Future Fighter Industry Day Statements

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Lisa Campbell, Assistant Deputy Minister, Defence and Marine Procurement Branch, Public Services and Procurement Canada

Good morning. I’d like to begin by thanking you—representatives of foreign governments, aircraft manufacturers and Canadian and foreign industry—for being with us for today’s Future Fighter Capability Project industry day. I would also like to specifically recognize the participation today of the Canadian Association of Defence and Security Industries (CADSI) and the Aerospace Industries Association of Canada (AIAC).

Stakeholder engagement is an important part of this competitive procurement process, one that our government is committed to. We are all here today for different reasons—some of us to share information, others to gather information and determine what competitive advantage can be brought the competition. But at the end of the day, we all are share the same objective. We are all committed to an open and transparent competition, one in which all suppliers that meet Canada’s needs can participate on a level playing field. And most importantly, we all want to see the Canadian Armed Forces acquire the right replacement aircraft at the right price and economic benefits, as quickly as possible.

So with that in mind, we are pleased to be here today to provide you with more information on our plans for an open and transparent competition to permanently replace Canada’s future fighter fleet. But most of all, we want to hear from you—during the question and answer session later this morning and during the one-on-one meetings to follow, about your perspectives on our proposed way forward. To put today’s event in context, recall that during 2016, Canadian government officials consulted with governments and industry in allied and partner countries on fighter aircraft currently or scheduled to be in production. We gathered information on costs, aircraft capabilities, delivery times, and potential economic benefits to Canada for various fighter aircraft. Following these consultations, the Government of Canada announced in November 2016 that Canada would prepare to launch an open and transparent competition to acquire a permanent replacement for our CF-18 fighter aircraft.

Following this announcement, consultations continued with allied and partner foreign governments and defence organisations through the summer and fall of 2017 to further explore potential approaches to the competitive process. As part of these consultations, we learned more about how some other countries are implementing their fighter replacement programs, and their procurement timelines which has informed us in developing our process.

On December 12, 2017 the Government of Canada announced that it was launching an open and transparent competition to replace Canada’s fighter fleet with 88 advanced jets. This competition will take as its starting point the missions that the Government set out for the Canadian Armed Forces, including the Royal Canadian Air Force, in Canada’s defence policy Strong, Secure, Engaged, which was published in June 2017.

In the Canadian context, most competitive procurements entail solicitation of binding bids from private sector companies that lead to a contract between Canada and such companies. However, for the procurement of fighter aircraft—that is, sensitive export controlled military capabilities—the involvement of the suppliers’ governments is also required. The involvement of governments is also required to obtain information and solutions in regard to fleet operations, pilot training, etc. As a result, we are undertaking a new competitive procurement approach to solicit proposals with foreign governments acting as primary points of contact for Canada. Foreign governments will be responsible for working with commercial suppliers and other entities, as required, to present Canada with comprehensive solutions.

Proposals for a permanent fighter capability replacement will be for a complete solution in response to Canada’s stated requirements identifying how each requirement will be provided through one or several bilateral or multilateral government agreements and/or contracts. This procurement approach is designed to maximize competition, and focus on outcomes. Governments are encouraged to submit proposals for more than one manufacturer of fighter aircraft, if applicable.

You will hear more about the operational outcomes that underpin this capability-based procurement from Major General Alain Pelletier from the Royal Canadian Air Force and Mr. Pat Finn, Assistant Deputy Minister, Materiel Group with the Department of National Defence.

Additionally, given the complexity of this competitive procurement and the diversity of solutions that may be offered, Canada is considering the implementation of a competitive procurement strategy that may include an opportunity for dialogue and negotiation with Suppliers, as well as clarification and improvements of their proposals. In this context, we are considering an approach where Suppliers would be asked to provide initial non-binding proposals to deliver Canada’s required operational outcomes in response to our stated requirements. These proposals could subsequently be clarified and improved through engagement between Canada and Suppliers, resulting in the submission of amended proposals for formal evaluation. This notional approach is subject to further development following engagement with Suppliers on the Suppliers List and consultations with various stakeholders. We need your help to get this right.

The primary objective of today’s industry day is to present foreign governments, defence organisations, aircraft manufacturers, foreign and Canadian industry with the information required to make an informed decision about if and how to respond to the Supplier’s List Invitation for the Future Fighter Capability Project. As you know, the Suppliers List Invitation was posted on BuyandSell.gc.ca on December 12, 2017.

Only Suppliers on the Suppliers List at the time of notification of solicitation will be invited to participate in formal supplier engagement and to submit proposals. Notification of solicitation and publication of the approved Supplier List could occur as early as 12 February 2018 following evaluation of responses to the Suppliers List Invitation. For this reason, responses to the Suppliers List Invitation are requested no later than February 9, 2018.

The Public Services and Procurement Canada team is responsible for ensuring the fairness and integrity of the procurement process and for leading stakeholder engagement. It is being led by Mr. Troy Crosby, Director General Defence Major Projects and Ms. Paula Folkes-Dallaire, Senior Director of the Future Fighter Capability Project. Later this morning Ms. Folkes-Dallaire will be presenting further details on the procurement strategy and next steps.

Mr. Paul Halucha from the department of Innovation, Science and Economic Development will be speaking next about the importance of leveraging economic benefits for Canada’s aerospace and defence industries through the Industrial and Technological Benefits Policy. The Value Proposition will be an important part of this project and the department of Innovation, Science, and Economic Development will facilitate partnering opportunities between fighter manufacturers, Canadian industry, and post-secondary research institutions.

This open and transparent competition, including supplier engagement, will be overseen by an independent third-party Fairness Monitor, who observes all key engagement activities and will provide an attestation of the fairness of the process, and its openness and transparency. The Fairness Monitor’s final report will be publicly available.

Proposals received from suppliers will be evaluated in accordance with a bid evaluation plan contained in the solicitation documents, based on technical merit, costs, economic benefits, as well as program and contractual risks. The evaluation of bids will also include an assessment of bidders’ impacts on Canada’s economic interests.

The Government of Canada is committed to doing business with trusted partners when it comes to major defence acquisitions. This new assessment will be developed in 2018 to determine whether the procurement from a supplier is compatible with Canada’s economic policy objectives. Industry engagement will be a key feature in the development of this assessment, with opportunities for input on initial concept design, evaluation criteria and guidelines. Engagement with industry associations will begin in February. We will be coming back to suppliers for this project on this assessment once the Suppliers List has been established.

Following negotiations and selection of the best-value solution to meet Canada’s future fighter capability requirements, contract award is anticipated in 2021/2022, and delivery of the first replacement aircraft is planned for 2025. This said, we look forward to formal engagement with Suppliers to receive feedback on the request for proposal documents and to explore options for accelerating this schedule. Canada welcomes Suppliers’ active and fulsome involvement in this important procurement.

At this point, I will turn now to Mr. Paul Halucha to make a few opening remarks on behalf of Innovation, Science and Economic Development Canada.

Paul Halucha, Assistant Deputy Minister, Industry Sector, Innovation, Science and Economic Development

Good morning and thanks to Public Services and Procurement Canada for the introduction. My thanks also to the Canadian Association of Defence and Security Industries and the Aerospace Industries Association of Canada for your assistance in helping us organize this important event, and facilitating the networking session this afternoon.

I am pleased to join you today as we begin to lay the foundation for our approach to maximizing the economic benefits for this once-in-a-generation opportunity.

This project is the most significant investment in the Royal Canadian Air Force in over 30 years. Through our Industrial and Technological Benefits Policy, or Industrial and Technological Benefits (ITB) Policy, we will leverage this project to generate long lasting benefits for Canadian industry.

More than 30 years ago, when Canada procured our current CF-18 fleet, we negotiated an economic benefits package that left an indelible legacy on our aerospace and defence industry. Expectations are high that we will generate similar far-reaching economic benefits for this project. Today, our aerospace and defence sectors combined contribute more than 240,000 jobs across Canada. This procurement is an opportunity to position these important sectors for success for the next several years.

The development and design of our Value Proposition approach will be key in helping achieve Canada’s goals in this regard. As part of the ITB Policy, suppliers will be required to submit such a Value Proposition in their bid proposal.

Later this morning you will hear John MacInnis, John give a wave, our Director for Air Projects within our ITB Branch, who will broadly outline our notional approach for the Future Fighter Value Proposition. I’d also like to introduce the Director General of the ITB Branch, Jeff Waring, who will be overseeing our work on this file.

As you may know, my department is responsible for Canada’s Innovation and Skills Plan. Through the Plan, we are looking to build more competitive Canadian companies that are positioned to compete in the global economy. This includes fostering growth through innovation and collaboration with suppliers, universities, colleges and other publicly funded research institutes. The ITB Policy is an important driver in meeting the objectives of the Innovation and Skills Plan. The ITB Policy also contributes to the objectives of Canada’s new defence policy, Strong, Secure, Engaged, by leveraging the participation of Canadian companies in meeting the current and future needs of the Canadian Armed Forces. The Future Fighter Value Proposition is an opportunity to reinforce and deliver on both of these important Government priority areas. This is especially true given the innovative nature of Canada’s aerospace sector, which is the number 1 research and development player across all Canadian manufacturing industries.

In the months ahead we will be working closely with suppliers and Canadian industry to receive input on our economic benefits approach for this project. This ongoing dialogue is critical for us, and indeed across the Government of Canada, in helping ensure strong outcomes.

Our objective is to ensure that Canadian industry is well-positioned to participate in the Value Proposition. In the coming months we will be conducting regional forums across Canada to consult with Canadian stakeholders on our economic benefits approach and to raise awareness of the potential opportunities on this project. In addition, our Department, through the Regional Development Agencies, is pleased to assist all suppliers in identifying potential Canadian supply chain partners by facilitating business-to-business matchmaking opportunities.

The Government of Canada is committed to doing business with trusted partners when it comes to major defence projects. We are working closely with Public Services and Procurement Canada on developing an important new assessment criterion to determine whether the procurement from a potential supplier is compatible with Canada’s economic policy objectives. Industry engagement will be a key feature in the development of this criterion, and will be conducted through separate engagement activities in the near term. Our first step on February 8th is to meet with the industry associations to begin this engagement. is important to note that while the ITB Policy seeks to leverage economic benefit from future investments, the new criterion will evaluate the past and recent economic behavior of potential bidders leading up to the procurement. More detail on the new criterion will be made public in the coming months.

Going forward, it will be important to ensure that our Value Proposition approach results in lasting economic benefits, and I look forward to continuing the dialogue with all of you that we have started here today.

At this point I would like to introduce Mr. Pat Finn, Assistant Deputy Minister for the Department of National Defence’s Materiel Section, who is responsible for overseeing the Future Fighter project.

Pat Finn, Assistant Deputy Minister, Materiel Group, National Defence

Ladies and Gentlemen,

Thank you for joining us here today.

The event today is a very important milestone in the delivery of this capability, a critical element of the new Defence Policy Strong, Secure, Engaged.

My role in the Department of National Defence is to lead the project that will deliver the new fighter capability to the Royal Canadian Air Force (RCAF). The Canadian Armed Forces have identified the requirements associated with a fighter capability to meet the mandate given to them by the Government of Canada. As the Project Lead, the Materiel Group’s efforts are aimed to ensure the fighter capability that is delivered meets these stated operational requirements, and is adequately supported over the life of the aircraft, including all aspects of the logistics support, such as maintenance, training, and supply chain management. This capability also needs to be affordable; not only to purchase, but also to operate and sustain throughout its entire life cycle.

To support these activities, we have stood up a Project Management Office that will work with all internal and external stakeholders to deliver this capability within budget and schedule. This includes industry and government partners on many elements of this project, as well as, for example, our Assistant Deputy Minister Infrastructure and Environment colleagues, to meet the infrastructure requirements for this project.

During today’s event, you will hear from Mr James Gaerke, Project Manager for the Future Fighter Capability Project, concerning the scope and objectives of delivering the required fighter capability. Importantly, we are seeking to acquire 88 fighter aircraft, and to set up the sustainment capability necessary to transition to the new fighter. We will also examine how to transition to the long-term logistics support that will ensure the safe and efficient operation of this advanced fighter capability for the RCAF, for the next thirty plus years.

Let me now take a few minutes to discuss the approach that Canada is implementing to define and establish the right sustainment solution to support its new fighter capability.

As some of you may be aware, in its efforts to modernize Defence Procurement, the Department of National Defence, in collaboration with Public Services and Procurement Canada, and Innovation, Science and Economic Development, launched a Sustainment Initiative to modernize the way we contract for sustainment services for military equipment. This approach is being applied to all significant sustainment contracts.

The Sustainment Initiative aims to create more cost-effective and flexible sustainment solutions and drive innovation in the provision of sustainment services for major defence capabilities, a need that was highlighted by the Auditor General a few years ago. Under the Sustainment Initiative, the three government departments work collaboratively with suppliers to deliver sustainment solutions that meet four key principles:

The ultimate goal is to establish sustainment services in a manner that ensures a high level of military equipment readiness at best value to Canadian taxpayers and the Canadian Armed Forces. Rather than apply a one-size-fits-all set of rules and requirements on how to establish long-term sustainment, procurement and sustainment specialists in the three government department’s work together through a Sustainment Business Case Analysis process to develop options for sustainment that will best optimize the four sustainment principles.

Later today, Mr Brian Lewis, Sustainment Manager for the Future Fighter Capability Project, will provide some additional details on this process and how the project will work through it over the next several months.

In closing, we will work with all stakeholders to specify the technical requirements of the aircraft, the sustainment approach, the infrastructure needs, and the training systems for technicians and operators—including things like the need for a synthetic training environment.

Let me now turn to Major General Alain Pelletier from the Royal Canadian Air Force, who will speak to the operational aspects of acquiring new Fighters for Canada.

Major-General Alain Pelletier, Chief, Fighter Capability Program, Royal Canadian Air Force

Good Morning Ladies and Gentlemen

The Government of Canada’s Defence Policy articulates the concurrent commitments assigned to the Royal Canadian Air Force to ensure that Canada remains strong at home secure in North America and engaged in the world where the Royal Canadian Air Force (RCAF) is a key—and often a lead—component of Canada’s engagement.

As a guarantor of Canadian sovereignty, the RCAF needs the resources—the people—and the airpower capabilities to deliver on these essential missions for Canada.

The recent announcement regarding the replacement of our current CF-18 fleet with advanced fighter aircraft is aimed at investing in our country’s security.

… and it is Canada’s responsibility to ensure the RCAF has, as stated in Canada’s Defence Policy, the required modern aerospace capabilities that provide an operational advantage in relation to present and future potential adversaries This enables the RCAF to succeed in the missions Canada asks the Canadian Armed Forces to carry out—in complex operating environments and against technologically advanced systems and adversaries.

Our new defence policy states that Canadians require a military that is agile, highly trained, superbly equipped, capable and professional. Collectively across government, we aim to deliver these tenets with this project.

In order to do this, the Future Fighter must be able to detect, track, identify, assess, and if required, defeat threats in all environments, whether permissive or contested, in a North American Aerospace Defense (NORAD), North Atlantic Treaty Organization (NATO) and Coalition context.

But Canada does not always act alone. So, we must field advanced capabilities to keep pace and remain relevant to our allies and to work closely with our partners in NORAD and NATO. Seamless interoperability with the United States and our 5 eyes partners will ensure that Canada makes a robust contribution to coalition efforts around the globe.

Thanks to this acquisition, the Royal Canadian Air Force will be better able to contribute to the success of Canadian Armed Forces missions in collaboration with the Royal Canadian Navy, the Canadian Army, the Special Forces, and the entire Government.

We will do the same in the procurement process flying in close formation with our partners across government.

While this important procurement process is underway, the women and men of the Royal Canadian Air Force will continue to rely on our modernized CF-18 fleet to conduct sovereignty, NORAD and NATO operations, as well as any other requests we may receive, as we prepare to transition to the new capability, delivered through this project.

The RCAF requirements for the future fighter is aligned to Strong, Secure and Engaged and fully reflects the Government of Canada’s intent to acquire a fighter fleet replacement through a competitive process.

In conclusion, I would like to remind you that the defence policy requires the Royal Canadian Air Force to simultaneously carry out a wide range of missions for Canada.

This significant investment in the RCAF will provide the necessary flexibility to enable the Canadian Armed Forces to operate across the spectrum of conflict, enable interoperability with Canada’s allies, and maintain an operational advantage over the threats of today and for the next several decades.

I thank you for coming today, but before I leave the stage, I would like to introduce Mr Stephan Kummel, Director General Fighter Capability and LCol Jean-Marc Brzezinski, the Project Director for the Future Fighter Capability Project. LCol Brzezinski is an experienced fighter pilot and will provide more details as it relates to the environment within which our Future Fighter will operate and the Capabilities that will be sought by the RCAF.

LCol Brzezinski, the floor is yours.

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