NDVA Committee Meeting

STANDING COMMITTEE ON NATIONAL DEFENCE AND VETERANS AFFAIRS

COMITÉ PERMANENT DE LA DÉFENSE NATIONALE ET DES ANCIENS COMBATTANTS

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, April 15, 1999

• 0903

[English]

The Chairman (Mr. Pat O'Brien (London—Fanshawe, Lib.)): I call to order the meeting of the Standing Committee on National Defence and Veterans Affairs, noting that at least Mr. Laurin and Mr. Price are here from the opposition, but we would like some more members from the opposition. We have four or five government members here.

Mr. René Laurin (Joliette, BQ): I'm the opposition.

Mr. Robert Bertrand (Pontiac—Gatineau—Labelle, Lib.): You've got that right.

The Chairman: We have the Conservative Party and the Bloc Québécois represented on time. We're pleased for that.

Mr. Robert Bertrand: They're true Canadians.

The Chairman: That's right.

We're going to encourage the official opposition to get to this meeting on time. I want to note that. I'm trying to be in good humour about it, but we do have witnesses who were here on time, and I've appealed to the members before to please try to get here promptly. We will start to perhaps note in the record which parties are not here promptly, and maybe that will encourage them a little bit.

With that, I see a point of order from Mr. Bertrand.

Mr. Robert Bertrand: I don't think you are allowed to do that.

The Chairman: I'm not allowed to do that?

Mr. Robert Bertrand: I don't think you're allowed to say that the Reform Party and the NDP are not here.

The Chairman: Oh, okay. I'm sorry. I appreciate that correction.

Mr. John O'Reilly (Haliburton—Victoria—Brock, Lib.): We should stop sitting if the Reform Party is not here yet.

• 0905

The Chairman: In fairness to Mr. Hart, we were just noting that we're encouraging all the parties to try and be here at 9 a.m. for our witnesses; we weren't noting—

Yes, Mr. Clouthier.

Mr. Hec Clouthier (Renfrew—Nipissing—Pembroke, Lib.): On a point of order, Mr. Chairman, Mr. Hart was not with that particular party for a while.

The Chairman: I don't know. I won't comment on that.

So we're going to begin, and before we go to our witness, Mr. Bertrand wants to raise an important matter.

[Translation]

Mr. Robert Bertrand: On a point of order, Mr. Chairman, I have two issues I'd like to address.

[English]

First of all, I would like to tell all members that the technical briefings on the situation in Kosovo are still being done every day at NDHQ, and if any member from this committee is interested in going over, they are most welcome.

[Translation]

The Chairman: At what time?

[English]

Mr. Robert Bertrand: It's at 1 o'clock every day.

[Translation]

Mr. Laurin, briefing sessions on the situation in Kosovo are held daily. Everyone is welcomed to attend.

[English]

For further information, you can always browse the NDHQ web page.

The Chairman: All right.

Do you have a question on that, Mr. Price?

[Translation]

Mr. René Laurin: Are these briefing sessions televised?

Mr. Robert Bertrand: Yes, they are broadcast on RDI, Newsworld and other channels.

[English]

The Chairman: Mr. Price has a question.

Mr. David Price (Compton—Stanstead, PC): My problem is that those briefings are all very nice, but they're for the journalists. As members of Parliament, we can't ask questions at those briefings, and the ministers are not at those briefings—well, he has been there occasionally. So that rather bothers me.

The Chairman: All right.

Mr. Robert Bertrand: That's why we have Question Period—thank you, Mr. Wood.

The Chairman: Mr. Proud has a point on this matter.

Mr. George Proud (Hillsborough, Lib.): Mr. Bertrand, I wonder why briefings couldn't be set up for members of Parliament in one of the rooms in Centre Block, as they were during the Gulf War and other things like that. There were briefings held every morning for the foreign affairs and defence committee and whoever else wanted to go there.

Mr. Robert Bertrand: This time they're at NDHQ, and there are also representatives from Foreign Affairs at these briefings. I mentioned it was NDHQ, but it's also Foreign Affairs: National Defence and Foreign Affairs.

Mr. George Proud: But why couldn't we have something for the members of Parliament set up in the Parliament Buildings?

The Chairman: Do you want to make a motion, Mr. Proud?

Mr. George Proud: Not specifically a motion, but I'd like Mr. Bertrand to find out for us.

Mr. Robert Bertrand: Okay, I will find out.

The Chairman: Mr. Price.

Mr. David Price: I would like to make a motion, Mr. Chairman, that similar to what happened in the Gulf War when the ministers were present three days every week meeting with the national defence and foreign affairs committees, I think the same thing should be done.

The Chairman: All right. Well, it will take unanimous—

Mr. Robert Bertrand: If I can answer that, these technical briefings are for the media and, as I mentioned before, for all of us. If you ask that ministers be there, I can't give assurances that they will be there. As Mr. Wood mentioned a while ago, that is why we have Question Period. If there are very specific things that you want to ask the minister, then the House of Commons Question Period would be the place to ask those questions, as I'm sure Mr. Price—

Mr. David Price: You're smiling too, Bob, because you know we don't get any answers.

The Chairman: Maybe, colleagues, I could suggest this. The concern has been raised with the parliamentary secretary here, and I think it's a valid concern. Maybe we can leave him with that concern, to go back to the relevant ministers, because it would take unanimous consent anyway to receive the motion today. But I think we all share a concern that beyond the briefing where we can just sit and listen, the members of Parliament on both sides of the House, all parties, would like some kind of regular opportunity to be hearing from officials and a chance to speak with the ministers.

So if we could leave the concern with Mr. Bertrand, we'd like to get a report back from him on that at our next meeting on Tuesday. Possibly, if we don't like what we hear then, we could entertain a motion at that time. That might be a more effective way to deal with it.

• 0910

[Translation]

Mr. Laurin.

Mr. René Laurin: Mr. Chairman, since these briefings are televised and we can't ask questions, why would even bother to attend when we can simply catch them on television?

The Chairman: Mr. Bertrand.

Mr. Robert Bertrand: You could arrange to meet with General Henault who holds the briefings.

[English]

Mr. David Price: Strictly from meetings, unless they've changed.

Mr. Robert Bertrand: Strictly from meetings.

Mr. David Price: I've been there several times and couldn't ask any questions.

[Translation]

Mr. Robert Bertrand: I will look into that for you.

[English]

The Chairman: All right.

Mr. Price.

Mr. David Price: Some of the questions I've been asking in the House lately, which seem to surprise the ministers an awful lot, maybe could have been cleared up before if we'd had an opportunity.

The Chairman: That's a fair observation. I'm sure Mr. Bertrand will put that into his discussion with the minister.

We'll look for a report from Mr. Bertrand on our concern at our Tuesday meeting. If we don't like the answers we hear then, we'll entertain a motion at that time.

Thank you very much.

Thank you, Mr. Forster, for your indulgence here. I think there's another point from Mr. Bertrand.

Mr. Robert Bertrand: I was quite surprised to see we are hearing from Team Cormorant this morning. I thought in the steering committee we had agreed not to hear individual companies, but defence associations representing all these companies. I know what's going to happen—no offence to Mr. Bamford. If we hear from one company, we will have to hear from a whole bunch of them. We have so much work to do on this research, I think we will open up the floodgates with this one.

The Chairman: I share your surprise. It's my recollection that the steering committee decided we'd hear from groupings rather than individual companies, be they whatever company, producing whatever product. Of course, Mr. Morawski is not with us today, and obviously our current clerk can't help us with that.

How do you want to proceed? I'm in the committee's hands. I'm sure Mr. Price and maybe Monsieur Laurin will remember we decided at the steering committee that we didn't want to have individual firms come before us because it could turn into a less productive session.

Mr. Price.

Mr. David Price: Maybe in this case it's because this group happens to have a contract in hand right now. Maybe we can question them on how the whole process worked and how it came about. We're not talking right now about the Sea Kings. We're talking about search and rescue today. Maybe we could look at it along those lines.

Mr. David Pratt (Nepean—Carleton, Lib.): We're talking about process, aren't we?

Mr. David Price: Yes. That's right.

The Chairman: Monsieur Laurin.

[Translation]

Mr. René Laurin: Mr. Chairman, I agree that there was never any talk of inviting competing companies to come and discuss upcoming contracts with us. However, since a representative of the Team Cormorant is here and a contract is currently under way, perhaps we could take this opportunity to ask him some general, albeit highly relevant, questions. Moreover, I was expecting to hear from this individual. After all, doesn't our committee have a mandate to ask questions about contract terms and administration?

The Chairman: Thank you.

[English]

Mr. Price.

Mr. David Price: Mr. Chairman, I promise not to ask anything about the Sea Kings.

The Chairman: All right. Very good.

Mr. Bertrand.

[Translation]

Mr. Robert Bertrand: Mr. Chairman, I was surprised when I learned yesterday that a representative of this company had been convened before the committee. I don't have a problem with this, provided it doesn't become standard procedure. Thank you very much, Mr. Chairman.

• 0915

[English]

The Chairman: The researchers are helping refresh my memory. We were planning to hear from companies, as M. Laurin noted, but in groups in a panel-type discussion, rather than individual companies. So maybe there's been a little slip-up here.

Mr. Bamford's here and we don't want to waste his time. I don't have a problem with hearing from him. Does anybody have a problem with hearing from this witness today? No, so we'll proceed.

We'll ask the clerk to note that we want to see companies in groupings in the future, rather than individually. I think a panel discussion would be more useful. All questions will be acceptable, of course. But the original thought was to bring them in three or four at a time, rather than individually. We can discuss that later and proceed now with these witnesses.

Let me welcome Mr. Anthony Forster and Mr. Frank Bamford to the committee. Thank you for your indulgence for some of our inevitable procedural matters that come up at committees. I'll ask you now to make your presentation.

Mr. Anthony Forster (Individual Presentation): Thank you. First I'd like to thank the committee for inviting me to come today; it's an honour and a privilege. I'd also like to apologize in advance for any procedural mistakes I may make, as this is my first time before the committee.

Where military forces are concerned, it's the responsibility of government to provide a cohesive policy for the use of those forces and the tools with which those forces will deploy. Cohesive policies—-

Mr. René Laurin: Excuse me.

[Translation]

Mr. Chairman, could Mr. Forster introduce himself first and explain to us exactly what an independent research intelligence analyst is. I'm not quite sure, and I don't know if the other committee members understand what this job entails. Perhaps he could explain as well whose interests he represents in this matter.

[English]

The Chairman: Okay. Can you flesh out your CV a little bit for us?

Mr. Anthony Forster: I work as a freelancer for a company called Jane's Information Group. Most of you should be familiar with their publications, Jane's Defence Weekly, and Jane's Intelligence Review. I have written articles on terrorism and counterterrorism, and in my work for Jane's World Armies, I specifically studied countries and their procurement processes. The most recent was on the Middle East. That involved a great deal of open-source intelligence work and collecting data on the target countries, and then putting together a brief similar to this one about the procurement process—if that's any help.

The Chairman: Thank you very much. You can go back to your brief.

Mr. Anthony Forster: Cohesive policy can be defined as policy that is appropriate to the current political environment and the current potential threat environment, and non-contradictory in its relation to equipment expenditures.

Since the process of downsizing began, a good deal of paper has been dedicated to this topic and its requirements. Warnings have been made regarding the state of Canadian Forces preparedness and the future of Canadian Forces capabilities. Unfortunately, budgetary considerations seem to have outweighed the necessities of the armed services.

What is perhaps most unfortunate is the Canadian government has failed to address the shortcomings of its own policies regarding the roles to be filled by the men and women of the CF, and the warnings issued by agencies within the Canadian government, such as the Office of the Auditor General, have fallen on deaf ears. The very real facts are that the failure to address the equipment requirements of the CF has resulted in, and could continue to result in, loss of life.

To prepare for my appearance before this committee, I embarked on an intensive examination of the Canadian military. In the course of my studies I have focused not so much on numbers, figures or specific procurement programs, but rather on the strategic environment the CF has been asked to operate in and the equipment, both present and future, the CF has been asked to use to accomplish what the policymakers ask. I spent a good deal of time talking to men and women at the pointed end of the sword, and I looked to the documents generated by this government in its attempt to articulate what is expected of its military.

First I would like to address the role Canada expects the military to fill. I ask the members of this committee a question: under what conditions would Canada deploy its Leopard main battle tanks? After reading policy papers and Canadian Forces doctrine and studying the historical deployments of the CF, I've been able to ascertain precisely when the government in Ottawa would use these expensive and important weapons platforms.

The Canadian government has stated repeatedly that Canada has responsibilities to NATO, the UN and like-minded nations that it must fulfil. It has stated that a multi-role force—that is, a force that has armour, aircraft and naval assets on par with its allies and the potential threats on a modern battlefield—is required for this.

• 0920

It is written that Canadian prestige and legitimacy on the world stage is at stake, and yet the threat environment that the CF may operate in has changed. The geopolitical in which the Canadian government has to make decisions in has changed as well.

As to the threat environment, one has only to look to the proliferation of cheap off-the-shelf technology to see that in terms of tactical or operational-level confrontation, there is a danger of falling behind the curve. The advent of relatively cheap and easy-to-use anti-tank and anti-aircraft guided missile technology constitutes a threat to armoured vehicles and to aircraft. With the advent of hand-held affordable cellphones, the problems of command and control become much easier to surmount for a potential aggressor in a peacekeeping or counter-insurgency deployment. The use of GPS units for missile guidance creates the possibility of a smaller nation gaining cruise missile capability.

The hunger for hard currency has forced many governments to begin to sell weapons beyond the capabilities of the purchasing nation, thus putting more advanced technology in some very questionable hands indeed. The dispersion of intellectual assets—that is, weapons systems programmers and designers, etc.—has created an atmosphere of chaotic technological advancement, difficult to track or police. The primary beneficiaries of such changes are smaller nations who previously lacked advanced production or research and development capabilities. Unfortunately, these same nations are now the ones most likely to be the centre of dispute in the future.

Aside from the changes technologically, there is a culture of the gun that has begun to thrive in many of the world's hot spots. An article published in the U.S. Army quarterly Parameters in the summer of 1994 points out the many difficulties in fighting a foe whose motivations, actions and ethics may diverge wildly from western standards for the conduct of war. Rather than only preparing to face an organized force operating by globally accepted rules of war, the Canadian military now must also prepare for conflict with street fighters, men for whom fighting is a way of life and not merely an occupation. These gunfighters can be found in many of the world's hot spots and may have a vested interest in seeing war continue in their region simply because it is all they know.

Economic issues may also be part of this culture of the gun. It would be unwise to forget that during the height of the troubles in Northern Ireland, whole cottage industries sprang up around the acquisition and laundering of ill-gotten gains, the treatment of kneecap gunshot wounds, and the blast-proofing of businesses and residences.

However, narrowing focus from large-scale warfare to smaller wars can be hazardous as well. Warfare can now spring as easily from a conflict of economic interests as from ethnic or religious dispute. With the increased globalization of economies, a situation akin to that prior to World War I has developed, with interlocking trade and policy agreements that could collapse with a domino-like effect. While peacekeeping and similar operations are the most likely deployments in the foreseeable future, it would be naive to assume that large-scale warfare is a thing of the past. Given the ease with which a motivated nation can buy fairly capable technologies, the line between peacekeeping operations and high-intensity warfare is becoming blurred.

Finally, there is the spread of technology associated with weapons of mass destruction, both strategic and tactical. Such pressures can motivate a previously disregarded threat to initiate hostilities in the belief that it may ultimately win through the use of such devices.

The strategic atmosphere that Canada must now operate in has changed as well. Foremost among those changes has been the nature of the relationship between the U.S. and Canada. Canada has pursued a variety of policies and initiatives that are in opposition to American views. As a result, there are those within the Canadian military and elsewhere who believe there is a growing chill between the United States and Canada, with tangible results. Even without divergent policies to separate U.S.-Canadian strategic interests, there is the simple fact that without a land war in central Europe to guide defence issues, U.S. attitudes towards Canada and Canada's place in U.S. military doctrine will evolve and change over time.

So we see that while the current policy pays lip-service to the needs of a multi-force role, the realities of a more capable and implacable enemy, combined with a changed geopolitical position, may not have been fully appreciated when the recrafting of the Canadian military began.

It is into this mutable world that the Canadian government must send its sons and daughters to represent it. It is the responsibility of this government to ensure that the people we send overseas have a clear mandate and the tools to function.

It should be abundantly clear that the CF has equipment failings that need to be addressed. The lack of lift and supply ship support can put the Canadian navy at risk. The lack of proper upgrades for the CF-18 puts Canadian pilots at risk. The lack of electric turret drives, appliqué armour, or a 120-millimetre gun puts Canadian armoured forces at risk. The aging APC and armoured combat vehicle fleets, as well as a lack of dedicated close air support, puts all the land forces at risk.

• 0925

Finally, minimal operational research and reliance on U.S. military intelligence-gathering capabilities create an atmosphere rife with potential for mistakes for loss of life. No amount of training will compensate for bad planning or intelligence.

And so we come to the question of procurement. I have taken the time to read the most recent Auditor General's report. What I found was a sharp discrepancy between what was expected and what was provided. In its 1998 report, the Office of the Auditor General spoke of three possible directions for the military to go. Those possible directions were, one, maintaining the status quo; two, increased funding; or three, restructuring of the military.

As for option one, the maintaining of the status quo, clearly this is not an option. Continued rust-out, advancing technologies, and changing threat environment and capabilities make current budget and capital equipment expenditures fraught with risk.

A Leopard tank is an example of the problems currently faced by force planners and equipment end-users. Produced by a NATO ally, it was fast, dependable, and adequately armed for the threat environment of the period. However, since then, certain technologies have rendered the Leopard C1 obsolete. In its obsolescence, it represents a threat to the lives of the servicemen who may deploy in it. Its main gun is a 105-millimetre cannon. Most armies have upgunned to a 120-millimetre gun, and the advent of an appliqué armour—that is, an add-on armour or explosive-reactive armour—make the current 105-millimetre gun less potent than in the past. It can now be outranged by designs being produced in Russia for export, and given the Russian need for hard currency, it is no longer unlikely that the latest Russian designs will be met on the battlefield.

The C1's turret drive is hydraulic, and currently there are very small stocks of appliqué armour available. The attachment points have been added to most of the vehicle fleets, but there is no appliqué armour to hang on them. In these two shortcomings we see a significant added risk to the Leopard's crew. A hydraulic drive system is very vulnerable. If penetrated, a hydraulic line can cause injuries inside the crewspace. An electric turret drive would be much safer.

The lack of appliqué armour is especially egregious given the places and situations a modern main battle tank can expect to be deployed. In urban or terribly wooded landscapes, a single enemy soldier with a cheap and easily available rocket-propelled grenade can knock out a Leopard with comparative ease. Finally, it is important to point out that a number of western companies are now offering targeting and turret upgrades for the most likely opponent of the Leopard, the Russian-made T-72 tank.

It is also instructional to look at the CF-18. While it was a capable fighter-bomber when it was purchased, the CF-18 has now fallen behind the technological curve. Its radar system is in need of upgrade, and the simple fact is that the airframe itself is beginning to age. Most distressing are the raw numbers available to the air force to fulfil its duties. With a limited number of aircraft, the air force is being asked to conduct Canadian air space patrolling and protection, as well as operational deployment in small numbers. If a shooting war were to break out, then, aside from these duties, the CF-18s would also be expected to conduct battlefield air superiority, close air support, naval combat air patrol, logistical interdiction, air defence suppression, and more. Without a dedicated and close air support platform available to the air force, the CF-18 pilots and airframes would be spread very thin indeed.

Also, it is important to read the section of the J-3 doctrine document on operational pauses. In it, it sets forth the idea of other Canadian assets picking up operational pressure on an opposing force while the land forces rearm and regroup. Strong ground attack capability for the air force is vital if it's to uphold its end of this doctrine.

Finally, there is a question of operational research. As it currently stands, for three armed services branches all in need of threat assessment and force development scenarios, there are only two offices dedicated to producing product. The directorate of defence analysis and the director general of operational research have limited staff and are in need of at least a 30-gun increase to actively catch up with the duties delegated to them. I cannot stress this point strongly enough.

True operational research—that is, scenario development and threat assessment—is absolutely crucial to a country with a limited military capacity. After examining the doctrine laid out by the J-3 doctrine and training office, I can say that this is especially true of the Canadian military. The doctrine being written is dependent upon threat assessment, finding an opponent's centre of gravity, and then manoeuvring to exploit the enemy's weakness so that the centre of gravity can be dealt with. This is what is referred to as manoeuvre warfare doctrine, and it is eminently appropriate for the Canadian Forces. However, that very doctrine is difficult to execute without a well-trained, -equipped, and -prepared force. So once again, we see that while the Canadian military appears to be on the right track in its thinking, there are discrepancies between what it is being asked to do and the tools it is being provided to do the job.

• 0930

As a side note, I feel I should point out comments made in the committee for security and intelligence's recent report regarding the use of diplomatic personnel for intelligence gathering. It was the contention of the committee that in keeping with its role as a behind-the-scenes deal maker, there should not be a task-specific foreign-intelligence-gathering branch of the Canadian government. I submit to you that this belief is misguided. Diplomats should be looked on first and foremost as diplomats. Asking them to act in an intelligence-gathering capacity undermines their respect abroad and splits their duties.

The second option available would be to increase funding. This seems unlikely, given the atmosphere of austerity currently at work in procurement for force development and capital equipment expenditure funding. Through interviews, I find a pervasive attitude of defeatism where this option is concerned. In fact, the consensus of those I spoke to was that the likelihood was slim to none of a new main battle tank or fighter-bomber aircraft being purchased any time in the foreseeable future.

The third option on the table is one of restructuring, and restructuring is perhaps the most realistic response to the growing split between policy and procurement. Unfortunately, it is also the option involving the most work and probably the most short-term expenditure as well.

Restructuring of the Canadian Forces would require, first and foremost, an acceptance of the need for changed policy in this government. Restructuring would require an abandonment of many of the principles that have guided Canadian Forces development since the 1994 white paper. Most importantly, it would have to downplay the desire by the Canadian government to field what has been referred to as a multi-role force. Foreign policy would have to be recrafted to accept the realities of a cooler U.S.-Canada relation, and to account for the changed face of forces deployed overseas. Operational research capabilities would have to be beefed up to review possible new directions.

For the record, I believe Canada should indeed have a multi-role force, but I'll speak of that at the end of my statement.

If restructuring is to be examined, there are options available to the Canadian government. My recommendation would be as follows.

The government in Ottawa would have to acknowledge that it is unwilling to spend the money required to keep ahead of the technological curve, and would have to discard the homogeneous force profile currently expected of the military. A possible new avenue would be to stand down the bulk of the heavy armour—that is, the Leopard main battle tank force—and craft a primarily light infantry or mechanized infantry land force.

Cost savings from the standing down and/or sale of the aging Leopard C1s could be used to begin purchasing desperately needed close air support assets for either the air force or the land forces to use, thus freeing up CF-18s for battlefield air superiority, and giving the land forces a much-needed force multiplier. Certainly, the U.S. A-10 attack aircraft, U.S. Cobra gunship or Apache attack helicopter would all be very viable purchasing choices and could be obtained cheaply. Both the A-10 and the Cobra are facing retirement currently.

There would be the possibility of inter-branch turf battles regarding the disposition of such dedicated close air support assets, with both land forces and the air force possessing legitimate claims. This would need to be addressed from the outset. Without a main battle tank in its inventory, the land forces would also require upgraded anti-tank weaponry for long-range engagement of opposing armour. Again, operational research capabilities would have to be enhanced to provide better threat assessment and scenario development for this new force. Continued purchasing of new armoured personnel carriers and armoured combat vehicles would be necessary to enhance infantry's mobility and firepower, as these two factors are vital to successful operations by a manoeuvre-warfare-oriented force.

Despite the initial costs and organizational issues that come with such a change in force structure, there would be a great deal of benefit as well. Canadian air-sea lift capabilities would be enhanced. A force more in keeping with the fiscal realities of the current administration would be created. The Canadian government and military would be less likely to be faced with a “fight with what you've got” scenario. With a more narrowly defined structure, Canada would have greater control over how and where its troops would be deployed. And if there were need for heavier armoured formations, such needs could be addressed in advance by crafting operational overlap with countries also deploying to regional hot spots.

There is a precedent for such operational sharing. Canadian troops have relied on British heavy armour in the past, and Canadian naval platforms routinely depend on U.S. or NATO air units for combat air patrol. Also, such a force would likely be better able to fight in the urban or close country environments where many peacekeeping operations are likely to occur. Tanks tend to be vulnerable in such tight environments.

The difficulties facing a government and its armed forces in preparedness are legion. Each branch of an armed service has its own agenda and will attempt to protect itself. The government is inclined to make short-term promises for election purposes. It is the responsibility of a government to provide a clear and unambiguous policy for the armed forces to follow. Saying that hard choices must be made and then not making those hard choices does nothing more than ensure a stagnation. Such stagnation puts at risk the men and women of the CF.

• 0935

I do believe that a multi-role force is what Canada needs. Given the blatant need for a force capable of fighting either at the operational level—that is, large formations of units in a total warfare environment—or at a peacekeeping level—that is, smaller-unit deployments with much more flexible rules of engagement—it may be that a balanced, combined armed force gives the best possible answer. The best-case scenario would see better main battle tanks, armoured personnel carriers and aircraft purchased, as well as a dedicated close air support asset, with more funding being funnelled to operational research and intelligence gathering.

Regardless of which force is ultimately decided upon—that is, multi-role or light infantry—command and control capabilities must be enhanced. The TCCCS program is an excellent start, but it must be completed.

Finally, I feel I should point out that in the 1997 benchmarks report for the Minister of National Defence's office, one sees that despite similarities to the countries studied, Canada comes out last in terms of aircraft available and armoured fighting vehicle capabilities. Is last place the position Canada wishes to hold in such studies? If it is a tenet of Canadian policy that it needs forces that are capable of being deployed to support like-minded nations, then as it currently stands, the men and women of the Canadian Armed Forces are at risk due to disparities between policy and procurement. If the Canadian government can honestly acknowledge this, then there is some hope.

As an example, I would call the committee's attention to the recently released government response to the 18th report of the Standing Committee on Public Accounts, Department of National Defence: Equipping and Modernizing the Canadian Forces, and Buying Major Capital Equipment. The government embraced a number of good initiatives, but to a certain degree it missed the point. While a certain amount of reform is still required within the DND structure in regard to procurement, it is a lack in strategic vision at the policymaking level that needs to be addressed before there can be long-term improvement in the areas we are considering today.

I have appended a couple of recommendations to the end of this statement. I don't know if you'd like these read into the record or not.

The Chairman: It's up to you.

Mr. Anthony Forster: Just very briefly, my general recommendations would be as follows: an immediate freeze on further budget cuts to this military; a public relations effort to improve the reputation and image of the armed forces; an immediate resolution of issues pertaining to further CF-18 upgrades; a hold on further reductions to the CF-18 fleet; increased funding to DGOR, DDA, and J-3 training and doctrine, for them to staff up and create a viable and autonomously crafted strategic vision in the form of threat assessment, force planning scenarios, and joint warfare doctrine; and finally, a top-down review of policy-level decision-making regarding the purpose of the Canadian Forces.

As stated above, there currently stands a widening gap between procurement, force planning practices, and the stated policies of the current government on the mission of the armed forces. An absolutely clear and consistent mandate is required for there to be long-term effectiveness in either the procurement process or the military in general.

There are some recommendations for force planning for a multi-role force or a light-armour force, but I suppose you can read over those at your leisure.

The Chairman: Thank you very much, Mr. Forster.

Just before we go to questions, I would just ask for a clarification. You speak about a recrafting of our foreign policy and having to accept the reality of cooler U.S.-Canada relations. Really, why are you making that statement? Is it because of a reduced Canadian commitment to the military? I'm not sure why you—

Mr. Anthony Forster: There is that, yes, but there is also the simple fact that there is no longer a land war in eastern Europe to drive policy either in Canada or in the United States. But there are certain initiatives that the Canadian government has embraced—there's the landmine initiative, the question of the Chinese satellite data, and others—that some in the military believe have created a quantifiable cooling effect. An example of that could be the APG-73 radar upgrade for the CF-18 Hornet. Canada was instrumental in helping to design that radar upgrade but has not received it yet. Other countries such as Finland and Malaysia have received the APG-73 upgrade, but Canada has not.

The Chairman: So the cooling of relations would result from a more independent Canadian foreign policy. What I'm trying to get from you is a clarification. Are you saying that if we have a lessened commitment to military spending or procurement of equipment, it would further exacerbate the situation?

Mr. Anthony Forster: Yes, indeed it could, as a matter of fact. The United States, given that it is the only superpower remaining, is looking to its allies to pick up some of the operational pressure on opposing forces.

The Chairman: I just thought we could get that clarification.

We'll go to a first round of questions, starting with Mr. Hart from the Reform Party.

• 0940

Mr. Jim Hart (Okanagan—Coquihalla, Ref.): Thank you very much, Mr. Forster for your presentation. It was most informative.

You mentioned the Auditor General, and the Auditor General has made several comments about procurement. In particular, he's told this committee the current system is too complicated. There's an adversarial approach to the system. There's complicated paperwork. The federal approach adds overhead costs, slows project completion dates, and increases total costs of procurement. Could you address that? How could that problem be best addressed for this committee?

Mr. Anthony Forster: As far as actual streamlining of the process is concerned, I would be overstepping myself to say I could make specific recommendations on how to streamline the procurement process. I can say with the Leopard tank, for example, and with the purchase of the Coyote reconnaissance vehicle and others, you can see there is clearly a need for some streamlining. The Leopard turret upgrades have been going on for a long time. They continue to take time. With the CF-18, the radar upgrades that have been needed have been stuck forever. The Labrador is another example of how this procurement process has been fairly slow.

Given the advancing technologies that are available, to keep abreast of those advancing technologies that are in the hands of potential threats, procurement must be efficient. Without efficiency, the very real possibility is that Canadian lives will be put at risk. During World War II, for example, the Canadian Forces and the Allies had a reasonable tank in the Sherman main battle tank. Unfortunately, a reasonable tank is not enough in a total warfare environment. Typically, it took four to five Sherman tanks to knock out one German tank. That sort of bloodletting on a modern battlefield can be increased exponentially due to the increase in tempo in warfare.

I would absolutely say that procurement does need to be streamlined. As far as specific recommendations are concerned, I would be overstepping my bounds.

The Chairman: Mr. Hart, if I might, I just thought that given the very interesting—as you noted—and detailed presentation, we might want to go to Mr. Forster. But we would have the option too, if the committee would prefer, to hear from Mr. Bamford first and then question both witnesses. How do you want to proceed?

Mr. Jim Hart: Does my 10 minutes start over again?

The Chairman: Oh yes, we'll give you another shot. Would the committee rather hear from the second witness? Okay. I really should have checked that first.

Mr. Bamford, welcome. We're happy to have your presentation.

Mr. Frank Bamford (Head of Region—Americas, GKN Westland Helicoptors; Business Director, Team Cormorant): Thank you, Mr. Chairman. I'm pleased to have the opportunity today to share our views from a supplier's perspective with you and your committee on the very important role of government procurement in meeting the operational requirements of the Department of National Defence. My name is Frank Bamford and I'm the head of region for the Americas for GKN Westland Helicopters. I'm also the business director for Team Cormorant here in Canada.

I'm pleased to be here as one of the newest contractors to the Government of Canada for the provision of 15 search and rescue helicopters to the Department of National Defence. These helicopters, as you know, will replace the retiring Labrador helicopters. I'm happy to bring this committee the news today that the Cormorant program is both on time and on schedule for the delivery of the first of those 15 aircraft in February 2001. Team Cormorant's parents now form one of the largest helicopter manufacturers in the world, those parents being GKN Westland Helicopters of the United Kingdom and Agusta of Italy.

As I believe this committee has already heard from others, meeting the very demanding operational requirements of the Department of National Defence is the number one priority for government procurement. Team Cormorant's parents having supplied world-class helicopter products and services to the international marketplace for over 50 years, and having operators in over 60 countries with 150 individual customers in both the civil and military environment gives us extensive experience in international defence procurement, and has given us the opportunity to compare Canada's approach to defence procurement with a wide range of international customers. From our recent experience with Canada's search and rescue program, I can justifiably say that Canada has earned an international reputation for the quality of its procurement process and the resultant openness and fairness.

The Canadian government's decision to buy Cormorant helicopters was made only after a very careful and thorough evaluation process that considered the needs of both the user and the government in terms of its declared operational requirements and affordability. It is important to note that this process has subsequently been validated by auditors in an independent review of that action.

• 0945

The evaluation criteria used by Canada in this instance serves as a model for other international customers who have similar objectives and priorities in operational requirements, affordability, and open competition. We recognize it was a very difficult decision for the Government of Canada to cancel the first order for new helicopters. We also recognize that it was an even more difficult decision for the government to repurchase a less costly version of the same helicopter it had previously cancelled. This decision, in our view, took some political courage. Ultimately, though, in the search and rescue helicopter program, operational requirements and affordability remained paramount in that selection.

We are here as the newest supplier of helicopters to Canada, but are fair and open in our comments that we also have a clear and focused objective to provide the Canadian Forces with the most appropriate low-risk, off-the-shelf solution to replace the Canadian Sea King maritime helicopters.

I'd like to spend a moment or two, though, to discuss operational requirements that we believe are key to major defence procurements. In the case of helicopters for countries with a diversity of needs and operational requirements such as Canada, governments are faced with the utilization of limited resources to acquire the most capable, competent helicopters that have the highest degree of mission flexibility, the greatest utilization in difficult scenarios, and needless to say, an extremely long in-service life. That's why defence procurement based upon declared operational requirements, projected international policy, and the changing needs over this extended life is so important. The robustness of these operational requirements, which are often developed over many years and take into consideration the changing dynamics of the international environment, forms the basis on which defence procurement strategy is applied. These need also to stand the test of user, political, and public/press scrutiny.

With this scrutiny in mind, we would like to express concerns over some recent press articles that suggest that the statement of requirements for Canada's new maritime helicopter may not reflect declared operational requirements that we have come to understand from the 1994 defence white paper. These concerns reflect potential erosion, reduction—or “descoping”, in military language—of operational requirements, which may mean buying a helicopter that will not fly as long, cannot fly as far, and may carry less.

In our experience in today's market, equipment procured is aimed at enhancing existing capabilities, with the benchmark often being the standards of the existing equipment in the field. As a business involved in defence-related products, we view the Canadian 1994 defence white paper and Canada's declared role as an international participant in peacekeeping and NATO operations as a clear indicator of defence policy and the resultant operational requirements. Declaring your operational requirements, in terms of the 1994 defence white paper, as the need for Canada to retain a fully combat-capable maritime air and land force and Canada's ability to deliver force projection is a major statement of your intent and is something that is not often subject to arbitrary change.

In our particular areas of interest, we look forward to Canada's defence procurement policy for the future reflecting those that have been clearly demonstrated in the Canadian search and rescue helicopter program: open, fair, and very competitive selection for the future maritime helicopter, clearly based upon operational policy. However, in saying this, defence procurement processes do not have to be elaborate, cumbersome, or costly mechanisms to select new equipment. These principles are not unique to defence procurement processes and are often applied to a wide range of complex commercial and technological acquisition processes.

Procurement reform in the defence industry can take a number of different routes to deliver financial and operational effectiveness benefits to the military user and the taxpayer. After this presentation, I would be happy, if you like, Mr. Chairman, to explain some of the experiences we recently had in the United Kingdom on that very subject. The important principle I wish to stress is giving the soldier, sailor, or airman in a hostile environment the best equipment we can provide within the given budgetary constraints in an expedient and decisive manner. The quality and performance of this equipment is unquestionable, but the cost of this equipment can be greatly affected by the expediency and decisiveness of the procurement decisions and acquisition process.

• 0950

Procurement decisions made today clearly have to stand the test of time, as well as meet the principles I've just outlined. Canada has historically bought equipment that has longer service life than many of its NATO allies. The role this equipment will be called upon to perform today over its lifetime will change without visible or realistic prediction at times. Mission flexibility, the ability for the equipment to perform several different jobs, interoperability, the compatibility with existing equipment, both in the Canadian inventory and that of its allies, common spares and maintenance have become the hallmark for Canadian procurement, acquisition and operation.

After all, Canada will not replace helicopters again for many years. Taxpayers must be certain the helicopter they are buying will last and be able to grow with the changing demands that are not foreseeable today. Today's fast-changing world serves up demands daily for armed forces, such as peacekeeping roles, naval enforcement for international sanctions, massive humanitarian relief efforts, not to mention the domestic tasks and civil requirements ranging from sovereignty protection to open ocean surveillance, right the way through to flood relief.

Canada's procurement process must deliver the most capable helicopter possible to meet these new tasks and demands. Today's events in Kosovo reflect some of the changing tasks and demands that equipment will see in its future service life.

It's important to take a look at what Canada's Sea Kings, essentially anti-submarine aircraft stationed on the back of naval ships, have accomplished in just this decade alone, as an example of changing defence equipment applications. They've gone to the Persian Gulf, where they served as the ears and eyes of a coalition fleet. In Somalia they provided airlift over the beach and were used as gunships, performing rescues and logistic supports in that theatre of operation. In Canada they served in mud slides, the Winnipeg flood, and other domestic disasters. That's the real world of helicopter operations and defence equipment application today. These helicopters were called on to do jobs that weren't even foreseen when they were acquired in the 1960s.

All of these factors in defence procurement are highly reliant on budgets. Today's challenge, for both government and industry alike, is the ability to reduce acquisition costs, the cost of ownership, and ultimately the time of products to market. We believe this can be achieved through partnership between industry and our customers to deliver streamlined acquisition mechanisms, collaborative approaches to operation and support, and the maximization of commonality and commercially available solutions for equipment.

Commonality alone in standards and equipment can generate hundreds of millions of dollars in savings for the user. We at Cormorant believe this should be a factor for consideration in the forthcoming maritime helicopter program between the search and rescue aircraft and our proposed maritime solution.

Commercially available equipment that reduces obsolescence and increases improvements at low cost is another factor that has significant bearing on the overall life-cycle costs of any equipment, be it defence, aerospace or commercial application.

In summary, we would like to reiterate our confidence in the integrity of the Canadian defence procurement process, particularly in open competition. With so much visibility given today to international free trade, we believe this is an important factor. We believe, from our experiences, that defence products can be procured in a more expedient, cost-effective and decisive manner through teamwork and collaboration with industry and our customers. Our approaches would include privately financed initiatives supporting the customers' needs, with alternate service deliveries and risk-sharing incentivized partnerships.

The dilemma will always be whether a government should invest today in selecting the best equipment possible and reaping cost-saving benefits over the long life cycle of defence products, or save now and pay later by lowering requirements and ultimately selecting equipment that may wear out early and not meet the flexibility of future requirements.

Let me assure you that as a new defence contractor to Canada, Team Cormorant is committed to providing Canada with the best value of its services and products for future procurement requirements. In terms of obligations, we are prepared to be contractually responsible to deliver risk-free and affordable solutions.

• 0955

We would welcome the opportunity, in open dialogue with our customers, to explore these new procurement principles, which may offer significant benefits in times of constrained financial resource and operational need.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Bamford.

You alluded to your experience in the U.K. Unless you have an objection to discussing that now briefly, I would welcome you to do that, noting that yesterday we had approval by the budget subcommittee of the liaison committee for a trip this committee hopes to take in May to the U.K., with members from all parties to be involved in that trip.

Would you mind now briefly sharing what you were going to share, or would you rather wait? If it's okay, we'll all be able hear it, in case members have to leave. It will be part of the record.

Mr. Frank Bamford: Certainly, Mr. Chairman.

You may well be aware of initiatives in the U.K. that are entitled “smart procurement”. Smart procurement is a change to the process in the way government determines its overall equipment needs, and the process for procuring that equipment.

Smart procurement has now, for example, brought industry into the procurement process, rather than allowing industry to stand outside of the procurement process. The fundamental changes have been in developing the requirements of the customer as an integrated product team approach. Rather than determining his requirements and being prescriptive about the solution to those requirements, the customer now asks industry to sit with him to determine the overall needs in the operational scenario and then come forward with solutions that are applicable.

This has reaped benefits in terms of both cost saving and the time it takes equipment to reach the marketplace. There are certainly examples in the marketplace today in the United Kingdom that demonstrate significant savings on that approach.

In terms of electronic equipment, GEC, with new radar for the United Kingdom, has operated an integrated product team approach that has validated approximately a 20% saving in overall cost of the procurement and acquisition of equipment for helicopters.

There is an alternative approach as well that is greatly gaining favour in the United Kingdom, which this committee may be aware of; privately financed initiatives. It is an initiative where industry provides facilities and equipment for the military user to operate and utilize in a military environment, which aren't necessarily owned by the government but by the contractor.

GKN Westland were recently awarded a contract for the provision of training equipment. Is it really the defence department's objective in life to train all its staff, or can industry actually do that? In the United Kingdom, the British government have decided they will contractualize that.

In this particular process, we provide the complete facility and resources to train the whole of the Apache flight crew, air crew, and ground maintenance training staff for the British army. The cost to the British government is not the acquisition of that equipment but the hourly charge that is levied against those services.

What has that done for the defence budget? It has removed in the region of £660 million of burden from the defence budget in the United Kingdom, a cost that can be applied to alternative equipment needs the government may well have in its forward defence policy plan.

On incentivized partnerships with industry and government services, how can we streamline acquisition and benefit both the defence industry and the customer? The traditional concept is to buy spares, put them on the shelves, and leave them there. They may be utilized, they may go obsolete, they may be scrapped. Why not allow industry to provide that facility for the defence contractor and be able to share in the benefits of cost reduction? That process is in operation today in the United Kingdom.

The final point is partnership of defence facilities and resources. Today GKN Westland Helicopters are in partnership with the support resources of the United Kingdom for the support of all rotary wing assets. It is run as a business with two partners—the Ministry of Defence in the United Kingdom and GKN Westland Helicopters. We both have a business plan that is collectively related to achieving the service requirements of that military user, but running it on a profitable basis with an industrial perspective. Benefits are being saved, without any shadow of a doubt, in that particular area.

• 1000

The Chairman: Thank you very much for those additional comments.

I would indicate to colleagues that the British High Commissioner and Philip Springfield, who is military adviser to the high commission here, sent over to my office a copy of the recent study that was done in the U.K. on procurement, and it's quite fascinating. Some members have had a look at it. If any member would be interested in a copy of that, indicate that to the clerk and I'll endeavour to get copies.

It looks as though there's quite a bit of interest, so could we endeavour to get additional copies, Mr. Clerk, through Mr. Springfield at the British High Commission? It would probably be very useful prior to the trip that I hope we're going to take.

Thank you very much to both witnesses. We'll now go back to Mr. Hart, who starts the first round of questions.

Mr. Hart.

Mr. Jim Hart: Thank you very much, Mr. Chairman.

Originally I was talking about the Auditor General and his comments with respect to streamlining the procurement system. I wonder, Mr. Forster, then, if you have any suggestions. We've heard from Mr. Bamford about a system that we should look at: smart procurement in the U.K. Are there any other countries that you're aware of that have a more efficient and effective system, or do all countries have a more efficient and effective system of procurement?

Mr. Anthony Forster: Well, the very nature of government is that it is a bureaucratic organ, so that will perforce have some delay built into it.

It is not so much on the actual procurement process that I focused on during the course of my studies preparing for this testimony. Equipment procurement is based upon where the military and this government sees future threat, and it is currently the purview of only two offices within this structure, the DGOR and DDA, to produce force planning scenarios. Those two offices have had staff reductions since 1990 and will continue to produce their product very slowly. If there is to be streamlining in the procurement process and if there is to be direction in the procurement process, these two departments need to be either re-funded or re-staffed to address the creation of those force planning scenarios.

As a side note, I should point out that there has been some delay in the creation of those force planning scenarios because of various branches of the military having input into the process, which is why, during my recommendations, I pointed out that these should be autonomously crafted force planning scenarios. The branches of the armed service should not have that much say in the creation of these force planning scenarios. They should be autonomously crafted and then distributed to give the procurement process guidance.

Mr. Jim Hart: You also spoke in your brief about U.S.-Canada relations in particular. I wonder if you could elaborate on the effect of our defence budget being reduced in real terms by about 30% since 1993. How specifically has this restricted Canada's ability to participate in defence industrial projects with the United States?

Mr. Anthony Forster: As far as defence industrial projects go, it has created an atmosphere, at least insofar as the people are concerned.... I want to say this is strictly anecdotal evidence, but it has created an atmosphere within the United States where some of the process in Canada is looked on with suspicion. Whether or not Canada is serious in the long term in its commitment to creating a joint multi-role force is the primary concern among the people I've spoken to within the U.S. procurement industry, within the U.S. defence industry, if that's any help.

Mr. Jim Hart: I have one more question, and then I'll turn to Mr. Bamford.

Canada is participating in this joint-strike fighter program, although we don't seem to be putting a lot of resources into this project—I believe $2 million to $3 million this year. What is your read on that? Are we again falling behind in a very important project? Should we be putting more in? What's a reasonable level at which Canada should be participating in that project?

Mr. Anthony Forster: The Canadian government will decide how much funds should be funnelled to each individual project.

As far as the actual platform goes, I consider it to be an eminently capable platform as far as its interoperability is concerned. If it's actually deployed with a number of NATO nations, the nations that are involved in the process, then its contribution will be immense.

• 1005

The problem with having a bunch of interlocking policies is that you need to have interlocking military capabilities as well. Producing a platform that everyone can use in a variety of roles is, in essence, a good idea.

Mr. Jim Hart: Mr. Bamford, you've spoken about the search and rescue helicopters. It seems to me that the 1994 white paper was really the document that laid out that Canada needed to acquire new search and rescue helicopters, yet the Cormorant was only purchased in January 1999. That's about four years later. From your perspective, were you satisfied with the length of time, and how could that process have been a little bit quicker as far as the procurement process is concerned?

Mr. Frank Bamford: From our perspective, the determination of needs for a program such as the search and rescue helicopter clearly had to be resolved at an operational level. The previous requirement of Labrador helicopter operations had to be reviewed and certainly had to be packaged in a way that could allow open and fair competition, given the background of this particular program.

Given the circumstances of that, I'm not sure there would have been anything else, other than the process that was applied to that particular program, being able to alleviate any of the time that was taken to come to that sort of conclusion. We certainly were involved in that process in the time scales. It's not unusual for defence programs of this nature to take that period of time to come to fruition.

Mr. Jim Hart: Is that acceptable, though? From an operational point of view, wouldn't the military, having considerable experience in dealing with search and rescue, know sooner than a four-year period exactly what the requirements would be?

Mr. Frank Bamford: I certainly believe the military community understood their requirements. Being able to put that into a mechanism that allowed it to be competed into the marketplace is something that the department clearly had to package. As I say, given the background of that particular program, we would obviously, as a contractor, like to see it take less time, but also, there are processes that have to be applied to activities of this nature.

Mr. Jim Hart: Could you describe for us the industrial offset provisions of the Cormorant project?

Mr. Frank Bamford: Yes, certainly.

In the Cormorant program, we have guaranteed to deliver to Canada 100% of the overall contract value, some $629 million worth of business into Canadian industry. The approach that was taken was both direct and indirect industrial regional benefit obligations for our two companies, both ourselves and Agusta of Italy. The application of those went across Canada in a variety of different means, and our objective as a contractor was to be able to provide industrial regional benefits that sustained themselves beyond those of the particular program.

We have endeavoured to introduce an international flavour to those industrial regional benefits, rather than just applying Canadian industry to a position of working on the Cormorant program and, when those 50 aircraft are delivered, the opportunities dissipate and disappear. There are examples of international export opportunities for Canadian industry today.

Mr. Jim Hart: Has industrial offset increased the price of the Cormorant for Canadian taxpayers?

Mr. Frank Bamford: Certainly there is some form of price tag related to offset, but not as onerous as it has been in the past. From our perspective, it's relatively minimal. Clearly we have people who have to administer those procurement processes, and as for the differential cost, rather than our people procuring from the in-country resources in the United Kingdom or Italy, it's far more approachable to put people into the country that the particular product is going to. But those costs are relatively small, by comparative standards, to the overall cost of the program.

Our ultimate objective here is not to be buying industrial regional benefits in Canada, but to be looking at competitive, technically capable, and competent organizations to be involved in the program. Ultimately for the prime contractor, inappropriate decisions in industrial regional benefits can often mean the differential between a profitable program and an unprofitable program.

Mr. Jim Hart: Maybe I could get Mr. Forster to respond to the question of industrial offsets as well. Is there a deterrent when it comes to procuring a piece of equipment for the military when we look at industrial offset?

• 1010

Mr. Anthony Forster: I think there is. My knowledge of the inner workings of the offsets is admittedly limited, so my answer would have to be very general at best, and I apologize for that. But I think there is certainly some, at least in the United States. From speaking to people there, I'd say there is certainly that attitude, yes.

Mr. Frank Bamford: Could I just add to that comment, if I may? There is a differential in the cost of industrial regional benefits between the technology base of different nations. And I would hedge my remarks by saying that in terms of the technology base of Canada in the aerospace and defence industry, it is much higher than that of some of our less appropriately positioned technology customers in other areas of the world. Then the cost of industrial regional benefits do start to impact your programs.

Mr. Jim Hart: Thank you very much.

The Chairman: Thank you, Mr. Hart.

[Translation]

Mr. Laurin.

Mr. René Laurin: I will begin with Mr. Bamford, and then direct my questions to Mr. Forster.

Mr. Bamford, you referred to the timetable for the Cormorant procurement program which, it would seem, is being adhered to. What type of controls are in place to ensure that the contract is being properly executed? How do you report to the government on the progress made in fulfilling the contract requirements?

[English]

Mr. Frank Bamford: Certainly, Mr. Chairman, there are some very clear operating policies between us and the customer. There are regular reporting requirements. There are program reviews. In fact, there's a program review at the end of this month. There was one at the beginning of February. Those program reviews are supplemented by weekly reports to our customer of all the program milestones and requirements in a detailed reporting manner. There is the ability for the customer also, with his on-site representation—and Canada does have 10 personnel distributed between the United Kingdom and Italy—to monitor the progress of that program. There is open and clear visibility of the program's progress by not only the customer but also the Department of National Defence and PWGSC. That program has to be reported and is monitored on an extremely frequent basis.

[Translation]

Mr. René Laurin: The helicopter contracts contained clauses concerning regional industrial spinoff effects. Maybe you can't answer this question right at this moment, but could you tell committee members what kind of spinoffs we are seeing from these contracts? A number of jobs have been created locally in various provinces and we have seen some economic spinoffs in the regions. A report was drawn up, but it dealt only with projections and forecasts. Since the contract is now being carried out, could you give the committee some idea of the situation, in terms of the number of sub-contractors hired and jobs created in each province? Could you possibly forward this information to the committee within the next few days?

[English]

Mr. Frank Bamford: I think, Mr. Chairman, I can certainly provide an overview of that—and we're prepared to provide more detail; it's one of our contractual obligations to the Government of Canada. To give you some data on the situation as it is today, approximately just over a year into the overall contract—I would remind the committee that our contract effective date was April 1, 1998, so we're just about a year into that program—we have placed business associated with this contract into Canada at a value of $314 million.

This amount doesn't necessarily equate totally to Canadian business. For example, if we buy equipment in Canada, it doesn't necessarily mean that all that value is generated within Canada. Canadian companies will buy foreign equipment to supplement their own particular products. Our consideration today is that out of that $314 million we spent associated with this contract, $167 million of that is specific Canadian content value, i.e., those dollars that come directly from any form of Canadian application to this particular contract.

As far as the regional distribution is concerned, we have a clear policy for the distribution of these applications of contract values across Canada, as agreed between ourselves and Industry Canada. Our obligations, just to give you an overview of that, are that 7% of the value of this contract will go into Atlantic Canada, 23% goes into Ontario, 50% goes into Quebec, 14% into the western region, and at present there is 6% of that contract value that is unallocated and can be distributed across Canada.

• 1015

We also have an obligation to provide 12% of that overall value in those distributions to the small and medium enterprise units throughout Canada.

The overall application of those contracts to date has certainly seen both large and small contracts applied across Canada. We have supported Canadian industry in their initiatives overseas as well as placing business directly upon Canadian contractors.

We certainly have press releases here today that we will leave for the benefit of the committee if they feel it is appropriate, which detail some of those, and we can give a more formal report, if required by the committee, of their application.

I would remind you, though, that this is a situation that Industry Canada monitors on a frequent basis, and you can certainly check those particular figures against those that are contained within Industry Canada, if you felt it was appropriate.

[Translation]

Mr. René Laurin: At one point, you assigned to a consulting firm - a legal firm, I think it was - the task of finding SMEs to work as sub-contractors. What was the outcome of this exercise? Could you provide in your written report to the committee a list of the companies that were considered and retained for the purpose of the contract?

[English]

Mr. Frank Bamford: From our perspective there has never been any segregation of the activity related to SMEs in a separate consulting approach. It has been part of the overall program. The SME community across Canada today is, I would be open in admitting, one of the more difficult areas to be able to look at business opportunities, but we have been successful in those areas. There are a number of examples across Canada that demonstrate SMEs' ability to apply themselves to contract opportunities here.

We would state as well, of course, that in the SME community, we are looking at areas that are not necessarily directly related to the Cormorant contract.

[Translation]

Mr. René Laurin: I'm sorry, Mr. Bamford. I was referring to a legal firm that you had hired. Members were contacted and informed that if SMEs were interested in working on this contract in their riding, then they would be in touch with them to find out their area of expertise and how they might contribute. That's what I was referring to. A lawyer by the name of Mr. Bouchard contacted me to get the names of some SMEs. I believe all parties were contacted. That's what I meant. Could you possibly give us a brief update on the results you achieved and submit a more detailed account later to the committee?

[English]

Mr. Frank Bamford: Mr. Chairman, if I can, certainly a number of people have assisted us throughout the process of the campaign. In regard to the particular individual you're talking about, we certainly will provide you with details on how that approach has been going and the areas we're actually involved in.

There are a number of companies that have benefited from that application of those activities, and that one particular individual you're talking about is one of a team of people who are looking at those approaches. But certainly we would be prepared to provide you with information on those particular outcomes.

Mr. René Laurin: Okay.

The Chairman: You have two minutes.

[Translation]

Mr. René Laurin: I'd now like to go to the other witness, Mr. Forster. First of all, I was very surprised to hear your testimony which calls into question Canadian forces policy as set out in the 1994 white paper. Wouldn't you say that there is a contradiction when you state that of the three options on the table, the third seems to be the most realistic when in fact it would necessarily call into question the existence of a multi-role force? Don't you in fact still believe that Canada should have a multi-role force?

• 1020

How do you reconcile these two recommendations: on the one hand, that the Canadian military be re-structured, which would mean abandoning the idea of a multi-role force, and on the other hand, that this force be maintained?

[English]

Mr. Anthony Forster: In theory, the idea is that Canada would have a multi-role force in keeping with its foreign policy. To do that, I think the only realistic option is to maintain a main battle tank fleet to purchase close air support. In lieu of creating a true multi-role force, the other option would be to scrap the main battle tank and go with a light infantry or mechanized infantry force. In my paper I say that would hand NATO and the UN a fait accompli as far as deployment goes. In practice, I believe what would happen is that the Canadian military would be reduced to a strictly constabulary function, not really a true combat-capable force.

When I say that the scrapping of a heavy armoured force is the most realistic option, I say that because it is in keeping with the actual practices of this government in the past five or six years.

[Translation]

The Chairman: Thank you, Mr. Laurin.

[English]

Thank you. And now we go to the majority side. There are four speakers; in order, Mr. Richardson, Mr. Pratt, Mr. Clouthier and Mr. Bertrand. As time allows, there will be a second round of questions too.

So we'll start with Mr. Richardson.

Mr. John Richardson (Perth—Middlesex, Lib.): Thank you very much, Mr. Chairman.

I listened carefully to the presentation by Mr. Forster. I hear them every year from people who are on the periphery of the Department of National Defence and writers on strategy. But he left out a big gap of things, and they always do.

He talked about how the Americans may get cheesed off with us. We're cheesed off with them. They haven't paid their dues to the UN, they've never gone on a UN mission, they've never done this, this, this and this. Keep that in your book when you're talking about American-Canadian relationships.

Two, our alliances are made on commitments. We're in NATO, we're in the western hemisphere defence alliance, and we're in peacekeeping for the UN. We make a big commitment.

Certainly I was there with the Leopard tanks when they were first purchased. We do need them. But I wouldn't sit down and deride the Canadian Forces over that issue. It's a problem with the defence department to determine where they're going to put that in a priority, and when they get that priority together maybe they'll get the tanks.

We have been looking carefully in this committee since 1994 at the pluses and minuses to keep a balanced force, a force in the air, on the sea and on the land. This committee has been non-political. The opposition parties and the government have been working together trying to come up with something that is balanced and will meet the threats.

The threats come from the commitments we make. Those are the areas: NATO, the western hemisphere defence alliance and the UN duties. Those are the outside threats. We've been able to meet our commitments each time. When the Americans went into the gulf, we went. When the Americans needed some help in Somalia, we went. When the Americans went into Kosovo and Bosnia, we went.

So don't lay down the strap on us with that kind of nonsense. Sit with your strategy. Look at your globe and talk to the guys over there at Defence, but don't come to this committee, because this is a hands-on, factual committee.

Certainly you make a point on the tanks. We would like to solve the problem of the tanks as well. It takes time. But we have one war that we're fighting here, and it's the pre-eminent target as far as the Canadian people are concerned: get the debt down and get rid of the deficit, and that will be the priority. So we can't go around and start cherry-picking at this time when we're in that phase. We have not met our total targets on this. And when we have met those targets, we'll probably have money freed up to achieve those things and rebuild it. We got into a situation that was not easy to get out of. We're getting out of it at a speed we didn't expect we'd get to, but it's a good one.

• 1025

Smart procurement: When I hear fellows come to us and talk about smart procurement, I talk about the fox in the henhouse. When you come here, just give us the facts, what you have to sell, but don't tell us that you haven't got something on your side you're pushing. You're fronting for something at DND, and I don't know what it is, but certainly it was ill-disguised in the strategy papers. I certainly would like that point to be made, Mr. Chairman.

The Chairman: I think you've made your feelings pretty clear to the witnesses, and I want to give them an opportunity to respond.

Mr. Anthony Forster: I never meant to imply that the United States is completely innocent—

Mr. John Richardson: You said right in your paper that their feelings were cooling towards us.

Mr. Anthony Forster: Precisely, and that chauvinism is based largely in the United States. What has happened within the Canadian government...it is your purview to decide whether or not it is appropriate given budgetary considerations. The chauvinism within the United States can be traced straight back to, for example, the fact that the United States special operations command, which encompasses all the various special operating branches of the United States forces, is the same size as the entire regular Canadian army. It was certainly not my intention to imply that Canada was the sole bearer of any cooling of relations. If I have done so, then I would like to apologize right now.

As far as the question of deployment goes, yes, Canada has deployed to the gulf; yes, Canada has deployed to Somalia; and Canada is in Kosovo right now. But what I am attempting to do in this brief is ratchet up the level of focus. If you say you're going to maintain a multi-role force, then create force planning that will continue to maintain that multi-role force five or ten years down the road. Right now, Canada has a comparable force to any of the threats that are out there. In five or ten years, given the current state of the procurement process, the speed with which contracts are executed, this may not be the case. That is merely what I was trying to get across.

The Chairman: Mr. Bamford, did you have any reaction?

Mr. Frank Bamford: The only comment I would have, Mr. Chairman, is that certainly from the point of view of smart procurement it's very difficult to explain that situation in a very brief period of time, and it's certainly not lip-service paid by our company to that situation. We would be happy to discuss it in more detail.

The Chairman: Thank you very much. I did note that we hope to travel to the U.K., and that's one of the reasons.

I'll go to Mr. Pratt. Five minutes remaining, Mr. Pratt.

Mr. David Pratt: Five minutes, okay. Thank you, Mr. Chairman.

I'd like to ask Mr. Forster about the issue of interoperability. Part of this committee had the opportunity to go to Germany in January and we saw, through the presentations we heard there, the very high level of interoperability that the German army has, for instance, with some of its neighbours. I'm thinking of the joint brigade that it has with the French, with the Netherlands, and the Danes, and further arrangements that are proposed with the Poles and the Czechs.

In terms of your comments with respect to the growing chill, as you describe it, between the U.S. and Canada, would you see any possibility—given the fact that the Americans are also involved with the Germans in Europe and given the fact that the Americans remain our closest ally—whatsoever of reducing the chill on relations if we got involved in, say, a joint brigade or even a battalion, for that matter?

Mr. Anthony Forster: I think something like that would be the case. Any type of deployment in conjunction with allies of this government would certainly increase interoperability. War is about friction. When Clausewitz speaks about the friction of war, he speaks about all the little things that can go wrong during a military deployment. The only way to address those points of friction is to train and to deploy together. On top of that, you would have interaction between the staff officers of the various armies, which creates further ties, which creates further bonding.

So absolutely, I would strongly suggest that it be at the brigade level, not at the battalion level. Canada has, in the past, fielded forces at the U.S. training centre. They've actually done remarkably well. But yes, absolutely, interoperability is enhanced with joint training.

• 1030

Mr. David Pratt: Right now, do you see that as a gap in terms of the Canadian army's capability? When I look at our air force and our navy, I see there's already a very high level of interoperability with the Americans. Should we have been paying more attention to that?

Mr. Anthony Forster: No, I think the Canadian military has done an excellent job in maintaining interoperability with its NATO allies. Certainly training continues. Certainly in the procurement process we've seen that there have been decisions that will increase that interoperability.

No, I think the level of attention focused has been enough. The only thing I would suggest would be to ratchet it up even more.

Mr. David Pratt: It could be improved, then, by a—

Mr. Anthony Forster: It can always be improved. The cauldron of warfare is the most unforgiving of test beds, so if you're going to do it, you might as well do it right.

Mr. David Pratt: Could you provide us with some comments on the level of Canadian participation in the situation in Kosovo right now? Do you think we're making a proportional contribution to the forces that are over there and the forces that are engaged?

Mr. Anthony Forster: “Proportional” is a funny word. Is Canada contributing? Yes, absolutely. Do Canadian pilots put themselves at risk every single time they take off? Yes, absolutely.

My concern is down the road. There are those within the Canadian air force structure, for example, who believe the number of airframes available is about to be halved, down to 65 airframes. If Canada wishes to continue to make those contributions, then procurement is going to have to reflect that.

The Chairman: Last question, Mr. Pratt.

Mr. David Pratt: You're talking about the airframes. Obviously a conflict of this nature, one in which Canadian pilots are flying a fair number of sorties, puts additional stress on the airframes. Are we accelerating the obsolescence of the CF-18 as a result of Kosovo?

Mr. Anthony Forster: I think we agree that it's already an issue. Some of the CF-18s in the Canadian Forces structure are already showing signs of structural cracks well ahead of what was expected, and that's primarily because the Canadian air force trains so hard in air-to-air combat. As far as the future goes, again you're looking at an aging airframe, and continued upgrades are the only way to maintain its capabilities.

The Chairman: Thank you, Mr. Pratt.

We'll now go to Mr. Earle for the NDP for ten minutes.

Mr. Gordon Earle (Halifax West, NDP): Thank you, Mr. Chairman.

First to Mr. Forster, I want to ask you a question that comes in at the beginning of your presentation, and I'll apologize in advance because you may have elaborated upon this before I came in. I was late because of another commitment.

In the early part of your presentation I noticed that you mention:

The very real facts are that the failure to address the equipment requirements of the CF have resulted in—and could continue to result in—loss of life.

Could you elaborate a bit upon that? It's a very strong statement. You say it has resulted in the loss of life and it could continue to result in the loss of life.

Mr. Anthony Forster: Well, the Labrador helicopter is the first thing that comes to mind, of course. This is a platform that is clearly showing its age, and the only real option would be to replace it in as timely a fashion as possible. Obviously this committee has been instrumental in that and will continue to be so.

As far as future loss of life goes, as I said before, we're talking about warfare. Warfare tends to be rather unforgiving. The reason the United States and its allies dominated so strongly during Desert Storm is that they dominated across all branches of the military. There was no particularly area in which one was noticeably weaker than the other. To dominate across all areas of a military engagement, one needs to base one's procurement towards that. There cannot be a weak link in the chain, if you will. For example, if Canada were to deploy its main battle tanks, those main battle tanks are vulnerable as they currently stand.

Mr. Gordon Earle: I guess I'm just not so sure or convinced that we need to be in a race to the top in terms of dominating militarily through power, weapons and high technology. I'm not sure I agree completely with this idea of having to have all the latest in high-tech equipment, and with putting money into that area, when I see so many areas in our society in which I think our limited resources could be much more appropriately spent. We did, however, certainly support—and I continue to support—the quality of life issues that we addressed for personnel in the military. The equipment side is another issue.

But on that, I want to question you a little bit further. You mentioned restructuring in your paper, and you said:

The government in Ottawa would have to acknowledge that they are unwilling to spend the money required to keep ahead of the technology curve and would have to discard the homogeneous force profile currently expected of the military.

• 1035

On the next page, you then talk about various pieces of equipments that one could purchase in order to restructure. You mention the U.S. A-10 attack aircraft, and you talk about the Apache attack helicopter. In regard to this A-10 attack aircraft, can you tell me if this is the one referred to as the Warthog?

Mr. Anthony Forster: That's correct.

Mr. Gordon Earle: With respect to the concern that this particular aircraft uses depleted uranium in its chain gun, can you tell me if that is in fact correct?

Mr. Anthony Forster: There are varying opinions about whether the use of depleted uranium slugs is environmentally sound or not.

Mr. Gordon Earle: Do they use it?

Mr. Anthony Forster: Yes, they do, absolutely.

Mr. Gordon Earle: So, in essence, you're suggesting that Canada should maybe buy some of those aircraft if it is going to restructure along the lines that you talk about.

Mr. Anthony Forster: If you restructure along the lines that I lay out—and keep in mind that I consider that a poor second choice to keeping a true multi-role force—then some sort of force multiplier would be needed to offset the loss of main battle tanks.

Absolutely, I think the Cobra would be the best possible choice as a force multiplier. It can serve in a variety of roles, either reconnaissance or attack. And I actually took the liberty of investigating its current sale price. Currently, there are a number of Apache AH-64Ds available at approximately $20 million U.S. per airframe, delivery costs not being covered, of course. They have a remaining life expectancy of about 83%.

Mr. Gordon Earle: Forgetting for the moment about the “disputes” around the environmental aspect of the uranium weapons, what is the professed purpose of having uranium weapons on these aircraft? What's the intent?

Mr. Anthony Forster: The GAU-8/A gun, or multi-barrelled gun, is specifically designed to knock out armoured fighting vehicles.

Mr. Gordon Earle: Thank you.

Turning to Mr. Bamford, you mentioned that the first helicopter would be ready in 2001. How many helicopters are there?

Mr. Frank Bamford: Fifteen in total.

Mr. Gordon Earle: Fifteen in total. Perhaps I'm missing something in terms of how these things are done, but when will the last one be ready if the first is ready in 2001?

Mr. Frank Bamford: The final delivery of the fifteenth aircraft will come at the end of 2003.

Mr. Gordon Earle: Why is it that it takes a protracted length of time to deliver from one to fifteen? In this day and age, is there not a mass production system in which all can be produced and delivered at the same time? Is there a rationale? I'm not sure about this.

Mr. Frank Bamford: Certainly there's a rationale in the acceptability of new equipment into an operator's plans for deployment: the ability for the infrastructure to be able to take those aircraft; the ability for the operator to be able to utilize them; training needs, etc.; and the economic delivery of those particular programs.

Mr. Gordon Earle: Okay, thank you.

Turning to your smart procurement, again I would have some concerns about that too. When you talk about the private sector being responsible for various things, either in partnership or in total, what does that do with respect to jobs in terms of people who may be performing those jobs within the government structure, within the public service? What happens there?

Mr. Frank Bamford: There's a balance to that equation. Clearly it can have an impact on the infrastructure of the defence force, but the approach taken recently in the United Kingdom has been to integrate both military or uniformed personnel into an overall business unit that applies business processes to some of the activities they take on-board. They're not entirely turned over to civilian process personnel.

Of course, the other situation is trying to strike a balance between the utilization of resources between the civil sector—i.e., industry—and the military sector. Clearly there is an opportunity for those military personnel who may no longer be in uniform to become part of the industry sector as well. I think the ultimate objective is that industry and the military usually end up giving up some of their resources to combine to form a more effective approach to support the customer's needs.

Mr. Gordon Earle: Thank you.

The Chairman: Mr. Earle, thank you.

Mr. Price, for the Conservative Party.

Mr. David Price: Thank you, Mr. Chairman.

I don't know where to start. They were both excellent presentations. Mr. Forster, yours was quite interesting. As Mr. Richardson has said, it's kind of the other side of the coin, and it's interesting to see it. It gives us a little something to talk about.

There's one line in your presentation that kind of struck me:

Finally it is important to point out that a number of Western companies are now offering targeting and turret upgrades for the most likely opponent of the Leopard, the Russian made T-72 tank.

Are our western companies making equipment for the Russian tanks?

Mr. Anthony Forster: That is correct, yes.

• 1040

Mr. David Price: For the turret upgrades we're going after, we're going to Europe.

Mr. Anthony Forster: That's correct.

Mr. David Price: Interesting.

Mr. Bamford, you have had a rather glowing report with respect to our procurement process. That's interesting, since we've heard the other side of it far more. In our process we found the time slot very, very long for the whole thing.

When it comes to the point of the statement of requirement, if we divide it there, we said that's one side, and from there on to the point where we receive the actual helicopter, what percentages would you put on both sides of that, time-wise?

Mr. Frank Bamford: I'm sorry, I'm not sure I understand your question.

Mr. David Price: Okay, we'll take the middle point as the point where we get to the statement of requirement—what we know, what we want. In our procurement process getting up to that point is one side of it, and from there on until the time we get delivery of helicopter, or let's say to the point where the contract is given, is the other side. What percentage of time do you see on both sides of that?

Mr. Frank Bamford: I think in terms of the procurement process itself that could be applied, it's very dependent on the customer's approach to his procurement strategy. Will the customer himself determine the detailed specification of requirements? Will he determine all the actions required of that particular equipment or will he actually apply to the situation the principle: this is what I want to do with this equipment; can you tell me what the solution is from industry? In our opinion, that is a more expedient approach to defence procurement than the customer himself determining the nuts, bolts, and washers required for the equipment or our industry to help him in that approach.

That process, depending on the complexity and the size and scale of a program—and I can only base comments on the forthcoming procurement of the maritime helicopter program—is an extremely—

Mr. David Price: [Editor's Note: Inaudible] ...talk about that.

Mr. Frank Bamford: And I apologize, Mr. Chairman. But I think it at least gives some scale of perspective to future procurement requirements rather than historical approaches. The approach there, for a program of that complexity, can be up to a year from the release to the statement of requirement to the actual contracting of that particular requirement.

Mr. David Price: In preparation, in coming up to the statement of requirement, I'm sure there's a certain amount of lobbying going on from the different people who will be tendering. How much time before... [Editor's Note: Technical difficulty] ...did you start on that lobbying process?

Mr. Frank Bamford: I think we've been looking at the customer's requirement for several years. This is not a new program, as we know, and our approach has been to determine, to be able to set our solution, gaining knowledge of that process the customer is going to apply. Certainly we've been involved in this for several years, and I'd say “several” can be quantified in as many as five.

Mr. David Price: Then from that point on we were supposed to be looking for basically an off-the-shelf unit, something that was already out there. Time-wise, from there to delivery, if it's an off-the-shelf unit, why do we see such a long lapse of time?

Go ahead with that first, and then I have a follow-up question.

Mr. Frank Bamford: I think the important issue is the definition of “off-the-shelf”. Off-the-shelf will mean a non-developmental item that can be provided without major development cost being laid at the door of the customer. There are clearly, though, operational requirements that will determine some customization of a product to a specific customer's need. And, of course, in any project of this nature, and defence equipment can have the largest of it, lead time of equipment can be a significant factor in the delivery of that equipment.

Mr. David Price: We have this large lapse of time after we've got the statement of requirement. During that period of time—we're talking years here—there are always a lot of technological changes that take place.

• 1045

I'm sure that as things go along you would have liked to probably suggest changes that can be made—in this case, in the search and rescue helicopter. I'm sure some of those changes would even reduce the cost. Some of them might cost a little more but upgrade the uses of the helicopter. What possibility do you have in the interior of the contract to do that, to make those changes, to ask for those changes? As we've been told so far, there doesn't seem to be any flexibility in there. We have such a period of time, and the changes are happening so fast these days.

Mr. Frank Bamford: Certainly the traditional procurement process has had a restrictive approach to introducing changes from the supplier or in some cases it's also true of the customer himself. Contractual obligations will drive the flexibility of change that's allowed in that process. The principle, I would suggest, though, that has been adopted more and more in industry is the integrated product team approach, where you sit with the customer and industry, develop the requirement, and make a living document that has a commercial value to it rather than a prescriptive contract that says it will be painted this colour, it will be this size, and it will go this far when I get it.

If you're looking at operational requirements rather than necessary prescriptive end-use needs, that's a way of introducing that flexibility. Certainly we believe that integrated product teams with customer and supplier involvement is one of the ways of being able to change that. We already have examples of that happening now in some of our defence procurement in the United Kingdom.

Mr. David Price: Is there anything you foresee happening in the search and rescue helicopter in that line?

Mr. Frank Bamford: Absolutely. We've already seen some changes, and they're bounded by the commercial constraints we have in the contract, but those changes are being accepted and we're recommending those to the customers as well. So there are opportunities to be flexible in that approach.

Mr. David Price: So they are being accepted, they are being looked at.

Mr. Frank Bamford: Yes, they are.

Mr. David Price: Thank you.

Mr. Forster, I had a couple of questions. You didn't mention at all in your paper the American missile defence system, since we're talking about Canada-U.S. relations, and I would like to get your feelings on that, of what the benefits could be for Canada in that.

Mr. Anthony Forster: Well, strategically speaking, the benefits are pretty minimal. Canada is not globally viewed as the prime mover and therefore the prime target in geopolitics. Certainly Canada's role as a behind-the-scenes negotiator is very strong, but in terms of quantifiable threat, I can't honestly say I think Canada is an actual potential target for either a terrorist or a world nation missile attack.

Mr. David Price: It's not what the Americans say.

Mr. Anthony Forster: Of course that's not what the Americans say, but we all know how the Americans feel about this particular project. They feel very strongly about it. But as far as—

Mr. David Price: Would there be industrial benefits for us if we were involved? I mean, we've heard the rumours out there of Canada having their own, which is absolutely ridiculous. I don't think we'd consider that. But if we are going to put some money into a partnership there, are we going to get the benefits out of it on the industrial side? What's your feeling on that?

Mr. Anthony Forster: It depends entirely upon how it's structured. I didn't focus completely on that particular project. To answer you fully I would have to take about a week to look over all the documents related to that. Unless things are structured a little bit better than what happened with the APG-73 radar upgrade, ultimately that very project could get stalled and lost in the morass.

Ultimately I would like see a lot of that money used for Canadian companies to help develop that missile defence system. Whether or not that's a realistic possibility is a different question.

Mr. David Price: I said I wouldn't ask anything about Sea Kings, but Mr. Forster is different, so I will. Our frigates—we have great ships out there, they're designed to do a specific job, but their job works only with a helicopter on board. Could you give us a little of your feeling on that subject, please?

Mr. Anthony Forster: Anti-submarine warfare is an absolutely integral part of modern force planning with the sale of Kilo-class submarines—Kilo-class being Russian-made submarines—to a number of nations. The ability for a rogue nation to purchase a submarine and put it in a navigable strait and threaten traffic there is a very real one. Without some sort of anti-submarine capability in the form of helicopters, Canadian navy capability is seriously degraded. You have to be able to detect these enemy platforms far enough away from a fleet to be able to engage them without threat to the fleet. If you're picking them up with the actual ship-borne sonar systems, you've missed the ball.

• 1050

The Chairman: Thank you, Mr. Price.

I would note for colleagues that there's no need to adjourn at 11 a.m. If the witnesses can accommodate us for a few more minutes, we will endeavour to give everybody who wants to ask questions the opportunity to do so.

We'll start the second five-minute round with Mr. Hart.

Mr. Jim Hart: Thank you very much, Mr. Chairman.

As a follow-up to what Mr. Richardson was talking about, I recall that back in 1994 when we were on the special joint committee, that committee recommended that the Canadian government shouldn't reduce the forces to 67,500. We're now at 60,000. We also suggested that the defence budget should not go below $10.3 billion, I believe. We're now at $9 billion.

Mr. David Pratt: It's $10.3 billion. It went back up.

Mr. Jim Hart: There are reasons for that. It's not directly added to the military budget this year. Anyway, it's $9 billion. Has the government reduced the Canadian Forces below the critical threshold the special joint committee identified in 1994?

Mr. Anthony Forster: I think you're at that critical threshold now, to be perfectly honest. I think any further reductions would mean that in a total warfare environment, the Canadian Forces would not be able to field adequate troops to fulfil their obligations. That would be my primary concern.

Mr. Jim Hart: That's my concern as well. I just wanted to clarify that.

I don't take your presentation to be an attack on the military, but I do think it's eye-opening for the government to recognize the fact that we are getting very close to that threshold. Also, given Kosovo and the situation abroad, we should be able to perform as a middle power, and maintaining a combat capability is important. Even our Chief of Defence Staff has recognized in his report that sea lift and airlift capability are limited, if even there at all, as far as the Canadian military is concerned. These are issues that have to be dealt with.

Maybe you could comment just briefly on that. I just feel very strongly, and I've released a paper on the decline of the Canadian Armed Forces from 1993 to 1998. I think we should be able to operate as a middle power and have a capable force, and I'm very concerned that the rust-out is reaching that critical threshold.

Mr. Anthony Forster: I'm glad you bring up the soft power point. The foreign office of this government has sort of embraced this soft power aspect of foreign policy. That's a wonderful thing and in keeping with Canada's role as a deal maker.

However, the gentleman who coined the term “soft power”, Professor Joseph Nye of Harvard University, has himself in the last month pointed out that Canada is at risk of losing its legitimacy as a soft power negotiator because of the decline of its military. You cannot have soft power without backing it up with hard power. That is the bottom line.

In terms of Kosovo, if you want to use that as an example, air power is a wonderful thing. Air power lets you do a great deal of things. Air power will not replace a man on the ground with a rifle, and the only real way to enforce the will of the geopolitical community in Kosovo is to put a man on the ground with a rifle.

Mr. Jim Hart: Do I still have some time?

The Chairman: Yes.

Mr. Jim Hart: I just wanted to touch briefly on a story that was in the news about a U.S. businessman who tried to sell sophisticated missile technology to China. Apparently there's a possibility that Canada is becoming a conduit for the smuggling of technology to third world countries. How seriously do you view that situation?

Mr. Anthony Forster: I recently wrote an article for Jane's Intelligence Review on the capabilities of hackers, quackers, and professional data thieves and their potential effect on global infrastructure and national infrastructure.

Canada is a funny case. Canada has some very modern telecommunications infrastructure and some very old telecommunications infrastructure. The United States has used Canada as something of a data haven for people who want to do this very kind of thing.

• 1055

I take it very seriously. I think it's worth further study. I'm not aware of Canada having any capability to combat that sort of transfer of technological information. If I'm mistaken, then so be it. But at this point I'm not aware that Canada has a capability to combat that sort of thing, and it's becoming an increasing concern.

The Chairman: Thank you, Mr. Hart.

Now I will go to Mr. Clouthier.

Sorry, just before you start, I wrongly assumed that the interpreters were available to us, and they're only available until 11.15 a.m. at the latest. If everybody uses their five minutes, we'll be able to accommodate Mr. Clouthier and Monsieur Laurin, and maybe have a little bit of time for Mr. Bertrand, and that will be it.

Mr. O'Reilly.

Mr. John O'Reilly: Mr. Chairman, I have another committee meeting at ll a.m.

The Chairman: Okay. Thank you very much.

Mr. Clouthier.

Mr. Hec Clouthier: I just wanted to ask Mr. O'Reilly to tell them I'll be there in five minutes. We're going to the same committee.

The Chairman: Very good.

Mr. Hec Clouthier: This chair squeaks like Mr. O'Reilly's joints, so it must be about the same age. Good-bye, Mr. O'Reilly.

Some hon. members: Oh, oh!

Mr. Hec Clouthier: Mr. Bamford, as you probably know, the auditor general in the U.K. has been critical of the Merlin program. It seems to be something that is indigenous to most auditors general. Believe it or not, the Auditor General of Canada has been critical of us as a government on occasion. One of his reasons, I believe, was that there wasn't expedient delivery of some of the helicopters. Could you tell me, Mr. Bamford, how many other countries' navies, other than the countries who actually manufacture that maritime helicopter, have purchased that helicopter?

Mr. Frank Bamford: Today the Royal Navy and the Italian navy are the first customers of that aircraft.

If I might come back to your comment on the Merlin program, I think the Merlin program is a litany of disaster in terms of defence procurement, which is clearly identified, and the auditor general's report certainly identifies the end results of a procurement process that has laid a problem at the door of the customer.

If I might, Mr. Chairman, the Merlin program was developed in the 1980s, and the customer himself had decided he wanted to be the prime contractor systems integrator for that program. Between the time he decided he needed a replacement for his Sea King and ultimately determined his overall operational requirements and the performance of that vehicle, in a period of almost 14 years he had underestimated the cost of equipment in the analysis of that particular program. When he got to the point of integrating that—and I would remind the panel that the Ministry of Defence in the United Kingdom was the prime contractor, not our company in particular—and he was unable to manage the overall integration task and the prime contractor risk that goes with that program, he then decided to compete that in the open marketplace.

Our position in that particular competition was to team with Lockheed Martin. Subsequently, Lockheed Martin put a bid on the table to be able to deliver a specification requirement to the customer's demand as it stood at that day, and that award of contract was given in 1993. Since that period in 1993, there have been no further overspends in that program, and the program is fully on time and on schedule. I think that indicates how corrective action in defence procurement may be taken to recover that situation.

Mr. Hec Clouthier: So, Mr. Bamford, other than Italy and the U.K., no other country has purchased that maritime helicopter.

Mr. Frank Bamford: Certainly at this stage in the product's life, that is a correct statement. But I would remind you that the aircraft is in the first stages of its product life in the marketplace. It's a relatively modern aircraft. There is significant interest from the international marketplace.

Mr. Hec Clouthier: Correct me if I'm wrong, but under the U.K. strategic defence review, were there two components to it, that is, phase one, where they said they were going to purchase so many of these helicopters under the Merlin program and then they would review it, and now after the review they've decided not to take the second part of the contract? Am I right in saying that?

Mr. Frank Bamford: In the strategic defence review there is a situation where 44 Merlins have been ordered for the Royal Navy. There had been no pre-planned purchase of additional Merlins at this stage. Clearly from a corporate point of view, we were hopeful of the opportunity to expand the fleet.

In the strategic defence review, as you will be aware, the customer has at this stage opted to procure naval carrier-borne forces. The emphasis has switched from the application of funds to airborne assets to surface vessels, certainly from our perspective, and the customer's planning additional aircraft to go into his inventory once those airborne carriers are put into position.

• 1100

The other shift in his policy has been to introduce amphibious support helicopters, and there's currently a competition running in the United Kingdom for the supply of up to 22 additional amphibious support helicopters of the generic type of Merlin.

Mr. Hec Clouthier: Would you be involved in that bid also?

Mr. Frank Bamford: Absolutely.

The Chairman: Thank you, Mr. Clouthier.

Monsieur Laurin.

[Translation]

Mr. René Laurin: Mr. Chairman, I have two questions for Mr. Forster. In your presentation, sir, you state the following:

The Directorate of Defence Analysis and the Director General of Operational Research have limited staff and are in need of at least a third again increase to adequately catch up with the duties delegated to them.

In practical terms, does this mean that in the case of Kosovo, Canadian forces do not have adequate resources to properly assess the threat they face or even their own military capability?

[English]

Mr. Anthony Forster: Certainly I think an increase in personnel for the DGOR and the DDA would result in better force planning and better threat assessment for future deployments.

As it currently stands, I attempted to contact some of the people instrumental in military intelligence for my preparation for this testimony. They were disinclined to speak with me. So my actual knowledge of the inner workings of the intelligence committee in preparation for the deployment in Kosovo is limited.

As I understand it, for the deployment in Somalia, the intelligence preparation was extremely limited. It is that sort of limited preparation that can result in loss of life. So I think a one-third increase again would, in actuality—after speaking with Ann Bradfield, who is the director general of operational research—merely bring the DGOR office back up to its staffing levels of 1990, not even increase it to address the increased requirements put upon it.

[Translation]

Mr. René Laurin: When you talk about assessing the threat, are you talking about remote threats, for example Canada's potential future enemies, or rather are you talking about Kosovo, where the threat is real and where Canada is involved? Again, did Canada have the necessary resources to properly assess the level of threat it would face in Kosovo?

[English]

Mr. Anthony Forster: It is not within my province to say whether or not the actual threat assessment for Kosovo was adequate. I can give you the facts and let you decide for yourself, in that DDA and DGOR have had reduced staffing since at least 1990. They admittedly, if you speak to them, will tell you that they are overmatched in terms of their responsibilities. They are currently responsible for creating force planning scenarios for this government and are in desperate need of assistance to continue that process and provide intelligence product for the various branches of the Canadian military.

From an outsider's point of view, I would have to say, yes, better intelligence preparation could have been provided to the Canadian Armed Forces through DGOR and DDA with increased personnel employment. As to whether or not the intelligence product that was given to the armed forces was adequate, that would be something you'd have to ask the armed forces themselves.

[Translation]

Mr. René Laurin: I have a final question for you. Among other things, you recommend the following:

Certainly the US A-10 Attack Aircraft, Cobra Gunship or Apache Attack Helicopter would all be very viable purchasing choices and could probably be obtained cheaply. You make this recommendation on the assumption a decision is made to restructure Canadian forces. However, you go on to say that “both the A-10 and the Cobra are facing retirement”. Are you recommending that we purchase old equipment for the Canadian forces? That's how we went about purchasing sub-marines. Once again, should we be buying equipment that the United States no longer wants?

• 1105

[English]

Mr. Anthony Forster: When I say that the A-10 and Cobra are at retirement, I mean within the American force structure they are at the point of retirement.

Are they still effective weapons platforms? Absolutely. The A-10 is eminently effective in the ground attack capability. The Cobra, with the appropriate systems upgrades, continues to be produced and would still be a very effective force multiplier. In terms of the threat that is out there, which is primarily Russian-made equipment that has been distributed, the Cobra and A-10 would be more than capable, with proper training and logistical support, of handling those threats.

When I say “retirement”, I'm referring to the fact that the United States armed forces are looking at phasing out those platforms, not that they are, in and of themselves, worthy of retirement.

[Translation]

The Chairman: Thank you, Mr. Laurin.

[English]

Mr. Bertrand is next, and I'm going to try to get a last question for Mr. Earle too.

[Translation]

Mr. Robert Bertrand: Thank you, Mr. Chairman.

[English]

Mr. Forster, in the last sentence of your second paragraph, you say:

The very real facts are that the failure to address the equipment requirements of the CF have resulted in—and could continue to result in—loss of life.

I think you mentioned an example, but could you give me that example and whatever other examples you used?

Mr. Anthony Forster: Certainly.

The Labrador is the first failure that comes to mind. Primarily, this paper was meant to look towards the future, and it is from the future that one can expect further loss of life if procurement continues along the same vein.

I've tried to outline the areas where I feel equipment failures could put at risk the members of the armed services. I'm certain there are others that could be further addressed, but that would be sort of beside the point. The point is to look five to ten years in the future to the policy of the Canadian government regarding the usage of these troops.

Mr. Robert Bertrand: Perhaps you have information that I don't have, but isn't the investigation of that crash still going on?

Mr. Anthony Forster: I'm certain it is.

Mr. Robert Bertrand: Then how can you tell us that it's equipment failure, that you're sure it's equipment failure?

Mr. Anthony Forster: Well, it is my judgment call, and I spend a great deal of time studying these very issues. It's a judgment call that I make based upon spending every single day of my professional life studying equipment and their requirements and the requirements of armed forces. If that is a judgment call that is in opposition to what is finally determined, then so be it.

Mr. Robert Bertrand: So you are saying it's because we have old equipment, if I understand you correctly.

Mr. Anthony Forster: Aging equipment would be my primary concern.

Mr. Robert Bertrand: I believe the Americans lost seven astronauts in the Challenger explosion a few years back. Would you say that is also equipment failure on their part?

Mr. Anthony Forster: The failure of the Challenger was due to the o-ring failure during launch. That would therefore qualify it as equipment failure, yes.

Mr. Robert Bertrand: You seem to be coming to conclusions that the investigation hasn't come up with yet. I don't understand your reasoning.

Mr. Anthony Forster: It is the purpose of people like me, analysts, to come to conclusions. When those conclusions are wrong, then they're wrong, but I can only operate with the information that is put in front of me and draw conclusions of my own.

Mr. Robert Bertrand: Personally I think to make such inflammatory suggestions is really beyond me.

Mr. Anthony Forster: Unfortunately, inflammatory or not, the future is what it is, and the future is that the Canadian Forces, if they continue on their current path of procurement, will continue to lose lives. That is my assessment of the situation, which is why I was brought before this committee.

Mr. Robert Bertrand: You mention that we should be buying new supply ships, close air support aircraft, and new APCs. Have you given thought to how much that would cost? Also, you seem to be saying that selling off the Leopard tank would cover part of that cost. Can you tell me, first of all, how much that would cost and how much the selling of the Leopard tank would be bringing in?

• 1110

Mr. Anthony Forster: The sale price for the Leopard C1 would be dependent upon the market. The market will determine how much—

Mr. Robert Bertrand: But you're an expert, you're an analyst. You tell me how much we would be able to get.

Mr. Anthony Forster: The market would be the final determiner for the price of the Leopard C1, and obviously this government. In terms of it offsetting further procurement purchasing, it would probably have a fairly minimal effect, which is why I say that in the short term the sale of the Leopard tank and the restructuring of the military toward a more wheeled light infantry force would be expensive, to say the least.

As far as the purchasing of force multipliers like the Apache is concerned, you're probably talking about $20 million per frame, which is admittedly very expensive. And that's not inclusive of logistics costs. As I tried to point out in my paper, this particular force planning scenario that I've laid out for you—a Canadian force without main battle tanks—is a poor second choice compared to maintaining a true multi-role force.

The Chairman: Mr. Earle, I can give you your top-priority question, and we have to excuse the interpreters.

[Translation]

Mr. Gordon Earle: Thank you, Mr. Chairman.

My final question is quite simple. It's directed either to Mr. Forster or to Mr. Bamford, since both are very knowledgeable about military equipment.

[English]

Just yesterday someone was asking me about our frigates, the Canadian frigates and the weapons system on those. There is a weapons system on the frigates, right? They asked me if that system also employed depleted uranium. Do you know if that's the case or not?

Mr. Anthony Forster: Absolutely not. The depleted uranium is a penetrator round designed specifically for tank and anti-tank use.

Mr. Gordon Earle: So not for the cruise missiles?

Mr. Anthony Forster: No, sir.

[Translation]

Mr. Gordon Earle: Thank you very much.

[English]

The Chairman: Thank you.

Mr. Bamford and Mr. Forster, thank you very much for what we found to be very interesting presentations. You certainly face some tough questions, and members have some concerns. These are serious issues we're studying. We appreciate very much your time. Thank you again.

The meeting is adjourned.