Defence procurement overview: Committee of the Whole—May 19, 2022
Document navigation for "Committee of the Whole: May 19, 2022"
On this page
Defence procurement
In this section
Key data points
- We have recently achieved important milestones with respect to the future fighter capability project (FFCP) procurement process. We continue to work towards contract award for the FFCP this year
- On February 11, 2022, the final request for proposals (RFPs) were released for the Future Aircrew Training Program (FAcT) and the remotely piloted aircraft system (RPAS) projects
- Canada has accepted delivery of 9 out of 16 fixed-wing search and rescue (FWSAR) aircraft
- Canada is advancing work to replace its CC-150 Polaris fleet with a strategic tanker transport capability. The contract award for full implementation is anticipated to take place in 2022 to 2023
- In 2021, Public Services and Procurement Canada (PSPC), on behalf of the Department of National Defence (DND), awarded 2 contracts, valued at $186-million tax included, for the purchase of 3 new tactical control radars and their in-service support for an initial period of 5 years
- In 2022, PSPC, on behalf of DND, awarded a contract to an Inuit owned company for the operation and maintenance of the North Warning System (NWS). The new contract is for an initial period of 7 years, and is valued at $592 million ($527 million before taxes). The contract also includes 4 2-year option periods for a total estimated value of $1.3 billion ($1.1 billion before taxes)
- The NWS has had a long and successful history, in large part due to the involvement of Inuit and Inuit industry. That’s why DND, in conjunction with Crown-Indigenous Relations and Northern Affairs Canada, Indigenous Services Canada and Public Services and Procurement Canada, has worked diligently to consult, engage, and include Inuit firms throughout this competitive process
- Between 2012 and 2021, contracts awarded under the National Shipbuilding Strategy (NSS) have contributed an estimated $21.2 billion to Canada’s gross domestic products, for an average of nearly $2 billion annually. These contracts have also created or maintained more than 18,000 jobs a year, through the marine industry and its Canadian suppliers, over the past decade
Defence procurement summary
- PSPC’s 2021 mandate letter includes a commitment to “ensure the ongoing delivery of defence procurements in support of Canada’s defence policy: Strong, Secure, Engaged”
- We work closely with DND and our other key federal partners to ensure that we provide the acquisitions support needed to deliver the right equipment and services to the Canadian Armed Forces in a timely manner
- PSPC chairs the interdepartmental governance committees established under the Defence Procurement Strategy to bring together all the key federal players to transparently consider trade-offs related to capabilities, cost, the timely delivery of equipment and services, and benefits to Canada
- Defence procurement is very complex and multifaceted and the defence procurement apparatus is making sound progress at addressing this complexity and delivering on multiple air defence procurements. Despite the challenges, we are making progress on key air defence procurements
- As we make progress on major projects, defence procurement continues to innovate to meet the needs of the Canadian military
Air defence procurement
- Until such time as new fighters are delivered and fully operational, there is a need to extend the life of the CF18 aircraft. The Hornet extension project will provide upgrades to avionics and mission support systems for up to 94 aircraft in order to meet new regulatory requirements and keep pace with allied military interoperability and will provide combat capability upgrades for 36 aircraft
- To ensure that there is no capacity gap until the new fighters are delivered and are fully operational, the Interim fighter capability project (IFCP) acquired 18 Australian F/A-18 aircraft, associated spares and equipment to supplement the CF-18 fleet. All aircraft deliveries were completed in 2021. To date 6 aircraft have been introduced into service after some minor modifications and it is expected that all aircraft will be in service by the end of 2022
- We are making increased use of the “phased bid compliance” process in projects like the FFCP and the FAcT to foster competition and best value to Canada by increasing the potential number of compliant bids
- To support the streamlining of defence procurement processes, in June 2019, contracting authorities for the Department of National Defence competitive services contracts increased from $1 million to $5 million. This has allowed for appropriate due diligence and attention to be focused on higher value, risk and complexity acquisitions
National Shipbuilding Strategy
- More than a decade ago, the Government of Canada launched the NSS as Canada’s long-term plan to renew the fleets of the Royal Canadian Navy and the Canadian Coast Guard and it is helping rebuild a domestic marine industry and create sustainable jobs in Canada
- Since then, we have seen 5 large ships and numerous small vessels delivered to the Royal Canadian Navy and the Canadian Coast Guard, as well as the completion of dozens of ship repair, refit and maintenance projects at shipyards across Canada
- This past year, construction and design work continued on a number of vessels
- Deliveries of completed vessels included new search and rescue lifeboats to the Canadian Coast Guard and a second Arctic and offshore patrol ship delivered to the Royal Canadian Navy
- Several repair, refit and maintenance contracts were also awarded on behalf of the Canadian Coast Guard and the Royal Canadian Navy, generating hundreds of jobs and significant economic benefits to communities across Canada
- We also made progress towards selecting a third shipyard under the NSS to build icebreakers for the Canadian Coast Guard, and we hope to have more to share on this in the coming months
- These are important achievements, but despite the successes, the NSS continues to face significant challenges
- As indicated in the Auditor General’s 2021 report, shipbuilding is highly complex and challenging work
- The delivery of ships has been slower and more costly than originally anticipated
- During the early years of the strategy, expertise both at the shipyards and within government was still developing as new workforces in modernized shipyards were building entirely new classes of ships. This has led to ongoing challenges with respect to planning, management and oversight
- Canada had limited recent experience in the planning of shipbuilding projects when original delivery schedules and budgets were established more than a decade ago
- Much has changed since then, and preliminary budgets did not fully consider refinements in build requirements and plans, inflation costs, changes in exchange rates, or labour rates and material costs—all of which have risen significantly over the last decade
- The marine industry is also facing challenges with attracting and retaining workforce as well as developing skills and capabilities
- Of course, industries around the world have experienced added challenges due to the pandemic and Canadian shipbuilding is no exception
- COVID-19 has put immense pressure on workforces, working practices and supply chains, and has resulted in rising costs of materials as well as delays to build projects
- Although we are still assessing the full impact of the pandemic on our projects, we anticipate further adjustments to project schedules and budgets will be required. These are serious problems that several industries are facing at the moment
- It is true that we have made some progress since the inception of the NSS, but we know we need to apply lessons learned now so that we can keep delivering in the future, especially as global challenges persist
- I can tell you that the government continues to work closely with shipbuilding partners to do just that
- And now that the shipyards and Canada have gained the experience required to set more realistic schedules, we are better positioned to tackle emerging challenges and manage risks
- To address these challenges, we have made significant enhancements over the past number of years to how we manage the strategy. This includes strengthening risk management tools and processes so that we can make more informed decisions
- We are actively working with the shipyards to address issues related to overall performance using proven tools such as darned value management and actively managing specific risk registers through a rigid governance system
- And we are engaging with the marine sector to develop an human resources strategy that aims to support industry in their ongoing work to recruit new workforce talent
- The strategy relies on the active involvement of the marine sector including the large shipyards and relies on a common understanding of the challenges to be tackled and the joint development of solutions
Military pistol procurement
Key data points
- A request for proposal for the acquisition of 7 000 pistols, plus options to acquire up to 9 500 additional pistols, was issued in February 2022
- PSPC posted a new solicitation on February 18, 2022 addressing the Canadian International Trade Tribunal recommendations. and it closed on April 19, 2022
- The bid evaluation process including shooting trials of proposed pistols is currently planned to be completed by end of August 2022
Background
- The Government of Canada is committed to modernizing its military equipment to support the Canadian Armed Forces and keep Canadians safe
- Small arms are critical tools for the success of Canadian Armed Forces training and operations
- The current Browning High-Power 9mm pistol has been in use across the Canadian Armed Forces for 70 years. Due to serviceability and reliability issues, the Browning pistol needs to be replaced
- A request for proposal was published on May 3, 2021 and 2 complaints were filed with the Canadian International Trade Tribunal by Rampart International Corporation, the Canadian distributor of a pistol made by Glock, an Austrian company
- On November 10, 2021, the Canadian International Trade Tribunal found the last complaint valid in part, and recommended, as a remedy, that Public Services and Procurement Canada cancel the pistol solicitation and issue a new solicitation
- In light of the tribunal’s recommendation and the reasons provided, PSPC has decided to cancel this solicitation and worked with the Department of National Defence to issue a follow-up solicitation that would address the tribunal’s concerns
North Warning System operations and maintenance contract
Key data points
- Following a competitive process, on January 31, 2022, Nasittuq Corporation, was awarded a $592M contract effective April 1, 2022 until March 31, 2029
- The North Warning System will be in place until a replacement system is designed and constructed to fulfill the aerospace surveillance mission requirement
North Warning System
- The government is committed to ensuring that members of the Canadian Armed Forces have the equipment they need to do their jobs and protect Canadians. The North Warning System is a vital part of North American defence and Arctic sovereignty
- The North Warning System is a chain of remotely operated radar stations within the Arctic that provide continuous aerospace surveillance of Canadian and United States northern approaches. It is an essential element in the provision of aerospace surveillance information as a contribution to Canada's sovereignty and Canada’s participation in the North American Aerospace Defence Command (NORAD) with the United States
- The remote radar sites are linked by a satellite communications network to the Canadian Air Defence Sector in North Bay, Ontario. The control centre located at Canadian Forces Base North Bay, enables the continuous remote monitoring of all sites on a 24/7 basis
- A North Warning System operations and maintenance contract has been in place since the early 1990s to cover all required activity for its full support
- The work includes, program management, information management services, sustainment support, communications and electronics maintenance, operations, mobile support equipment, DND and US Air Force logistics, bulk fuel, government furnished airlift, real property management services, corrective and preventive maintenance management and engineering services, fire protection services, and environmental management
- An open competitive procurement strategy was developed for this requirement that ensures compliance on a wide range of Inuit and Government of Canada obligations
- The final request for proposals was released on March 31, 2021 and closed on July 19, 2021. Three bids were received, and following their evaluation, the contract was awarded to Nasittuq Corporation who provided the highest combined total score and provided the greatest economic benefits for the Inuit
- Nassituq Corporation is an Inuit firm who is owned by ATCO Structures and Logistics Ltd. (49%) and Pan Arctic Inuit Logistics Corporation (51%). Nassituq Corporation was also the contract holder from 2001 to 2014 and has significant experience with the operations and maintenance of the North Warning System
Strategic tanker transport capability project
Key data points
- February 12, 2021, an invitation to qualify was published
- April 1, 2021, the result was published with Airbus Defence and Space SA of Madrid, Spain as the sole qualified supplier
- A directed request For Proposal to Airbus Defence and Space SA was released May 13, 2022
Background
- In June 2017, the Government of Canada articulated within the strategic vision of the new Strong, Secure, Engaged (SSE) defence policy that Canada needs an agile, multi-purpose, combat-ready military. In response to SSE initiative #47, the Strategic Tanker Transport Capability (STTC) Project is the means to recapitalize the next generation strategic air-to-air tanker-transport capability, and replace the CC-150 Polaris fleet
- Aligning with the SSE requirement to enhance interoperability with Canada’s allies, the Minister of National Defence has a mandate to renew Canada’s strong commitment to the North American Aerospace Defence Command and the North Atlantic Treaty Organization (NATO), acting in multiple theatres simultaneously, while also bolstering disaster relief, search and rescue, contributing to peace operations and capacity building
- The STTC platform will be equipped to support and contribute to these renewed commitments through delivery of air-to-air refueling of Canadian, allied and coalition aircraft, strategic Government of Canada transport, aeromedical evacuation, personnel and equipment transport
Fixed wing search and rescue project
Key data points
- On May 4, 2022, the Department of National Defence announced delays in the fixed-wing search and rescue (SAR) project
- The CC295 Kingfisher fleet of aircraft, that will eventually replace existing SAR aircraft, still require significant work, tests, and trials before entering into Royal Canadian Air Force service. As a result, initial operational capability has been delayed from 2022 to 2025 to 2026
Project information and status
- Canada is building a more agile, better-equipped military, while ensuring the best value for Canadians
- As of May 3, 2022, 10 of 16 aircraft and all training devices have been accepted
- While operationalization of the aircraft will take more time than originally anticipated, Canada expects to remain within the project’s approved budget. The contract is performance-based, therefore payments are made only when equipment and services are delivered, and accepted by Canada
- The firm, fixed-price contract protects Canada from cost overruns for work defined in the contract and incentivizes the contractor to minimize further delays
- Due to the overall project complexity and the COVID-19 pandemic, the delivery schedule for the new fleet has experienced some delays which were caused by travel restrictions and loss of productivity. Canada continues to work closely with the manufacturer to reduce the impact of the delays
Remotely piloted aircraft systems
Key data points
- In May 2019, Canada established a list of qualified suppliers that demonstrated their ability to meet Canada’s needs
- The winning contractor will commit up to 5% of the contract value to support Indigenous benefits in Canada
Overview
- In June 2017, Canada committed to acquiring remotely piloted aircraft systems as part of Canada’s defence policy: Strong, Secure, Engaged. These aircraft will be integrated into a network of intelligence, surveillance and reconnaissance systems to enable near real-time flow of information essential to the Canadian Armed Forces operations
- The aircraft will be piloted by certified Canadian Armed Forces pilots from a remote location and will be capable of carrying and launching precision-guided munitions
- This is a multi-phased procurement. As part of the initial phase, Canada established, in May 2019, a list of qualified suppliers that demonstrated their ability to meet Canada’s need, as defined in the invitation to qualify. The qualified suppliers are L3 Technologies MAS Inc., and the United States Government and General Atomics Aeronautical Systems, Inc
- This group of qualified suppliers have been engaged to provide feedback to government, most recently through the release of a draft request for proposal in November 2020. Benefiting from that feedback, the formal request for proposal was released
- To support Indigenous procurement objectives, the qualified suppliers will have to provide a draft Indigenous participation plan with their proposal. This plan will detail how the winning contractor will identify the affected Indigenous communities and consult/engage with them, in collaboration with Canada, to obtain long-term, meaningful and sustainable benefits
- The winning contractor will also commit up to 5% of the contract value to support Indigenous benefits in Canada. The contractor will be required to finalize its plan no later than 6 months after contract award and will also be required to regularly report on progress in the area of Indigenous participation and deliverables set-out in their plan
- A fairness monitor is engaged to oversee and report on the openness and fairness of the entire procurement process. Once the procurement is completed the fairness monitor’s report will be published
- The formal request for proposal was released on February 11, 2022 and the contract award is anticipated by 2024 with the request for proposal scheduled to close in August 2022
Document navigation for "Committee of the Whole: May 19, 2022"
- Date modified: