is a cleaner energy than fossil fuels and natural gas in terms of pollution and climate-change issues.
More importantly, from a security perspective, you need the ability to go under the ice to deal with threats that are discovered by the underwater sensors, and that can only be done with nuclear-powered submarines.
I would note that Canada’s GDP last year was just under $2 trillion, and 2% of that is $40 billion. The defence budget in the public accounts for fiscal year 2019-20 was $23.2 billion, and it is $24.3 billion in the fiscal year 2021-22 estimates. Moving to the NATO 2% target would provide more than enough money to acquire nuclear-powered submarines.
Let me end by noting that if we want to buy equipment specifically for the Arctic, it requires a mindset change for the military. The default is to buy equipment that can be utilized in multiple environments and missions because funding has always been limited and sporadic. When you only get one opportunity to acquire a capability, the default is to make sure it can do as much as possible. I can expand on what I mean by that during the question period if desired.
I wish the committee the best of luck in trying to come to a consensus on what to say in your final report based on the multiple perspectives you have been presented from the witnesses.
Thank you, and I would be happy to answer any questions that you may have.
The Chair: Thank you very much, Dr. Stone. I have no doubt you will receive any number of questions, given that presentation.
Let’s now hear from Dr. David Perry. Mr. Perry, please go ahead when you’re ready.
David Perry, President, Canadian Global Affairs Institute, as an individual: Thank you, Mr. Chair, and members of the committee for the invitation to speak to you today. It’s a real pleasure to be back in person. The discussion today is about Arctic security and defence, but I would like to start by situating that in the context of Russia’s brutal war against Ukraine, which is demonstrating in a real way the implications of the return of great power competition.
Both Russia and China continue to invest in military modernization programs and employ those modernized Armed Forces in concert with other elements of state power in ways that threaten Western and Canadian interests. Given both of those countries’ demonstrated interest in the Arctic and their increasing capability to take military action through the Arctic against targets in Canada or North America or against targets in the Canadian Arctic itself, Canada needs to act with an urgency we are not currently demonstrating to strengthen our Arctic security and defence.
The announcement this summer of a package of investments supporting NORAD modernization is a good start to bolstering our Arctic defences, but to those recently announced initiatives we should add subsurface naval capabilities and integrated air and missile defences to improve our ability to understand what is happening in our coastal waters and to defend Canada against the most likely threats we face.
Unless substantial changes are made, we can expect investments like those to take between two and three decades to produce operationally employable defence assets. Let me cite a few examples to illustrate how glacial the pace of our Arctic defence investments have been. In 2008, the Canada First Defence Strategy, a defence policy that expressed significant concerns about Arctic security and defence, identified five projects to renew the Canadian Armed Forces’ core equipment platforms. Three of those will meaningfully improve our Arctic defences, the projects to replace our surface combatant ships to the navy, our fighter jets and maritime patrol aircraft. Not one of those projects mentioned in 2008, however, have delivered a new plane or ship, and they won’t under current schedules until between 2025 and the mid-2030s.
The observation I would make about our demonstrated, very slow ability to improve Arctic capability for your study is two-fold. First, when taking decisions today about our future Arctic security and defence, we need to be mindful of our actual demonstrated ability to respond to future changes in our security environment in the decades to come and not simply react to the world that exists around us today, given how slow we are at implementing meaningful change.
Second, we need to spend at least as much time and effort on improving our ability to implement defence and security and policies and those funded investments that we have today as we do considering future plans to address needs into the foreseeable future.
To that end, let me offer some comments about how we can improve the procurement of Arctic-capable assets. First, we need to acknowledge that our procurement system is systematically incapable of procuring major defence equipment on the timelines identified by National Defence, and this has been the case since 2007 when the department started under-spending its capital procurement funding by 20% or more annually. While there are a number of contributing factors to this situation, and individual projects experience unique problems, overall, the magnitude of current defence investment plans, which are the largest Canada has had on the books since the Korean War, exceed the capacity of our procurement system as it is currently configured. Addressing this situation requires a recalibration of the system itself and the capacity of the workforce trying to navigate through it with the demands we are placing on it.
Until the capacity of that system and the demands we’re placing on it are brought into better balance, more effort needs to be placed on identifying procurement priorities and ensuring those priority files are recognized as priorities across the entire government and not just by individual parts of the procurement system.
National Defence and the Canadian Coast Guard collectively have hundreds of projects, and they simply can’t all move at the same speed. More can be done to identify which must move quickly and concentrate resources more efficiently on those priorities.
Similarly, unless and until defence procurement is identified as a priority of the Government of Canada, we should not expect dramatically better results, no matter what other changes are made. As my colleague just identified, when we were at war in Afghanistan in the mid-2000s, procurement was a priority, and as we’re seeing with our military support to Ukraine, it is currently. When those procurements are a priority of the Government of Canada, articulated from the Prime Minister on down, Canada is able to make those purchases in weeks or months instead of decades. It generally takes decades when the government does not identify defence procurement as a priority.
Over the medium and longer term, though, the capacity of the procurement workforce needs to be increased to deal with an increase in demand that we’ve seen over the last 10 to 20 years. At National Defence, the capacity of its workforce was cut roughly in half at the end of the Cold War, never substantially rebuilt since, and the current military human resource crisis is exacerbating this situation in the parts of the procurement process where the military plays a significant role, such as in force development. Quantitatively, too few people work on defence acquisitions across government, and qualitatively, subject matter expertise, professional training and preparation are not as widely available as they need to be everywhere in the system.
In the short term, we should add human resources through service contracts where possible, while we grow the full-time civilian and military ranks working on these files over time. In terms of the procurement system itself, we should be looking for options to further streamline processes wherever possible all across the procurement system.
If a single silver-bullet solution existed that would dramatically improve everything with a simple change, I would submit we would have already implemented it. Rather, an ongoing effort of continuous improvement is needed all across the system. This could include further delegation of lower-complexity and risk projects for formal approvals by all decision boards across the government to allow senior officials and politicians to concentrate their time and attention on the projects that need that time and attention the most. This approach should also be extended to the actual work itself to better tailor the level of effort required to advance projects through the various steps in the system according to their risk and complexity.
As an example, there is a vast difference in the amount of work and approvals required for minor and major projects, which is defined by those under or over the $10 million threshold. Once a project becomes a major project exceeding $10 million in value, there is not nearly enough difference between the treatment of a $60 million project and a $60 billion project in terms of the level of effort required to do the project documentation or that project’s review and approvals that are required to make either of those purchases.
Given the urgency of the current situation and our systematic inability to procure military equipment fast enough, we need to revisit a number of these issues and do so quickly. Thank you.
The Chair: Thank you, Dr. Perry. We will now proceed to questions, and you have each given us much to consider this afternoon and in the weeks and months ahead.
Before moving to questions and answers, I would like to ask participants in the room to please refrain from leaning in too close to the microphones or to remove your earpiece when doing so. This will avoid any sound feedback that could negatively impact committee staff in the room, and we have experienced some of those negative impacts, so this is more than a routine caution.
I also ask that you keep your questions succinct and that each of you identify which witness your question is being directed to. The first question today comes from our deputy chair.
[Translation]
Senator Dagenais: My questions are for Mr. Stone. We recently had discussions with officials about the delays in effecting acquisitions considered urgent for our Armed Forces. Do you think that decision makers have a systemic decision-making problem, that the final price of our purchases becomes exorbitant as a result, and that our tardiness generates a lot of money for the endless stream of outside consultants? Do you believe the explanations claiming it’s only to be expected that it should take a lot of time? The more time it takes, the richer the consultants seem to get.
[English]
Mr. Stone: Thank you for that question, senator.
I would start by building on what Dr. Perry said in terms of the issue around better decision-making when it’s not a complex project. I will start with that. Although you might not believe it, it’s actually better today than it was before the Defence Procurement Strategy was released. There have been lots of initiatives inside DND to reduce the number of steps. The minister has been given increased authority, based on project complexity, to make decisions without having to go back to Treasury Board.
The second part of that statement is that, although he’s got the authority to do that, inside the institution, there’s still a risk aversion to not following all of the steps in the administrative directive for doing projects, even though they continually talk about reducing the number of steps that need to be followed for less complex projects. That will take some time for people to get used to. It’s complicated by the fact that any time someone asks a question during Question Period in the house and that ends up back inside the department — and it could be DND, Public Services and Procurement Canada or Innovation, Science and Economic Development Canada — all of a sudden, people become concerned about the risk again and making sure they’re not challenged for what they decided.
People will make mistakes. If you want people to speed up the innovation, you actually have to accept mistakes. That’s problematic with taxpayers’ dollars when it comes up during Question Period in the house.
On the next part of your question, there is lots of consultation. Part of the work that went into the studies that were done before the Defence Procurement Strategy was released talked about the fact that the department needed to engage industry sooner. That then leads to the idea that if you don’t have the expertise, you hire someone who can provide that assistance to you.
I’m not confident to say that I think there’s too much consulting or not enough, because I don’t know enough about it; I just know that, for some of it, the department’s forced to go to a consultant to get the expertise they need to make sure they’re having the right kinds of discussion with industry. I’m not sure if that’s normal or not, but I would highlight that it is better today than it was in 2012.
[Translation]
Senator Dagenais: Mr. Stone, the question is for you. The government’s National Shipbuilding Strategy has been taking an enormous amount of time to recognize the Davie shipyard. Recognition for the Davie shipyard would lead to the construction of two icebreakers at two shipyards: Davie and Seaspan. Is this situation ideal for future shipbuilding? Thus far, it has not been encouraging to see the decisions being made, including the Davie decision.
[English]
Mr. Stone: Thank you for that question, senator.
I have written about the government’s decision to look at having a third shipyard. I’m on record as saying the government actually hasn’t explained to Canadians what has changed since the original National Shipbuilding Strategy was developed, where the government indicated there was only enough work for two shipyards if we wanted to avoid the boom-and-bust cycle.
Having said that, more specific to your question, the government could have made the decision about the Davie shipyard a long time ago. They had really, fundamentally, already made it, because they’ve had Davie working on projects for well over two years now, I think.
The Chair: I would like to mention that Senator Jaffer has joined us. Senator Jaffer represents British Columbia. Welcome.
Senator Richards: Thank you to the witnesses for being here. I have two quick questions, one to Mr. Perry and one to Professor Stone.
Mr. Perry, you might have answered my question, but I’ll ask it again. How far are the frigates behind, not only with the Irving dockyard but in all other forms? Also, how far behind are the F-35s, and will we ever see them when they’re still functional as top-of-the-line aircraft? We’ve been trying to get them now since the 1990s when the F-18s were looked upon as being relics. Now it’s 2022.
Mr. Perry: There are a couple of different ways you could answer the question about frigates. The original timeline issued by the government for the delivery of the first ship was 2017. By that metric, it’s been five years and counting. I believe the current estimates are that the first ship won’t be delivered until sometime in the 2030s, which would then not likely enter service until the mid- or late-2030s, after trials and acceptance periods are completed. That is between 5 and pushing 20 years, potentially.
With regard to the F-35, I hope the discussions under way right now to actually get to the point where Canada is going to formally request the purchase of those aircraft as part of the partnership that exists with the joint strike fighter are concluding almost literally as we speak and we will be at the point of doing that before Christmas. It will take a few years after that to finally get those aircraft, which is about 20 years later than it should have been.
Senator Richards: Professor Stone, I have a quick question. When I was younger and the F-18s flew out of Miramichi, there was really no consultation when Miramichi was up in arms about losing them to Bagotville, Quebec, which wasn’t a strategic move; it was a political move. There was no consultation with us, and they didn’t think they needed to have any consultation with us.
I’m wondering about the consultation and the impact of consultation, with all due respect, with the Inuit and First Nations when security is involved. Could you give me a sense of what takes precedence, the consultation or the security? It’s not a hard question; it’s just a quick question. If you could please answer it.
Mr. Stone: Thank you, senator. The Prime Minister will decide — that’s the short answer — but I would say there is a Treasury Board policy that has been agreed to with Nunavut that talks about how things are supposed to happen in terms of the economic benefits and the consultation. I would expect that any infrastructure modernization that is done in the Yukon and the Northwest Territories would follow a similar process, unless the government directs otherwise.
Senator M. Deacon: Thank you both for being here today.
We look across the information shared, and balanced by both of you, we certainly hear the word “urgency” and information on the realities of how long it takes to change and have real change, as well as honouring some human resource pieces. I’m hoping to ask two questions, one on the bigger picture and one more specific to on the ground in the Arctic.
Mr. Perry, you mentioned when you were speaking a return of the great power conflict in light of Russia’s invasion of Ukraine and that a crucial piece in securing our Arctic sovereignty will be how seamlessly we can operate with our NATO allies in the region. For instance, Canada has purchased the AEGIS Combat System for our future warships, which will allow us to contribute to the continental ballistic missile defence. In that context, what other items have we incorporated into our shipbuilding or any other aspect of the procurement for the Arctic that is important in terms of specifically the interoperability, or are there any items that you think we’re overlooking in that area?
Mr. Perry: I would say that interoperability is a spectrum, ranging from logistical standardization all the way up to, at a high end, integration, the ability of our forces to work together seamlessly, which you mentioned. A number of steps have been taken with those new ships, including the AEGIS Combat System as well as a Cooperative Engagement Capability, which is the highest end of naval interoperability when it comes to defence against air threats and missile threats to ships in particular.
One component that could be strengthened is to ensure that those ships are designed from the beginning to be as truly interoperable an asset as they can be in a broader integrated air and defence system. Parts of the design, as I understand it today, could allow Canada to play a role in ballistic missile defence and have that ship be one particular set of sensing equipment, as well as a response in terms of the missiles that the ship itself carries. We’re designing it with that possibility, but my understanding is that we haven’t actually made the decisions that would fully enable those ships to be a full participant in an integrated air and missile defence system, either in a NATO context, somewhere overseas, or as part of a NATO Integrated Air and Missile Defence System.
Senator M. Deacon: I’m going to shift to Mr. Stone, take a little detour from this question, and perhaps follow up with where Senator Richards started.
Professor Stone, you mentioned the importance of community consultation in projects like the renewed NORAD, but also not letting that consultation bog down the process. Certainly, it’s a crucial piece to securing our presence in the North, and specifically with regard to our allies who border the Arctic with us, how do they navigate those community consultations? Is it as big a concern? I suspect the U.S. case to be the most comparable, but there may be others. I’d be happy to hear your thoughts on that.
Mr. Stone: Thank you, senator. I think there are multiple venues for consultation to happen, and I’ll deal specifically with the DND part, because the Arctic Council exists for the government level. There is consultation with NATO allies, some of whom are Arctic nations and part of the Arctic Council, and there is consultation, likely much more of it, in the NORAD context with the U.S. on what is going to happen around some of the threat concerns, some of the interoperability issues. Some of that is decades old. In terms of how it evolves, the issue then becomes how long are people in positions, and that speaks to an earlier comment that was made about human resources and a challenge we have right now. When you think of consultation specifically with northern communities, there’s a trust issue. It doesn’t take much to lose trust; it takes a long time to gain trust.
In the context of where we are right now, with consultations that were done for the contract for the sustainment of the North Warning System, there is some confidence in the ability to continue that kind of dialogue with the communities, and I know it wouldn’t take much to destroy that confidence if we went ahead and made a decision without those consultations. As I said earlier, based on the government’s priorities and what they have made Treasury Board implement as a policy for all of federal procurement in the North, that’s going to happen. The downside to that is it will take time.
Senator Gignac: Thank you to our witnesses.
As an economist myself, you will not be surprised that my question will go to Professor Stone, given his economic background as well. I was delighted by your opening remarks, when you talk about the recent contract given to the company. It’s just a little example, but if we want to develop more economic benefit for the local community, we have to develop entrepreneurship.
Could you elaborate a bit more on what the federal government could do to be sure that with respect to the upcoming contracts in coming years — not to mention decades — the Inuit community will be well positioned in respect to the security that my colleague referred to, but as well, will have the possibility to win contracts? So they have to develop a venture partnership with a big company. How will it operate, exactly? Thank you.
Mr. Stone: Thank you for your question, senator.
I’m not terribly knowledgeable about this, but I do know from some of the work I did for the recent study I was involved in, one of the challenges is skill sets for people in the North. How do you provide training and education needed to deal with some of the technology we’re going to be talking about for modernizing the North Warning System? That’s a separate issue from you actually give someone the skill sets they need to be an entrepreneur, because those are different skill sets in terms of the technology.
That is going to be a lengthy process, and it’s going to start with — if we’re going to update a runway at one of the forward operating locations, the workforce might come from an Inuit community, but they’re going to be on the construction side as opposed to the avionic side, for example, and that speaks to a broader Government of Canada requirement to increase the ability of our northern communities to have that advanced education.
Senator Gignac: Thank you for your answer.
Shifting topics, you point out that Canada did not invest enough. It’s $24 billion a year on defence, compared to a target 2%, which is about $40 billion. You point out as well that, contrary to Russia, the U.S. and China, Canada has no nuclear submarines in the Arctic. You explained the difference. That is, that you could have nuclear power but not nuclear weapons. That’s what they failed to explain in 1987, I think.
What is the advantage? Can you elaborate a bit more about the necessity for Canada — if they want to protect the sovereignty and security — to have a nuclear submarine, please?
Mr. Stone: Part of the issue is you need nuclear-powered submarines in order to actually travel under the ice in the North. In 20 years, perhaps there won’t be a concern about ice in the North. However, at the moment, if we want to be able to deal with security threats in the North, my firm belief is it has to be more than just having sensors in the Arctic passages that tell you something is going on. You need to be able to go there and deal with it. Diesel-powered submarines cannot do that. You need a nuclear-powered submarine in order to stay under water long enough without having to break through year-two ice, et cetera, to recharge batteries.
In 1987, the nuclear-powered submarines were part of the white paper because the Americans had actually transited the Northwest Passage and didn’t ask us about it. That is how that came to fruition in the 1987 white paper, with the focus on the North.
Senator Gignac: The sensor is not enough. If you want to be serious about security and sovereignty in the North, you need nuclear-power submarines. This is what I understood from your testimony.
Mr. Stone: That is my view, yes.
Senator Gignac: Thank you.
The Chair: I note that Senator Karen Sorensen from Alberta has now joined us. Welcome, Senator Sorensen.
Senator Dasko: Thank you to the witnesses for being here today. I have questions for both Mr. Perry and Dr. Stone. I’ll start with Mr. Perry. I like your metaphor about glacial pace. Since we’ve just come back from the Arctic, I think it’s appropriate. It may be the title of our report, Mr. Chair.
You pointed out that Russia and China pose a threat that requires us to have more urgency, but I want to play devil’s advocate with that for a minute. When we were in the Arctic, one of the things we heard from one of the officers was that in their Ukrainian efforts, the Russians have diverted their attention away from the Arctic. Wouldn’t that suggest perhaps we don’t need the urgency that you’ve called for? We have certainly upped our involvement, our commitment and the money we’re spending. We’re building ships. We’re very active now. We’re doing much more than we were before. Perhaps the efforts we are making are appropriate to the threat. Given the significant history we’ve heard about from witnesses here of multilateral cooperation in the Arctic, many experts don’t want to throw that away because there is definitely a serious and important history of Arctic nations working together, including Russia.
I just want to put that back to you.
Mr. Perry: I’ll start with the last point first. I think the Russians have done an awful lot themselves to throw out the possibility of cooperation in a number of different venues, including the Arctic. They’ve also already made the investments and completed the investments in a lot of their northern forces which have not been engaged in the war on Ukraine at all. Clearly, there’s been a diversion of the focus of Russian effort towards Ukraine, but it hasn’t been a diversion of all of their military assets. They retain significant military capability in their Arctic that they could use against Canadian interests, either through our Arctic or directly in our Arctic, irrespective of what is happening in Ukraine.
In addition, while I think we’re starting to take steps in the right direction, after about 15 years, we have still only made incremental improvements in our ability to actually defend against the types of threats I was talking about. The most tangible examples right now are the first Arctic offshore patrol ships, which are now in the water and operating, but they were never actually designed to be a core defence asset. They were meant to support other government departments and play a constabulary role. They can be enhanced. They’re a significant improvement, but they’re not there in a way that would allow the systematic detection of Russian or Chinese activity. As my colleague Dr. Stone mentioned, they’re not going to be able to do anything about it, if they do happen to detect them.
Regarding the other investments that we’re making, such as the acquisition, finally, of modern fighter aircraft, part of the investments that were announced this summer are to modernize the infrastructure in our North so that those planes can actually fly there and be operated from there. Currently, they can’t be. The facilities that we have there right now are so rudimentary, we basically can’t land and operate those aircraft in our North. If we want to be able to use those aircraft in a way that can enhance the defence of the continent, then we need to improve that. No doubt we’ve made some important but incremental improvements in this direction, but it’s been quite minor in the scheme of things, and it’s taken us an awful long time to even get those advanced to the point that they are now.
Senator Dasko: So we still need to step up the urgency.
Mr. Perry: I think we actually need to act with urgency, which we have not been doing to this point.
Senator Dasko: Thank you. My next question is for Dr. Stone.
Dr. Stone, you talked about the benefits to Indigenous communities, which are a goal of the investments that Canada is making. Also, you talked about the hope of communities in the North that they, too, will benefit from these investments. We certainly heard that when we were just there on our trip.
I sensed a bit of skepticism in what you were saying. I want to drill down on that a bit. Do you think those goals are actually realistic? Can we actually expect, or should we expect, to have those kinds of benefits in a significant way from these investments?
Mr. Stone: I think my skepticism is probably from the notion that to do the consultation and the coordination that is required to do this properly, it will take lots of time. If I was in the U.S. government, I would believe that some of those initiatives shouldn’t be part of the cost of modernizing the North Warning System in that cost-sharing issue. I’m very much in line with what you heard from Dr. Lackenbauer, namely, that you need to coordinate this stuff so there are benefits for everyone.
For example, if you’re going to have a port built to deal with security issues so that you can refuel Arctic offshore vessels, that should be done in a way so that the civilian community there can benefit from that as well. If you’re going to have runways improved, it should be done in a way that civilian commercial air travel can use it as well. If we don’t do it that way, there might not be as much support across government to do some of that spending, and I think some of those things are going to cost more money than what people think it’s going to cost. If you’re doing multiple things with it, I think there’s a better chance of it actually coming to fruition.
Senator Dasko: Do you think the expectations might be too high in those communities in terms of the benefits they may be getting? That’s something that kind of bothered me on our trip. Expectations seem to be quite high, and I wasn’t sure if they would ever be realized. Any thoughts about that?
Mr. Stone: I think the expectations are probably high because that’s the narrative they’re hearing from everyone, that we need to have those benefits.
Senator Dasko: Yes.
Mr. Stone: I’ve been to the forward operating location in Tuktoyaktuk —
Senator Dasko: Inuvik.
Mr. Stone: Inuvik, yes. The Canadian military uses that periodically on exercise. It could be used yearly by the community if you did the right kinds of improvements to it.
Senator Oh: Thank you, witnesses, for being here. My question is for any of the professors.
What is the current status of the Canadian Coast Guard’s Arctic and offshore patrol ships, and Polar Icebreaker Procurement Strategy? What is the total anticipated cost of these procurements, and are the ships likely to be delivered on budget and on time?
Mr. Perry: The short answer is that I don’t know, and that’s troubling because I think we should have a lot more ongoing transparency on these projects that we’ve had.
To your question about the likelihood that we move these forward on schedule and on budget, I would say that it’s low, based on the track record of the National Shipbuilding Strategy projects to date.
I think it’s time that we have a fundamental re-examination of how the government component of managing those projects is going. From the beginning, there’s been an effort to have third parties come in and assess the capacity of the shipyards — how they’re doing with infrastructure upgrades and improvements to ensure they’re improving their productivity and efficiency. Given the difficulties we’ve had on those projects collectively and that we’re now going to expand that series of projects to include a third shipyard and basically a third pillar of new construction work, it’s time to have an assessment of how Canada is approaching the management of all of that together, because I think there’s certainly a lot of room to improve it.
Mr. Stone: Unfortunately, senator, I’m in the same boat as Dr. Perry. I don’t know a lot about the Coast Guard, for similar reasons.
Senator Oh: With global warming, what is the impact on the icebreakers?
Mr. Perry: The impact is that it will not fundamentally change the fact that we’re going to require an ability to break ice. It will just change and impact specifically where and when we would need to be able to do that.
To Dr. Stone’s comment about nuclear submarines and the ability to operate under the ice, given that it’s likely to take two to three decades to procure either new icebreakers or new submarines, we should be thinking about what the operating environment is going to be between 20 and 70 years from now, not what it is currently, given the length of time to field those new ships.
Senator Oh: Thank you.
Senator Boehm: Thank you to our two witnesses. My question is for both Dr. Perry and Dr. Stone.
We’re hearing a lot these days about friend-shoring. Janet Yellen and Chrystia Freeland have commented on this. In a sense, we’ve been doing a bit of that in Canada, usually when force majeure has been involved. The reference was cited in terms of Afghanistan. We did a lease agreement on Leopard 2 tanks using the Netherlands; we’ve used submarines from the U.K. and jets from Australia, that sort of thing.
As we look northward, and in a case of force majeure, so if there’s a clear and imminent threat, what is preventing us from outsourcing or looking offshore in terms of procurement? We’re getting a third shipyard. That’s all great, but we still have an issue in terms of timing.
I think, for example, of the Saab Gripen fighter jet, which is apparently very good in cold climates. What about experience the Nordic countries have had with surface ships? I wonder if you have any comments on that, Dr. Perry.
Mr. Perry: Given the systematic issues we face in terms of procurement timelines, we should be looking at a number of different ways and basically looking to take exceptions that have added value, where we can take them. I don’t think the current default — which, in effect, in many cases, does a version of friend-shoring — we don’t have open competitions that literally any supplier can apply to for a lot of different systems with respect to defence, in particular. In a lot of cases, we have criteria that equipment be fielded by either NATO countries, or NATO countries plus other members of the Five Eyes. So we effectively draw a smaller circle than full competition.
Even within that, in several cases — and it’s likely to be the case with respect to additional equipment for the Arctic — it’s a small pool of companies and countries that have relevant equipment. We should be more pragmatic about identifying sources of supply that make sense and not trying to set up and encourage competition for the sake of having competition. If it’s clear there’s only one or two potential suppliers, we should make the decision to go to one or two potential suppliers.
Senator Boehm: It looks like we’re getting two NATO members with significant Arctic experience as well, so there could be an opportunity there for some dialogue. Thank you.
I wonder if Dr. Stone has any comments on that.
Mr. Stone: Thank you, senator. In theory, we could do exactly what you say: go to one of those nations and tell them we want one of their ships or airplanes. We did that for Afghanistan. We went to some specific nations and said we want this stuff. That was done in a way where it was military off-the-shelf; it existed, it was in production, and we didn’t make any changes to it. We could do that.
For ships, it would probably still take a while for those ships to be built, unless Saab was prepared to give us Gripens that were already in production, at the expense of someone else. It would take a while for them to do that as well. We would be in a position where we accepted the capabilities that existed without doing any design changes to deal with the specific requirements of Canada. We could do that.
In fact, that is one of the challenges with the current surface combatant, where we’ve taken a Type 26 design and then we’ve made all kinds of changes to deal with Canadian-specific requirements. So it’s not really a Type 26 design anymore, but it will meet Canadian requirements.
Senator Boehm: Thank you.
Senator Jaffer: Thank you to both of you for your presentations. Unfortunately, I was late, but I can assure you that I will read them.
Dr. Stone, you mentioned that in Parliament something is raised and there’s an issue of risk, and then there’s activity of concern and defence, if I understood you correctly. For anybody who is in any organization or doing anything, there’s always risk. Is it because the defence force and procurement does not assess the risk? There’s always risk, and you can’t run every time. Sometimes it’s just for a big noise that MPs raise it. What is the issue? Is it not enough work done or is it just nervousness?
Mr. Stone: Thank you for the question, senator. I wouldn’t say it’s nervousness. There is lots of work done in the development of the capability requirements and the costing that deals with risk, in terms of the risk of a capability coming to fruition for being able to do the things you want to do at the cost. The challenge is, in the context of that question, that there are initiatives under way in the department so that we don’t follow all of the steps required to buy a fighter plane when we’re buying something that is of far less risk and doesn’t need all of those steps and meetings.
The difficulty is culture in the institution where the minister gets asked a question, because someone out in the world isn’t happy with a decision and they want to raise the issue. It could be an industry that didn’t win the bid or wasn’t included in the competition. What happens is the minister gets asked a question. The minister’s staff goes into the department with, “The minister needs an answer to this,” and that goes down the leadership into the workforce. As it goes down there, people say, “Well, this wouldn’t have happened if we had all of those other meetings and conversations so that we would have already known the answer to this perhaps.”
It’s not that the risk assessment is not done. It’s just the culture of the institution and to get them to actually believe it when someone says, “We’re prepared for mistakes to be made, and we don’t need to follow all of those steps.” That initiative is under way, but it’s like the culture in the military around gender and sexual assault. You’re not going to change it overnight. It’s going to take years.
Senator Jaffer: Dr. Stone, your answer is interesting. Politicians are not supposed to make mistakes, so who is going to admit, “Yes, we made a mistake”? It needs a lot of courage from a minister, so I have to reflect on that.
I have another question for both of you, and I’ll start with you, Dr. Perry. There was talk of infrastructure on the ground, and I think Senator Dasko raised it. What is the benefit for people who are living in an area with the projects that are taking place? For me, there are two points to that, and I would like to better understand. One is it’s true that they may not see the benefit, and maybe there isn’t the benefit, but it’s also the kind of infrastructure. Obviously, you’re not going to be in a position to build expensive infrastructure in the North because we might be buying from somewhere else.
What kind of infrastructure could we look at in the North that would get a buy-in from people who live there?
Mr. Perry: I wouldn’t want to speak on behalf of the people who live there.
Senator Jaffer: No, of course not.
Mr. Perry: I would identify transportation or communication infrastructure generally. If that is configured in the right way to allow for commercial-civilian use, which might not always be possible, but, for example, with a fully re-modernized airfield, it might be possible to expand the runway and expand the civilian access to it. As you’re expanding runways, aprons, taxiways and putting in secure military facilities, be open, when those design decisions are made, to allowing both sets of activity to happen at the same time.
To come back to questions that were asked earlier, I think it’s important that the Government of Canada approach this based on data about what is possible currently and identify any gaps between what’s currently possible given workforce constraints and the state of the business community in these areas. If there are specific targets the government would like to achieve in terms of the amount of contract value that would go to various partners, if the capacity doesn’t exist today, I don’t think it’s realistic to assume it will suddenly materialize overnight without an actual plan to develop it. If there is a desire to have some of these objectives met, then you need to make sure of all of the things that would require them to be successful — and, broadly speaking, not just delivering the capability to the military, but achieving these other objectives — you need to make sure that you are clear and pragmatic about what is possible over what timeline and to put in place the type of measures that would enable the full realization of these targets, and be cognizant that it may take more time and be deliberate about doing that.
Senator Jaffer: Dr. Stone, would you like to add to that?
Mr. Stone: I agree with everything Dr. Perry has said. I do believe it needs to be a deliberate plan, but I do believe there are lots of opportunities to provide economic benefits to communities so that they can improve their own quality of living in the North, but it has to be done in a very pragmatic way.
Senator Jaffer: When you say “building of capacity,” what do you mean by that?
Mr. Stone: If you are going to repair the runways on a forward operating location in a community, you will want to have a discussion with the community about the skill sets of the workforce in that community and what they can actually do. One of the issues that’s come up in previous minutes is internet connectivity in the North. You need infrastructure to improve internet connectivity. What are the skill sets of the workforce to be able to deal with that level of technology, to do the installations, to improve internet connectivity across the North in communities? That requires you to think about that discussion with the community about workforce skill sets and the educational programs that need to be done to improve those skill sets so they can work on those or manage them once they are installed. As Dr. Perry said, that takes time.
Senator Jaffer: Thank you.
Senator M. Deacon: So we look at the skill sets, which you’ve mentioned a couple of times, which are important, and this committee had an interesting on-the-ground experience not too long ago. Skill sets are critical as is being respectful in determining what those are and making sure they have the support. My question is around the tools and what is needed in the tool kit for some of this work to be done.
One of you mentioned the steps required when a project goes over a certain spending threshold, big-ticket procurement items we continue to talk about, such as our patrol ships and NORAD renewals.
I’m wondering how Canada is doing on the smaller procurement projects. We talk about skill sets, but think about our own homes and communities and what we need to keep things going and getting things done. Nothing builds respect or trust faster than folks understanding that the decision makers understand what they need to do their work.
I’m looking at the kit that our soldiers are using, particularly in minus 40-degree weather in the Arctic. How is Canada doing on procuring snowmobiles, for instance, or weather-appropriate infantry equipment? It’s not the big procurement items that we spend many hours on, but the items they need to be successful tomorrow. If either one of you could take a shot at that, that would be great.
Mr. Perry: I’ll say two things. First, we don’t have up-to-date information. The Department of Defence, as part of the Strong, Secure, Engaged policy, made a commitment to being more transparent and open about the state of all of its procurement projects. That transparency disappeared during COVID and hasn’t been brought back yet. There are documents and websites that the department updates that provide that kind of information effectively on all the projects above the $10-million-threshold, but it hasn’t been updated in almost three years now.
The last time I looked at those sets of documents and did some analysis year over year, as far as I could tell, roughly 70% of all projects of all dollar values had a delay of at least one year in one of the major milestones.
That’s aggregate data across the board, but my analysis was that there are delays at all parts of the different projects, not just the really expensive ones. The really expensive ones tend to be delayed more, but a lot of those that are less expensive are delayed at least to the original department-issued timelines for when people would like to see them advance to different project milestones. So the majority of all the projects in the inventory were delayed the last time the department released information on them.
Mr. Stone: Not to be negative — I agree with what Dr. Perry has said — but we do spend $3 billion to $4 billion every year buying things, and it never sees the media or the public because it happens. It is just the big-ticket items that get media attention.
Dr. Perry is right that lots of stuff gets delayed, but it gets delayed for a variety of reasons, not the least of which might be a contractor not being able to live up to the timelines they set. It happens.
On the flip side, to the other part of your question, I would just note that I spent 30 years in the army. Canada has really good winter kit. I’ve lived in minus-40 weather for weeks at a time in Shilo, Manitoba — not actually having to go up north. But we have good winter kit.
Senator M. Deacon: Thank you.
[Translation]
Senator Dagenais: I have two brief questions for Mr. Perry. Mr. Perry, in view of your observations on procurement delays, can you explain the point at which stakeholders and public servants could be kept out of the decision-making process to speed up purchases?
[English]
Mr. Perry: I’m not sure I got the entire translation there. Were you asking if we can eliminate middle men?
[Translation]
Senator Dagenais: I believe that many stakeholders and public servants are involved in the procurement process. Don’t you think that the process would be faster if there were fewer people involved?
[English]
Mr. Perry: Fundamentally, yes, the fewer people, points of view and considerations involved in this, the faster it could go, but we’ve built this system to satisfy a whole range of different interests and government objectives.
There are certainly examples you could point to where we’ve focused on one or two of those priorities more clearly than some others. There is the example Dr. Stone mentioned about Afghanistan or what we’re doing right now in supporting Ukraine. We’re prioritizing the speed of delivery because the speed of delivery really matters. When you’re doing that, you have to sacrifice, or not place as much emphasis, on some other considerations, such as whether you’re having full, open and transparent competitions or whether you are securing as many economic benefits or other socio-economic objectives as you might otherwise through a different approach. It is a question of deciding what is most important.
I tie that back to my comments on priorities. If you’re looking at the slate, the last time there was public information, there were several hundred projects between the Canadian military and the Canadian Coast Guard. They can’t all satisfy the full range of wide government objectives equally, or they can’t do so without sacrificing speed. If we want this to go quicker, we have to be more selective and look at examples where you can prioritize on some parts of those wider sets of objectives and be realistic that you can’t satisfy them all equally in every circumstance.
[Translation]
Senator Dagenais: You said that the decision-making process has been inefficient since 2007, and yet these expenditures amount to billions of dollars. Do you have any idea why the cost overruns affecting how our decision makers, whether public servants or politicians, operate? There comes a time when not making a decision costs money.
[English]
Mr. Perry: There are definitely circumstances where the process and the difficulty of navigating it unquestionably create problems with costs; they increase expenses. We’ve had the luxury of not having to really worry about that in a significant way for about 15 years because interest rates were low. Now the interest rates are no longer as low as they were, this is an issue we need to be seriously concerned about and pay more attention to the potential cost of delay in terms of lost purchasing power.
That’s an issue the Government of Canada writ large is going to have to quickly come to grips with. They will have to be more explicit about recognizing the impact of not taking decisions of any kind or not actually meeting project milestones in a way that we have only really done in the past with a view to what it meant for actually providing the ships, the planes or the vehicles. Now, in a much more meaningful way, we have to worry about how much purchasing power we’re going to lose with every year that a project is delayed.
[Translation]
Senator Dagenais: Thank you, Mr. Perry.
[English]
The Chair: I see no further questions from senators.
I’m going to ask you each a question that follows on from where you were with Senator Dagenais’ question.
As we think about our report and our recommendations, this is obviously a huge component of the government’s defence and security strategy going forward. While you’ve touched on elements of this question in various ways, I’d like to ask each of you to identify the top two or three critical success factors that the government has to confront as it moves forward in this area of procurement.
In doing that, please feel comfortable to restate what you’ve already said. I’ve certainly been taking careful notes, but I’d like you to focus in. If you had the Prime Minister or the Minister of National Defence in the room, and they asked you for your topline advice — three critical success factors — what would they be? Let me start with Dr. Stone.
Mr. Stone: Thank you, senator.
My top priority would be to not let the department keep changing requirements. I have to put some context on that. We keep changing the requirements because technology sometimes changes over time, and getting something that’s obsolete when you finally get it isn’t helpful to meet the capability either.
I know there are initiatives under way in the department to deal with the whole issue of technology insertion through the life of a capability so that it doesn’t actually have to become a brand-new project.
More importantly, when I look at some of the big-ticket items, the longer it takes, the more we change requirements. That goes back to the point I made about wanting to make sure it does all of the things it needs to do because you only get one chance to buy that capability. For example, with Arctic-specific equipment, we could buy new snowmobiles, equivalent to the BV 206, which was a track vehicle for the North, in limited numbers to be used solely in the Arctic. But the army is hesitant to do that unless they’re told to, because they can only be used in the North and they can’t be used elsewhere.
We’re buying 15 surface combatants to replace Halifax-class frigates and area-air defence destroyers. We’re trying to make sure those surface combatants do both of those functions, as opposed to buying a smaller number to do those functions and do it quicker.
My other recommendation would be, not that we stop focusing on cost, but that we focus on cost at the right time.
The department is getting better, but one of the challenges in the early stages of developing a capability based on the process is to come up with a rough order of magnitude cost for a new capability. Rough order of magnitude is plus or minus 50%. One of the challenges with a conservative defence policy was they got a rough order of magnitude for a capability, and as they developed the requirements and they got more fidelity on that, they were forced to stay with the original rough order of magnitude cost when it was plus or minus 50%. So there are both: on the government side, with cabinet to stop being so focused on those early cost estimates, and cost estimation in the department. They’ve increased the capability in Treasury Board; they follow the best practices of that discipline for cost estimation. It’s based on a whole bunch of assumptions. You know the Parliamentary Budget Officer came out with a recent report that it’s going to be $300 billion for ships, but none of you can probably tell me how you’re going to use your car 10 years from now and what it’s going to cost you to sustain it. That’s what we’re asking the military to do. How are you going to use that ship for the next 30 years, and what are you going to do with it? And come up with a cost. It forces the department to make a whole bunch of assumptions, and something like Afghanistan — which was not expected — can change all of those assumptions on how long a piece of equipment lasts and how much money you’re going to spend.
The Chair: Thank you.
Mr. Perry: To your original question, I would say the right person to ask is the Prime Minister, not the Minister of National Defence. Because they only control part of it. Fundamentally, you need to ask the Prime Minister or any future prime minister how much of a priority defence procurement, or coast guard procurement, is to them. And as part of that question, you need to ask how much speed of delivery is a priority versus the various other objectives we try to achieve through defence procurement: transparency, competition, socio-economic benefit and other objectives. The one is, in a broad sense, how important is this relative to all the other activities of government? And that would presumably, in a coherent system, help influence how much time is devoted to it at cabinet, at Treasury Board, the Privy Council office and other central agencies and on down the Government of Canada’s bureaucracy.
The second question is, within that, which of the different projects are priorities? One would not necessarily have to set them out 1 through 300, but you need more than what appears in a mandate letter, which is generally between two and four or five in the last several iterations. You can’t do all of these things at once. There is not enough capacity to get in front of cabinet to go to Treasury Board to have people do those types of costings and all those steps.
The third thing to reiterate is capacity. We are expecting the existing workforce, which basically hasn’t changed meaningfully in size in 15 years, to do between three and five times more work, if you adjust for inflation and other factors — potentially more than that when you add in the announcement this summer about NORAD modernization. I think it is unrealistic to expect that to happen all at one time when even beyond the actual dollar values, a lot of these files — fighter jets and ship building — are more complex than what we’ve done historically. We need to bring that into better balance. There is a mismatch between capacity and demand.
The Chair: Thank you.
Senator Jaffer: Dr. Perry, both of you are talking about capacity and capacity building. I hear that, but to my mind, to build capacity there has to be the will of Canadians to invest in the army. At one point, a long time ago, families were proud if their son, or now their daughter, entered the Armed Forces. It’s not like that so much now, I don’t think. Maybe I’m wrong.
So when you speak about capacity, there are two points. There is the point about building capacity — you have the will to build capacity — but you have to also have Canadians who want to be in the Armed Forces. That’s one part of the capacity building.
I have another question.
Mr. Perry: I would agree with you. I would just add it’s not just about the Armed Forces. There are five or six other departments that don’t have enough humans. However, they’re employed to do all of this work as fast as we want them to. I think the point you raise about the Armed Forces is very real. I think one of the things that might help shift that discussion is more discussion about what the point of trying to do this is. I come back to my comments about the actual security threats we face in the Arctic, which should fundamentally be what is driving the procurement aspect of this.
The Chair: Let me say to each of you, this has been a hugely important discussion. You’ve taken lots of questions. You’ve provided some really thoughtful answers, both touching on the scale of the issue and challenge of procurement of this magnitude, but also some of the approaches that we will need to take and prime ministers will need to take in order to get us through this. We’re very grateful for your attendance and participation and your forthright advice to us. And you have our assurance that we will give a great deal of attention to this as we think about the content of our report and the advice that we provide in it. Thank you very much.
Senators, we’re now moving to our second panel.
First of all, for those of you joining us live, this meeting involves security and defence in the Arctic, including military infrastructure and security capabilities, and our focus today is on the procurement of Arctic-capable assets, which is obviously central to our work.
To help us this evening, we welcome by video conference Dr. Philippe Lagassé, Associate Professor and Barton Chair at the Norman Paterson School of International Affairs at Carleton University, and also Mr. Les Klapatiuk, President, International Logistical Support Inc. Thank you for joining us today by video conference. We’ll invite you to provide your opening remarks, to be followed by questions from our members. We will open this evening with Mr. Philippe Lagassé. Whenever you’re ready, please proceed.
[Translation]
Philippe Lagassé, Associate Professor and Barton Chair, Norman Paterson School of International Affairs, Carleton University, as an individual: Thank you, Mr. Chair. I’d like to thank the committee for letting me appear remotely. I was asked to speak about capacity building for the Arctic.
[English]
I will address this topic in three ways. First, I will provide an overview of the government’s current Arctic-capable procurement plan; second, I will identify risks that surround those plans and how they might be mitigated; and third, I will discuss what additional capabilities are required and how they might be developed.
First, the government has announced several Arctic-focused and Arctic-capable acquisitions for the coming decades. As part of the renewal of the Canadian Coast Guard, or CCG, fleet, the government has pledged to acquire six program icebreakers and two polar icebreakers. If the full contingent of program and polar icebreakers are built, Canada will have a yearlong CCG presence in the Arctic. The CCG fleet renewal also includes the acquisition of modified Arctic offshore patrol vessels and other ships that will be able to navigate parts of the Arctic in warmer months of the year.
[Translation]
In anticipation of this new capacity, the Canadian Coast Guard, the CCG, is extending the life of its current fleet and also acquiring temporary capacity. These CCG ships will serve as Canada’s main surface vessels in Arctic waters during this century.
In connection with the Canadian Armed Forces, the government’s defence policy, “Strong, Secure, Engaged,” and the recent spending on the modernization of NORAD, will lead to several acquisitions in the Arctic.
[English]
The future fighter capability will require new fighter aircraft to patrol Canadian airspace, including in the Arctic, and will be Canada’s principal kinetic tool in the event of a hostile incursion into the Arctic. The new fighters will be complemented by air-to-air refuelling aircraft. Canada is acquiring medium-altitude remotely piloted aerial systems, i.e., drones, that could be tasked with Arctic roles, such as surveillance.
The government has also announced the acquisition of Arctic and polar over-the-horizon radars, new northern sensors, communication satellites that will reach the Arctic, augmented Arctic infrastructure and new Arctic-focused land vehicles in the project known as Domestic Arctic Mobility Enhancement, or DAME. Together, these capabilities will increase Canada’s presence and capabilities in the Arctic.
[Translation]
Needless to say, there are plans and then there’s implementation. Current scheduled capacity includes some relatively low-risk items that should be called into service as required, even if a little behind schedule, as Mr. Perry noted earlier.
Future fighter capability is now at the final negotiating stage. The government announced the acquisition of two of the six air-to-air refuelling aircraft, which are already in service, and four more should follow.
The drones project appears to be moving forward as planned, with the contract to be awarded in 2023-24.
[English]
The DAME’s trajectory is less clear, but it should deliver capacity in due course.
NORAD modernization, including the new radars and sensors, is beginning to take shape, as are the new communication systems. However, it will be important to track these projects in the coming years to ensure they will deliver the promised capabilities in an acceptable time frame.
Greater risks surround the CCG renewal. The upgrade and interim ships are on track, which will provide much-needed breathing space, but careful attention must be directed towards the program and polar icebreakers. Inflation will increase the cost of these capabilities, and delays will exacerbate these cost challenges, while pushing back Canada’s long-term capabilities in the Arctic.
[Translation]
In fact, costs and delays represent the greatest risk for all of the new capacities announced. There are major requests in the federal budget and as the Minister of Finance pointed out, additional expenditures will have to be found within the voted expenditures. We don’t know how long this situation will last, but one thing is certain: The cost of new capacity in the Arctic will not decrease. Cost rises may stabilize once inflation has attenuated, but the curve will remain upward.
Pressure on costs will coincide with other priorities that will compete over supplementary federal funding, including new social programs, the defence capital program, broadly speaking, and deficit reduction efforts.
[English]
Finally, new Arctic capabilities that have been announced will enhance Canada’s presence, awareness and command and control in the region; however, we should be prepared that adversary capabilities will develop as well and likely surpass Canada quantitatively. Canada’s continental defence alliance with the United States mitigates these threats, insofar as the American military will remain predominant well into the 21st century. Yet relying too heavily on the United States to defend Canada’s Arctic will not only strain relations with our closest ally, it will reduce Canada’s ability to make its own decisions and choices with respect to the defence of its territory and waters.
As the Arctic becomes a region of greater resource extraction and navigation, both commercial and touristic, Canada’s ability to assert its sovereignty and control will become more important.
Briefly, to end, I’ll note three capabilities that could be considered by the government, and I’m happy to address these further in the questions.
First, new Arctic-capable submarines to replace the Victoria-Class submarines, as was noted by one of your previous witnesses; secondly, remotely controlled systems for underwater surveillance, effectively, maritime drones to complement the submarine fleet; and finally, search-and-rescue capabilities, which will become ever more important as more touristic, commercial and military activity is found in Arctic waters.
[Translation]
Thank you.
[English]
The Chair: Thank you, Mr. Lagassé, for that helpful opening. We’re going to now hear from Mr. Klapatiuk.
So whenever you’re ready, Mr. Klapatiuk, please proceed.
Les Klapatiuk, President, International Logistical Support Inc.: Mr. Chair, senators, Inuvik is the most active NORAD base in Canada. I speak to you from the same ramp and hangar from which the C-130 tactical air-to-air refueller operated 439 times, and International Logistical Support, or ILS, supported the Royal Canadian Air Force and the United States Air Force an additional 600 times over 16 years.
I sent my speaking points to Ms. Dupont. Unfortunately, they haven’t been translated, but I’ve got charts and graphs in there to reflect my comments.
The green hangar, as we’re commonly called, on the Inuvik airport, is the only infrastructure of its kind in Canada’s western Arctic, north of the Arctic Circle and on the Arctic Ocean. Yet, real property operations removed us from the here and now of North American defence.
This is the same property that Innovation, Science and Economic Development Canada, on August 25, stated it was critical to North American defence. However, DND will not lease, contract or buy it to support NORAD. This is the same property that, on September 12 and 13 of this year, two United States military attachés visited and spoke with me about a possible purchase because Canada is not involved. This is now country-to-country and is being pursued.
In testifying before the House of Commons committee, Lieutenant-General Pelletier did not mention this, but I was advised that everybody in Ottawa, Washington and NORAD knows what is transpiring, as do the British and NATO. Trust, but verify. You, as a committee, are operating at a complete disadvantage, as you have to trust what you are being told. But how do you verify? All my statements and charts can be verified through open source information, ILS records, invoices, photographs, notes and emails with individuals.
The crux of the point is that I have several questions that I cannot answer. I cannot answer why Real Property Operations, during a time of nuclear crisis, refuses to support NORAD by providing the only available hangarrage in 40% of Canada’s land mass. I cannot answer why Real Property Operations will not support our air-to-air refueller crews who have actually intercepted Russian bombers from Inuvik and the ILS hangar. I cannot answer why Real Property Operations is forcing RCAF and NORAD flight crews to conduct snow bank operations in Arctic conditions.
In October of 2021, a lieutenant colonel in Real Property Operations ordered his staff to develop a new contract for ILS and they refused. Why? Real Property Operations gave away NORAD’s strategic fuel supply of approximately 270,000 litres on the Inuvik airport and had four 75,000-litre tanks destroyed. Fuel availability is and remains critical to all RCAF-NORAD operations.
On June 11, 2021, a NORAD general, accompanied by a Canadian general, asked me the state of contract negotiations between Real Property Operations and myself. When I replied there were none, there was puzzlement and betrayal. NORAD made their needs known, and real property operations and Canada has ignored them and our common defence. Real Property Operations personnel started this attempt to destroy ILS in 2015. They have persisted ever since, but at what expense to our country and harm to our relationships with our allies, including NORAD and NATO?
My final comment is we have no capability for the air-to-air refueller from the Inuvik airport or the Forward Operating Location Inuvik, the busiest NORAD base in Canada, and we have no capability for search and rescue in this region at all.
Thank you very much.
The Chair: Thank you very much, Mr. Klapatiuk. We’ll now proceed to questions.
[Translation]
Senator Dagenais: My questions will be for our second witness. I understand that there are some he will be unable to answer, but I believe we have allies and neighbours, the Americans, and that we need to do our share as allies. I don’t understand why, when there is work to be done, decisions are not being made. I’d like to have more information about some of the work and some of the decisions that are not being considered.
[English]
Mr. Klapatiuk: If you’re talking about contract negotiations, there are none. We have waited and begged and pleaded for Canada to step up in our common defence with the United States. Nobody has done anything. We have not been contacted by anyone.
Now, even during this time of a possible nuclear war, however hopefully unlikely, we have not been brought back into the NORAD operations. For 16 years, we were integrated into NORAD, to the point where we had the aircraft here, as I said, 439 times. The crews, ourselves, were integrated. We worked closely together and, as I said, we had bombers actually intercepted, but Real Property Operations has removed any capability for Canada in the Arctic. There’s no other hangarrage available. There is nothing.
[Translation]
Senator Dagenais: My second question is for Mr. Lagassé. We’ve had some fetching government announcements about investments and acquisitions, but they are always part of the five-year plans. So it’s not for anytime soon, as you mentioned. To what extent is advice from the Independent Review Panel for Defence Acquisition being followed?
Mr. Lagassé: As you know, I resigned from that panel this summer, so I can only talk about my time there from 2015 to the summer of 2022. What I can tell you is that it’s difficult for us to know. The advice is given to the minister and the minister can read about what the panel had to say about capacity and the various projects submitted to them.
However, I can say that every time a project is submitted to the panel, it looks at costs, requests, and integration. The panel monitors timelines and emphasizes the importance of continuing to move forward with the plan for the Canadian Armed Forces and the Canadian Coast Guard. The panel gets involved in every project valued at over $100 million.
So there is in fact an independent panel that gives advice on the projects we are discussing today and monitors them rather closely. However, it’s worth noting that the panel’s work ends once the project options analysis phase is over, meaning as soon the project enters the definition phase. So it’s role ends fairly early on.
Senator Dagenais: Mr. Lagassé, I’d like to return to Armed Forces recruitment. To what extent might the Canadian Armed Forces recruitment problems affect Arctic surveillance plans?
Mr. Lagassé: If there happens to be a shortage of pilots, technicians or personnel in various Armed Forces positions, it will have an impact. Capacity is not only a matter of technology and mechanics; it’s not just equipment. Capacities depend on the human factor too. Without the required personnel — and that does not always necessarily mean people in uniform, but also technicians, trainers and information technology workers — need to be filled. Right now, as you know, we are dealing with an economy in which virtually no job remains unfilled. So the demand for labour is enormous and the Canadian Armed Forces are suffering at the moment as a result.
Senator Dagenais: Thank you, Mr. Lagassé.
Senator Gignac: My question is for Professor Lagassé. Apart from the Arctic offshore patrol vessels and the new polar icebreakers, what additional capabilities would the Canadian Coast Guard need to properly fulfil its Arctic mandate?
Mr. Lagassé: For now, the fleet projected should enable the Coast Guard to meet its requirements. I believe that the most important question at the moment is whether we will be able to build the two polar icebreakers. Will we be in a position to build the six icebreakers planned as part of the program? I believe these two fleets should be sufficient. After that, the question will be about icebreakers for the St. Lawrence and other equally important aspects.
As you heard a little earlier from my colleague Professor Stone, it’s worth asking what vessels are appropriate for the Canadian Armed Forces in the Arctic, which raises the matter of submarines.
I believe that submarines, whether regular submarines with sailors on board, or automated systems, would be a major asset. The conversation needs to begin right now.
Senator Gignac: You guessed my second question, because it was in fact about submarines, given that Professor Stone had referred to this issue.
What struck me about the war between Russia and Ukraine was seeing Russian submarines in the Black Sea ready to attack Ukraine, thus reminding us that whether we’re talking about Russians, Chinese, Americans or other great powers, they all have submarines. In comparison, Canada has only small submarines — like the Victoria class subs which were extended — but no nuclear-powered submarines.
It’s a debate that took place several years ago. What then should the government do to convince public opinion that a distinction has to be made between a nuclear-powered submarine and the nuclear weapons in the submarine?
Why is it so important to have — there are sensors — but why, for us to be taken seriously, are nuclear-powered submarines an essential tool for the protection of the Arctic?
Mr. Lagassé: Basically, senator, it’s because it’s clandestine. The adversary, or anyone unaware of being under surveillance, even if they are at least capable of protecting themselves through space or aerospace surveillance, know that there is a vessel or a ship that could potentially follow them and gather data about them.
So even if what we’re talking about is a science vessel, or one that claims to be, but really isn’t, a submarine would be more effective at detecting military activities being conducted from a commercial or science vessel.
As for the type of submarine, it’s important to point out that nuclear-powered submarines are essential for operating under ice, but also that there could be new less expensive technologies that could also operate under ice. So that’s worth considering.
Given the lengthy 30-year time period expected to replace the submarines, new technologies could be examined as they emerge, and it might be possible to establish partnerships with other Arctic countries that have similar needs.
Senator Gignac: I have neither your expertise nor your knowledge of shipyards in Canada, but while we can build icebreakers and other vessels in Canada, do we have the capacity, if we decide to move ahead with the new submarines, to build them here, or would we have to deal with other countries?
Mr. Lagassé: I believe it would be a huge investment, but don’t think, given our capacity, that it would be possible within the required construction period. We could, however, always ask people in the industry whether they feel capable of doing so.
I believe it’s highly probable that we would have to purchase them from abroad.
Senator Gignac: Thank you.
[English]
Senator M. Deacon: Thank you both for being here today.
As we’re talking, I’m thinking about — a bit of a theme — the local infrastructure in the Arctic as it relates to what we’re talking about here, the National Shipbuilding Strategy. We have heard in prior meetings and conversations that while it’s all well and good to renew our fleet, there isn’t much room to operate in the North without the appropriate amount of local infrastructure to maintain and refuel. The HMCS Harry DeWolf, for instance, had to contract a tanker to refuel it during its recent transit of the Northwest Passage.
Are we shortchanging our future feeder ships by not investing enough in infrastructure in the Arctic? I would think this is especially important given the continued delays in delivery of our supply ships.
I’ll direct this question to Professor Lagassé, but you’re both welcome to respond.
Mr. Lagassé: Thank you, senator. I’ll begin by saying that I believe infrastructure is quite possibly the most underappreciated crisis facing the Canadian military. It deserves study in and of itself. This is an issue that does not get the attention it deserves, but it is front and centre and should be for all of us.
When it comes to Arctic infrastructure in particular, a deepwater port obviously has been contemplated. I’ll simply note that we need far greater infrastructure in terms of search and rescue as well, in terms of being able to access the region, which is immense. To put a finer point on it, the enormity of the region and the limited infrastructure we have limits our ability to act overall, and that is something that will need to be considered. I’ll leave it there.
Senator M. Deacon: Thank you for the responses. I’ll defer my time to my colleagues.
Senator Richards: Thank you to the witnesses.
Mr. Klapatiuk, I have a quick question. I know it’s a theoretical one, but do you feel our country is in any way being undermined by parliamentary indifference to your concerns?
Mr. Klapatiuk: Yes, I am very concerned. The Arctic takes a tremendous amount of time to build infrastructure and to train people. While the parliamentary world can deal in years or decades, just to build any kind of infrastructure in the Arctic takes three to five years.
With DND in some of the planning areas — and I’ll use Yellowknife as an example — they started planning in 2004 for a building and they haven’t even started. The Inuvik runway, which is now started, was first talked about by General St-Amand in 2007, and they’re hauling gravel now. The Nanisivik fuel depot was started on an existing site in 2008 and it may be ready in 2023. So there is a difference between the North and the South when it comes to construction.
Second, Parliament is busy with many more things than just the Arctic, and I am sure it sometimes gets pushed back. We are now in a position with Russia and China and other adversaries where we just don’t have the time anymore. One of the things I see is the capability of integrating military operations with civilians in order to give a quick upside for our current defence. Everything I’ve heard so far is about what is going to happen 20 or 30 years down the road. We are now faced with the here and now. We have no place to go.
I hope I answered your question.
Senator Richards: You did, and if I might ask: Do you think we’ve given up our moral responsibility for our own safety to American expertise?
Mr. Klapatiuk: Yes, we have. General Pelletier, in a House of Commons committee on November 3, stated that when it comes to air-to-air refuellers, they will use what they can and then borrow or beg from the United States. Bringing up air-to-air refuellers, it doesn’t matter whether it’s the F-35 or the F-18, they need fuel. Without an air-to-air refueller, these planes are limited. To be clear, an F-18 cannot fly from Cold Lake to Inuvik non-stop; it has to be tanked. When it gets to Inuvik, now it’s ready to go to work. But if it doesn’t have adequate fuel supplies, it can’t do it.
Yes, we are pulling from American assets, and America is kind enough to let us do it. However, when something really happens, Americans are going to look after themselves first. They have no choice. They will include Canada, because there is no choice in that factor either.
Senator Richards: Thank you very much, sir.
The Chair: We will go to our final senator on our list. If anyone else wants to identify themselves for questions, please let us know.
Senator Dasko: Thank you to the witnesses for being here today.
My first question is to Mr. Klapatiuk. This committee was in the Arctic just a few weeks ago, and we did a tour of the Inuvik NORAD base. I don’t exactly know how to ask this question, but if you had been the one taking us on the tour, what would you have wanted us to see and know about?
Mr. Klapatiuk: I’ve done many tours with NORAD people, U.S. Marine Corps and Canadian officers. We even had a House of Commons committee come through Inuvik.
One of the things we have to look, if I were giving the tour, is that we have eight people currently on the Inuvik Forward Operating Location. That is it. We have a shortage of fuel, which I’ve talked about to many people going back as far as 2015 and again in 2017 and 2018. We still face the same issues.
With Real Property Operations, I did not get a rate increase in the Arctic for my hangar for 10 years. They then terminated my contract. So now we have nothing. That is the message people have to understand.
No offence to you, ma’am, or anyone else but people in Ottawa are at a complete disadvantage. As I said before, trust but verify. I could tell you that the grass is growing here, and we know it’s not true, but you have trouble verifying that.
My tours were never easy. I was very clear, concise and actually hard, because we have no choice. The Arctic is hard, and it peels the layers away very quickly.
So I would start with infrastructure, fuel, operations and personnel.
Senator Dasko: We did see the runways; we were told about the runways. We did see a CF-18, supposedly. I think, almost by accident, it was there when we were there.
Do you have anything to add to that, Mr. Klapatiuk?
Mr. Klapatiuk: As I keep saying, we’re in the here and now. Russia is moving forward. China is moving forward. We have nothing.
As it pertains to ships — and I appreciate the other witness’ comments — NORAD has picked out the five domains that we must be aware of, which are the land, sea, ocean bottom, cyber and cyberspace. But there is also another factor that many people do not address, which is our hybrid warfare. That could be anything from financial investments in the mining industry throughout the Arctic, roads — there is a multitude of what is now called the hybrid warfare investment. Everything is being weaponized, and that poses a major problem because, from a security perspective — and I’ve been involved in security as well — many people are not catching up fast enough to what is actually happening. I always ask where I would get the information. Sometimes the best place to get it is the Financial Post.
Senator Dasko: That says a lot. Thank you.
I have a question for Professor Lagassé. Professor, you’re a political scientist, I believe, and you made the point that there are competing priorities against defence spending; there are competing priorities in the social spending area in particular and other areas where the government spends. You also made the point that we have heard recent announcements that the government is not going to keep the pie growing; it’s going to pick and choose from the pie that’s there.
What is your view about the priority that defence spending has compared to these other priorities, from the point of view of the government and also from the point of view of Canadian public opinion? What priority do you think this spending has compared to the other priorities that government has?
Mr. Lagassé: Thank you, senator.
First off, the investments have been significant, or at least the announced investments have been significant in terms of the capital program in Strong, Secure, Engaged of approximately $100 billion. That, however, is laid out over a number of decades. So that is important to recognize. Similarly, for the Coast Guard, we are looking at tens of billions of dollars. That is big money.
That said, one of the measures we have of how committed we are is as a percentage of gross domestic product. That tells you what portion of your economy you are committing to defence as compared to your other allies. As many of you know, in that respect, we still fall below what we have committed to NATO.
As your other witnesses have pointed out, part of the difficulty here is that even if we wanted to spend more and get this going faster, we simply lack the capacity. The ability to acquire and to service those capabilities has atrophied owing to decisions 30 or 40 years ago when we tackled the deficit last time. So we are trying to make up for lost time. If we find ourselves, in the coming decades, with another effort to reduce the deficit in light of the spending we had to incur both in 2008 and with the pandemic, we need to be very mindful of just how deeply we cut in terms of capabilities that are already very difficult to acquire and already baseline at 1% or 1.5% of GDP.
To answer your question more directly, senator, it’s simply an improvement in terms of where it has been on the priority list in the past, but it’s nowhere near where it may need to be, particularly when it comes to the Arctic.
Senator Dasko: Thank you.
[Translation]
Senator Dagenais: Mr. Klapatiuk, I won’t ask you to give us a list of the shortcomings in terms of refuelling in the Arctic, because time is short. However, if you had to focus on those gaps that could have serious consequences in an emergency, what do you feel would be the most important?
[English]
Mr. Klapatiuk: Thank you for your question, sir. We all understand that, without aviation, the Arctic will not survive. We can talk about ships, roads, rail and whatever, but without aviation, the distances are so vast.
We require, number one, hangarrage for aircraft. We have to have an air-to-air refueller ready in 15 minutes. Without hangarrage, we can’t do that. Number two is that there needs to be adequate fuel supplies at each site, and number three is the runway capabilities.
One of the problems we face with the C295, for example, as a search-and-rescue aircraft, it will not land on gravel or what we call “austere runways.” That poses a significant problem in the Arctic and in the northern part of all provinces in Canada, because all the runways are gravel, ice or ice-covered. It poses a major problem.
Second, all of our threats right now that we are fully aware of are aviation-related ones, and those are bombers. I will not approach the submarines. But we have to have a strong, robust aviation program.
[Translation]
Senator Dagenais: I have two short questions for Mr. Lagassé. In your view, to what extent can the role played by Canadian content political commitments in equipment procurement become an issue that could slow down the delivery of equipment considered urgent for operations?
Mr. Lagassé: Generally speaking, senator, these needs are specified early on in the process and we are already capable of identifying those Canadian industries that could contribute.
Generally speaking, based on my experience as a member of the panel you mentioned earlier — I’ve looked at about 100 projects since 2015 — I have never seen a Canadian content requirement that had a negative impact on a project. It might, however, cause delays if we were emphatic about developing or building capacity in Canada. There is a significant difference between having economic impacts in Canada, on the one hand, and the and the need to develop or build capacity in Canada.
Senator Dagenais: Experts have for a long time pointed out the importance of protecting the Arctic, for us and our allies. Do you get the impression that the government has ignored this urgent matter for too long, and that its promises to make up for lost time are coming a little late?
Mr. Lagassé: It’s true that we’ve known for a long time that the Arctic, owing to climate change, is becoming globally important not only from the military standpoint, but also in terms of trade and tourism, which could generate significant risks. More and more boats for tourism in the region would increase the rescue risk and Canada’s responsibility for being able to respond to emergencies, and likewise for economic development. If the region is developed, it’s important to be able to deal with emergencies, crises and other matters. We need to look at the big picture.
Senator Dagenais: Thank you, Mr. Lagassé.
[English]
The Chair: I see no other questions, and in that sense it brings us to the end of our meeting this evening.
I want to thank you sincerely, Mr. Klapatiuk and Dr. Lagassé, for helping us this evening. This is obviously an extremely important phase of our study of Arctic security and defence. You have been forthright with your analysis of the challenges and problems, as have our earlier witnesses. We thank you for your very direct advice and for your contribution to our work. We’re highly reliant on experts to help us with this, and you have done that considerably this evening. On behalf of all our committee members, and indeed the Senate of Canada, we thank you for your thoughtful advice, and we wish you all the very best.
Our next meeting will take place next Monday, November 21, at our usual start time of 4:00 p.m. eastern. With that, I wish everyone a good evening. The meeting is now adjourned. Thank you.
(The committee adjourned.)