NDDN Committee Meeting

     I call this meeting to order.

    Welcome to meeting number nine of the House of Commons Standing Committee on National Defence. Pursuant to the motion adopted on September 23, the committee is meeting to proceed with a briefing by the Secretary of State for Defence Procurement on his mandate and NATO defence spending.

    I welcome the Honourable Stephen Fuhr, Secretary of State for Defence Procurement, to a committee that he's very familiar with, having once chaired it himself.

    Joining the secretary of state are Arianne Reza, deputy minister of Public Works and Government Services, and Paula Folkes, associate assistant deputy minister of Public Services and Procurement Canada.

    I will now invite the secretary of state to make his opening statement. You have up to five minutes.

     Thank you, Mr. Chair.

    I want to extend my greetings to everyone and thank the committee for inviting me.

    I'll begin by acknowledging our presence today on the traditional and unceded territory of the Algonquin Anishinabe people.

    I'm pleased to participate in today's discussion of the priorities associated with my role as secretary of state responsible for defence procurement. My mandate is to deliver the capability to the Canadian Armed Forces at the speed of relevance while stimulating Canada's economy. Our government is equipping our soldiers, sailors and aviators with the tools they need while investing in the growth of a strong defence industrial base.

    Canada's new government has committed to our NATO partners that we will increase defence spending by 2% GDP by the end of the fiscal year and 5% within the next decade. To make that happen, the government is changing its approach to defence spending and procurement. We all know that procurement has been too slow, overly complicated and fragmented across departments.

    These are not new issues. In fact, this committee examined them in a 2024 report called “A Time For Change: Reforming Defence Procurement in Canada”, and we have incorporated many of its recommendations in the creation of this new agency. Building on that foundation, the Defence Investment Agency represents a new era in how Canada delivers critical capabilities to our armed forces. Many of its core features reflect the committee's guidance, including streamlining the end-to-end processes, simplifying approvals, tailoring oversight to project complexity and embedding a stronger sense of urgency and prioritization in how we deliver capability. We also drew from the recommendations from all parties, which called for a single point of accountability to replace the diffuse responsibility that had long hampered results. The Defence Investment Agency, established as a special operating agency within Public Services and Procurement Canada, now provides that clear accountability.

    It consolidates multiple procurement functions under one roof while maintaining transparency and ministerial oversight. Our goal is simple: to make procurement faster, clearer and more responsive. The agency focuses on consolidating processes, reducing red tape and accelerating defence acquisitions while ensuring that industry has greater clarity and predictability. At the same time, the agency's work will closely align with the forthcoming defence industrial strategy, which will serve as a road map for advancing Canada's defence industrial objectives and supporting homegrown innovation in aerospace, shipbuilding and advanced manufacturing, while helping Canadian firms scale up and compete globally.

    This is a significant transformation of defence procurement, and it required major shifts in how we do the work. That's why, leading up to its launch, we consulted broadly with industry partners, small and medium-sized enterprises, indigenous suppliers and allied frameworks to ensure we have this right.

    To manage day-to-day operations, the government has appointed Doug Guzman as CEO of the new agency. Mr. Guzman brings a wealth of experience to the job and extensive expertise in capital allocation, project execution and managing large fiscal projects.

    In the Second World War, the government of the day acted decisively to reform procurement, delivering the planes, ships, gear and ammunition the military needed at the speed that met the moment. Today, amid shifting geopolitical landscapes and growing global threats, Canada must once again rise to the occasion. The creation of the Defence Investment Agency marks a decisive step forward. It is one that will strengthen our sovereignty, support Canadian industry and ensure that our military remains ready and relevant now and into the future.

    I'm happy to be here and answer your questions.

    Thank you very much.

    Thank you very much for your opening statement.

    I'm going to pass it over first to Mr. Bezan, Monsieur Malette and then Monsieur Savard-Tremblay.

    It's over to you, James. You have six minutes.

    Thank you, Mr. Chair.

    Secretary, welcome back to committee. It's good to see you.

    In September, Vice-Admiral Topshee suggested that we should be looking at buying a mixed fleet of submarines, and then Prime Minister Carney said there's no scale of economy if we have a mixed fleet. Do you agree with the Prime Minister's comments?

     I think in fact it's relevant to the specific weapons system you're talking about and the number of things you get. Obviously, with the smaller number of things you get—in this case, up to 12 submarines—cutting it in half makes little sense. If you're buying a large number of things, dozens and dozens of things, then it may or may not make sense, depending on what you want the thing to do and the threat. There are a whole bunch of other considerations.

    It may or may not make sense. I tend to agree with the Prime Minister on those points.

    You agree with the Prime Minister on that. Does that carry over to the F-35 review? The Minister of Defence, Mr. McGuinty, said it would be done by the end of summer, and it's still not done. You mentioned “speed of relevance”. It sounds like more red tape, more bureaucracy and just slowing the process down.

    Well, we set this agency up almost verbatim the way this committee recommended this agency be stood up. Many governments over a number of years, including the previous Harper government, tried to set up an agency like this. It didn't get done. We tried different things—

    [Technical difficulty—Editor] setting up an agency. We actually set up a cabinet secretariat that sped things up, and were able to—

    Hon. Stephen Fuhr: Yes, sure—

    James Bezan: —add that political leadership to ensure it. All you're doing is adding more bureaucracy.

    Absolutely not. We're putting things into the centre. The Conservatives actually added more bureaucracy. We are taking resources from existing departments and bringing them together under one roof to focus on—

    I have a point of order.

    Mr. Chair, for the sake of translation, I would like it if we didn't have the witness and Mr. Bezan speaking at the same time.

    Thank you.

    Speak through the chair, please. Let's be cordial.

    Thank you.

    I'll go back to the F-35s. You're actually considering, then, to go to a mixed fleet even though it requires two sets of hangars, different pilots and different mechanics. Is that what you're considering? A mixed fleet is okay for fighter jets but not good for your submarines.

    To be clear, Mr. Chair, the program is under review. There are many outcomes. Nothing's been decided. I think the minister and the chief of defence were very clear that nothing's being held up. The program is under review and that's it. No outcome and no decision has been made.

    Comments were made at committees last week. We had the commander of the Royal Canadian Air Force, the chief of the defence staff in the past, and the deputy minister of defence who have all said that the F-35 is the plane we need. We need to have our pilots in stealth. The threat is from stealth aircraft. Why would we consider anything else?

    As I said, the program is under review. Nothing has been stopped. If you follow that logic, we are still getting the aircraft. It's in production. We're building the—

     It's just 16 aircraft though.

    The program is under review. The outcome hasn't been determined. It's a very important decision, and we'll take the time we need to get the decision right.

    Secretary, you guys are talking about a defence industrial strategy, and we're looking forward to seeing that. As you know, when we look at the defence industry, for the last decade Canada's been part of the F-35 program. There are jobs tied to the F-35 right across this country in places like Richmond, Winnipeg and Montreal in the production phase. Over 1,000 aircraft have been built. Canada's been part of that, and we're only now building the very first Canadian F-35s.

    Are you prepared to jeopardize this or have you been talking to the joint project office to ensure that we don't lose those jobs in Canada if we change course?

    Again, the program is under review and no decision has been made.

    James, just broadly, I understand this quite well. All options come with jobs. It's called ITBVP. We get jobs when we buy things. That's the way we work. Lockheed Martin said on TV just the other day that Canada will continue to compete for jobs at the best value. We've paid for that right for years. That will continue regardless of what we do. Lockheed Martin said that on TV just the other day.

    Are these jobs important? Yes, they're important. Do we want to preserve those jobs? We 100% do. Do we want to maximize jobs under any circumstance moving forward? Of course we do. That's why we're here.

    Secretary, as we know, first of all, the F-35 won in a fair competition run by your government. We already have a competition won, so the review is redundant.

    Second, we know that it's on the sustainment side where there are lots of opportunities for more jobs and more benefits back to Canada. L3Harris in Montreal has a contract now to have a depot for airframe maintenance and overhaul, not just for the Canadian F-35s but for the entire fleet. That's from a regional standpoint. There's also the potential for the F-35A engines for maintenance and overhaul here in Canada as well. That's not just for our fleet but for the entire fleet.

    Do you think JPO in the United States and the other coalition partners are saying, yes, it's okay to have those in Canada when they're only going to buy 16 F-35s?

     I think that I'll take Lockheed Martin at its word, which is that Canada competes for best value. We have some of the best aerospace companies on the planet. It's in their best interests to allow our companies to compete.

    I will say one thing, just to make sure we get our terms straight. The F-35 was chosen in a competition, but we had two compliant aircraft. The F-35 was chosen. Let's just be super clear about that. It was chosen, but it wasn't the only compliant bidder.

    Yes. It won the competition. I think that's fair.

    It was chosen.

    Chris Malette, we will go over to you.

    Thank you, Mr. Chair.

    Thank you, Mr. Fuhr.

    As you pointed out, in other countries, defence procurement is undertaken by individual armed services, defence departments, centralized defence organizations, separate government organizations or independent civilian corporations. In recent years, the global trend has been to centralize defence procurement processes under a single independent organization, as we have now done.

    My constituency, the Bay of Quinte, is home to several defence industry players, including L3Harris, that support operations at CFB Trenton. How will the new Defence Investment Agency help companies like these deliver the capabilities that the Canadian Armed Forces need now more quickly and efficiently at such bases?

    Thank you very much.

    I have been to L3 very recently, and it's a super capable company, as are many.

    One thing that I've really come to appreciate over the last several months, with industry engagement across Canada, is how much capability and capacity this country has. It's unbelievable. L3 is a very good example of that capability and capacity. It has a lot to offer. The government is currently working with L3 on a number of projects, and we'll continue to work with L3 moving forward, as we will with all sorts of companies across Canada.

    I think, moving forward for opportunity, it's not only in Canada, though; we need to start building ourselves outside of our own economy. When we talk about L3 or any other company we can buy from or can have them support us in Canada, we certainly will look to those companies to do that. Where we can help them expand their supply chains or their offerings outside our borders, we're also very focused on that. I don't think governments, previous governments, have really focused on that. I think there's more opportunity, to answer you more directly, for countries as we buy from ourselves and more opportunities for these companies as we try to help them sell outside our own borders.

    Further to that question—again tying it to CFB Trenton at 8 Wing—we have a good relationship with the civilian organization Nasittuq, which undertakes the contracting and supply of civilian contractors to Alert, for instance. Are there plans to further develop these sorts of procurements and contracts with our own indigenous-based companies?

    The current policy on procurement is 5% indigenous participation. That's the floor; that's not necessarily the ceiling, so yes, we're very focused.

    Again, I've met with industry extensively, and I'll continue to meet with them. I'm meeting with them today, again. We need to bring everybody into the tent as quickly as we can. We have the capacity and capability here, indigenous capability. We have many companies that can contribute. Part of this massive spend is to make sure that we leverage our own capacity and capability to help our own economy. We talk about this in the House all the time. We need to start creating jobs and opportunities for ourselves, and we will.

    Thank you.

    As Canada invests in new defence capabilities, how will the Defence Investment Agency ensure strong in-service support throughout the life cycle of some of these capabilities? What role can domestic industry, as well as our CAF, contribute?

    You bring up a good point. Obviously, we're going to look to see if we build it in Canada, or if we can quickly get it built in Canada, and then we're going to focus on making sure that happens, where we can. I'll use submarines as a good example. Could Canada build a submarine? I would say that, yes, we could. It would take us a while longer than we have to get them, so we're looking at other places right now to get submarines. That's public knowledge.

    The in-service support of whatever we buy, depending on who you talk to, is around 70% of the life-cycle costs of the system, so that's the bulk of the opportunities of actually looking after the thing over its life: servicing it, upgrading it, maintaining it. If we have to buy outside our borders, I want to make sure that Canadian companies are fully embedded in the in-service support, ISS, of the thing over its lifetime, because that's where the opportunities lie—in the things we have to buy outside our borders.

     Thank you.

    I will now pass it over to Mr. Savard-Tremblay.

    Thank you, Mr. Chair.

    We'll pick up roughly where your last discussion left off concerning the matter of working with companies.

    The Defence Investment Agency website states—

     I have a point of order on interpretation.

    A voice: It's not working.

    The Chair: Go to French. They may be on the wrong channel.

    James Bezan: Okay. We need English, please.

    I want to point out that I can hear you speaking English even though I selected the French channel.

    I need to make sure that I get it right.

    Is everything working? Great.

    I'll continue, but may I have my time back, Mr. Chair?

    Yes, it's okay to proceed. Start from the beginning.

    I'll pick up where you left off with the member who spoke just before me. You were talking about working with businesses.

    The Defence Investment Agency website states that there will be more collaboration. We can read the following: “will work more directly with businesses”; “clearer contract solicitation documents”; and “this will speed up the awarding of contracts”.

    On a practical level, what can we expect in terms of clearer bid documents sent in response to calls for bids? How will you ensure that the rigour required for the process isn't compromised? You want to move faster without cutting corners.

    The Defence Investment Agency is importing in the best folks we have from the departments that currently exist: PSPC, DND and ISED. Those folks are coming to our agency right now.

    What I heard when I was consulting with industry a lot is that it is just way too complicated and too complex, especially for the small to medium-sized businesses. The OEMs have lobbyists and all sorts of different people—they know what to do—but the small to medium-sized businesses don't necessarily have the resources to get involved in military procurement. That's a fair criticism. Bringing all these bits of procurement and centralizing them in one place is designed to be one-stop shopping for everybody. Right off the bat, you're only going to one place. You're not running around Ottawa, trying to figure out how it works.

    The defence industrial strategy should lay out a road map for how small to medium-sized businesses get more involved. With regard to industry engagement, certainly with big OEMs.... Canada has a number of them, and I have asked them to look at their supply chains that they pull from in the provinces or the areas that we work in—some of them pull right across the country—and to bring small to medium-sized enterprises into their tent so that we can maximize this big spend across the country to as many businesses as we can.

    I understand the issue of inclusion, which is obviously desirable. Small and medium‑sized businesses are subject to different constraints. They don't necessarily have the resources to hire experts to submit their applications. That's fine. I agree with that.

    However, we're also talking about speed. I understand that this involves clarifying and simplifying contracts. Yet your website also includes a commitment to a faster awarding process.

    What would be the concrete measures in this area?

    The Defence Investment Agency by design is the one-stop shop. I'm sure that we would all agree that when we have three large departments involved in anything, there is more likely than not—in fact, almost certainly—duplication of effort. Despite everybody's best efforts, there is duplication of effort, so when we centralize this and bring this into one office, we really reduce duplication of effort.

    If we go from dispersed accountability to a single point of accountability, we can move much more quickly. When you're delivering big projects or even small ones, sometimes there are issues, and it's hard to move forward unless someone who's ultimately accountable can get involved early, as opposed to later, solve the problems and move forward. So, by design, this agency is set up much better to deliver more quickly, and it's all about getting the things we need more quickly.

    Of course, this must be done without compromising on rigour or the time still needed to make an informed decision.

     Again, we have everybody located in one spot and there is one single point of accountability so that, at the end of the day, we don't have to run around to get an agreement. Once it comes to contracting and we're delivering on the procurement, it's one-stop shopping. That will speed things up greatly.

    The Defence Investment Agency website also shows that new procurement models and tools will be put to the test.

    Can you elaborate on this as well, meaning on procurement models and tools?

    Sure. A newer model would be a strategic partnership, and we've already exercised a strategic partnership with a Canadian company to deliver future fighter lead-in training. I think that was announced before I was elected. We'll work with that company to deliver this capability, as opposed to having some longer process that takes much more time than working with a Canadian company that can deliver the capability.

    Another way we can make things go more quickly is using commercial contracts where they're available. They won't always be available, but I'll be asking the department to use commercial contracts for things where we can. They are a much faster tool.

    We also know that the agency will have significant contractual authority. It will manage all projects worth $100 million, which is no small amount, as I'm sure you'll agree.

    Will you prioritize Quebec and Canadian companies in all this? Are there any objectives for local contracts?

    We will prioritize Canadian companies, and that includes those in Quebec. Quebec has really good capacity in shipbuilding, aerospace and space—I'm very familiar with what's going on in Quebec—but so have other provinces, like Ontario, the Prairies and B.C. It really is everywhere. It's just a function of harnessing all of this capability and capacity and leveraging it so that we can take this massive defence spending and make sure it benefits Canadians and Canada.

    Thank you.

    It's over to you, Ms. Gallant. You have five minutes.

    First of all, I'd like to set the record straight about what the Conservative government did. We never recommended a new agency. We asked that all the pieces be put together in one place so the movement would be faster.

    Secretary, you don't know why, at the end of the summer, the review on the F-35 was not received.

    It's not complete. That's why it wasn't received.

    Mr. McGuinty said the review would not take into consideration how much taxpayers are going to lose if your government scraps the rest of the F-35 order. Do you think it's irresponsible to leave this crucial fact out of the F-35 review?

    I had a chance to watch the committee proceedings in their entirety, and I don't think that was.... None of the witnesses I heard said....

     Nothing is being lost. The program is continuing as it was designed and it's being reviewed. That's it. Nothing has been lost. It's not costing us time and it's not costing us money. It's just being reviewed.

    Okay.

    You told us on October 2 that the F-35 review report was in the PMO and that he would make his decision known. Has the Prime Minister even opened the report?

    I'm sure the Prime Minister has opened the report. You may have noticed that a number of things have been happening. The government has done a number of things, including this review, and the review is not complete.

     The most important thing here, regardless of how long it takes, is that we make the right decision. It's a massive investment.

    This committee has been told in the past that the way to get procurement done quickly is for the Prime Minister to be the driving force behind it. Setting up this new agency seems like he's passing it off to somebody else.

    Is the Prime Minister going to ride herd on this procurement?

     If it's designed correctly, it should do the job on its own. The Prime Minister will be involved when he needs to be, but whether it's this agency or any other agency, if it's designed correctly it should deliver the results we've been mandated to deliver.

    Okay, so the Privy Council is not telling the department that this is the absolute priority.

    The Prime Minister appointed his friend Doug Guzman to head the so-called Defence Investment Agency. He has a taxpayer-paid salary of $679,000 a year and is entitled to a 33% performance bonus, which brings him up to almost $1 million. Is this type of compensation appropriate—it's higher than any other bureaucrat's—and why would you say it's appropriate?

     I had a look at this. Like you, I want to make sure we're doing things right.

    The compensation packages for people of this calibre were set in 2000 by Treasury Board. They are administered by the public service. If I look back at the CEO of Canada Post, appointed under your previous government, and if I bring his salary up to 2025 dollars, it's virtually identical.

    Has he ever served in the military?

    I don't believe Doug has served.

    I have all that. I have all the expertise I need. What I needed was someone who was capable of delivering these massive projects at scale, and who could leverage Canadian businesses and Canadian content in a way that we deliver for the Canadian economy and Canadians.

    If we already have that, why are you hiring him?

    Who has that? This is a brand new—

    You just said, “I have all that.”

    With respect, we have procurement specialists. I need senior-level support that can leverage this massive spend and build out our Canadian economy in a way that matters right now, because many of our sectors are getting beat up as is talked about in the House almost every single day.

    Has he ever worked in procurement before?

    He's delivered large capital projects.

    Were there any other candidates for the Prime Minister's consideration before he appointed Mr. Guzman to that position?

    You will have to ask the PCO. I don't know.

    Are you confident that, should the Ethics Commissioner conduct a review of the process in the selection of Mr. Guzman to his current role, everything will be in order?

    I'm not aware that the Ethics Commissioner is looking into it. The Ethics Commissioner is free to look into whatever he wants.

    Do you know if he's going to find a problem with that?

    Like I said, I've explained the process as I understand it. The compensation tables have been in place since 2000. There's the CEO group from CEO1 through CEO8. Your previous government appointed someone at that level and paid him about the same amount of money.

    Actually—

    I'm sorry, Ms. Gallant. You were on a roll, but I have to give it over to Mr. Watchorn at this point.

    Mr. Watchorn, you have five minutes.

    Thank you, Mr. Chair.

    We'll turn to another topic, if you don't mind, Mr. Fuhr.

    On Tuesday, we heard from witnesses who expressed their enthusiasm for the creation of the new Defence Investment Agency. I would like you to provide an example of a project. I would also like you to explain the difference between the new and old systems, in order to show us how things will improve.

    The people accompanying you can also answer my question, if you wish.

    I can actually point to one that was announced fairly recently. That was the submarine project we're undertaking. It is a massive procurement. It may be the biggest procurement this country has ever done if we take all 12 submarines, and we factor in the infrastructure on the coasts. I believe there were 25 responses to an RFI. We downselected to two that met the high-level mandatory requirements of the Canadian navy.

    Those two companies will square off to see which one can demonstrate the best value for Canada. This is exactly what we want. We literally shaved years off the process. The public timeline for awarding this contract is 2028 with subs in the water by 2035. I think we can do it faster. We're going to push this as quickly as we can.

    My big concern here is to make a decision and get infrastructure under way, find the correct locations and begin to build the infrastructure. Oftentimes, and I can think of a couple of projects, the projects gets out in front of the infrastructure. We then have a problem when the thing arrives, and we don't the correct infrastructure to look after it, maintain it or house it.

    My hope is that we can get this moving quicker, and I think we can.

    I would like an example of a process that will be improved by the creation of the agency.

    Perhaps Ms. Folkes could provide an example.

    Thank you for this question.

    The Defence Investment Agency will give us the chance to work more closely with Canadian and allied industries to develop faster procurement processes. For example, we'll prioritize the acquisition of equipment already in use. In doing so, we can work with our allies to better understand their requirements. Our clients won't necessarily need to write a document over 1,000 pages long to explain their requirements, because our allies will have already done so. Our principle will be that, if the equipment works well enough for our allies, we'll check whether it works for Canada and whether any modifications or improvements are needed to adapt it to Canada's unique situation.

    Basically, without a detailed statement of work, we could save over a year at the start of the procurement process. Normally, it can take a year or more for the client department to clarify its requirements.

    Here's another example. The agency will give us the chance to work more closely with the industry and the capital markets to secure a better investment.

     We will be financing investment to support Canadian supply chains, as Minister Fuhr mentioned, not only to meet Canadians' needs, but to be able to export.

    The agency will work closely with the industry to develop export strategies in line with the defence industrial strategy. This is a new approach. We didn't have much long‑term investment before. Our 5% target sends a message to the industry that we're aiming for long‑term investments, which will attract private sector investment.

    Thank you.

    I have one more question for you, if you don't mind.

    This week, we had the opportunity to meet with senior officials from Norway and Germany to discuss the potential acquisition of submarines. These senior officials spoke about the economic benefits for Canadian companies.

    I'm sure that, regardless of the submarine model selected, the acquisition will have quite significant economic benefits for Canada and Quebec. I'm thinking in particular of Marmen, a company that works in this field, and Davie, a shipbuilder, which could participate in the project.

    How do you see the future of long‑term investments in this area?

    You spoke about the acquisition, but the subsequent necessary investments are even greater.

    Can you elaborate on how the project could be implemented?

     I think we meant Norway and Germany. They are the partners on the TKMS sub. Whether we're talking about that sub or the South Korean sub, it's important to gain, again, the maximum fiscal benefit we can for the country.

     I have been to Marmen. It is an unbelievable company. It builds its own tools. You walk into the building and there are these tools as big as a single-storey house. The company works with pretty cool projects in the U.S. that I probably can't talk about on this microphone.

    There is capability and capacity here, either as Hanwha Ocean or TKMS. I have said very clearly to them, “Here's what we have to offer, so you guys go and figure out how you can bring in Canadian companies.” Again, we want to buy the sub as it is, but machine manufacturing, which is Marmen, and simulators, which are CAE, are great examples of maybe not messing with the submarine itself, because you start to Canadianize it or run down the road and you end up with an octopus with many arms. That will slow us down. We don't necessarily want to do it. As it is, the navy says that it meets its requirements.

    How can we bring in Canadian industry without upsetting the timeline, number one? Because this spend is going to be so big, when you talk about not B2B or going “G2G”—government to government—how else can Canada work with these other countries in other ways?

     We sell aircraft. Can we sell them aircraft? Davie builds icebreakers. Seaspan builds icebreakers. Everyone is looking for icebreakers. The U.S. just bought some icebreakers from the ICE pact. Canada is a member of the ICE pact.

     All of these things are happening. People are spending money, and everybody wants to work with Canada. How do we harness that and build out our economy in a way that matters? That's what we're looking at.

    Thank you, Secretary.

    Mr. Savard-Tremblay, you have two and a half minutes.

    Great.

    On Tuesday, Minister David McGuinty appeared before the committee. He couldn't tell us the timing for the release of the findings regarding his review of the F‑35s, which were promised for this summer. He also couldn't answer a question about the potential impact on jobs or costs if the government decides not to proceed with the acquisition.

    Can you elaborate on this matter?

     Again, I have to keep going back to the fact that there's still a review happening. Nothing has slowed down; nothing has stopped moving forward.

    Any path we take needs to bring financial benefits to the Government of Canada and, by extension, taxpayers. We have to make sure our businesses are involved. We have to make sure our companies get work. We have to make sure our economy grows. This is very important.

    We're applying that to submarines. We're applying that to planes. We're applying that to.... Everything we buy has a couple of lenses on it: Can we make sure that Canadian companies are fully involved or partially involved, and who do we partner with going forward?

     You may have heard me and others say we will be diversifying our defence spend amongst many allies, not just the one to the south of us. They're an important partner, but we need to make sure that we diversify our spend and grow our own economy while we equip the Canadian Armed Forces at speed to meet the moment.

    Do you know when we'll have the findings of this review? They were due last summer. The announcement of a summer deadline came from an educated assessment, based on the information available at the time, that this was a reasonable timeline.

    Do you have a new objective?

    The objective is the same: to get the military the machine it needs to meet the threats that it faces and to get the Canadian people the best economic deal that they can possibly get.

    I can't give you a timeline. We're going to make sure we make the right decision for the right reasons. That is the most important objective of this review.

    Why was it possible to have a deadline before, even though it ultimately wasn't met? First, we were told that we would have the findings last summer. Now you're telling us that you don't have a timeline and that it will take as long as it takes. Why was there a target date before?

    You're right. there are always objectives.

    I would say we can all agree that we live in a very different place than we did a year ago. We have different things we need to consider, and, as we review everything we're doing, we need to apply different lenses to what we're doing to make sure that we maximize the world that we live in right now.

    Thank you.

    It's over to you, Mr. Kibble.

    I believe you and Mr. Anderson will be splitting your time.

    Yes, Mr. Chair.

    Thank you, Secretary.

    Mr. Guzman is a wealthy banker friend of the Prime Minister's.

    Has he disclosed his investments? I'm presuming he will disclose his investments.

    As secretary, are you aware of any conflicts with his investments versus defence contractors, etc.?

    Thank you for the question, and thank you for your service.

     I assume...like everybody else, we make our disclosures, and like everyone here who has to, Mr. Guzman has done his due diligence. I'm not aware of any conflicts.

    I'm certain both you and I will look into that.

    Who will Mr. Guzman report to?

    He will report to the Secretary of State for Defence Procurement.

    Okay, so the Defence Investment Agency bureaucracy will be doing procurement but reporting to the people who do procurement.

    No, let me rephrase it.

    He will be reporting essentially to me, the secretary of state of the Defence Investment Agency, to be clear.

    Mr. Guzman will report to you, and your job is to do defence procurement.

    In a democracy, public service departments report to elected officials, like every other department.

    I'm sorry, but I'm going to ask a question here. Thank you.

    There are three government departments that will be providing personnel to the Defence Investment Agency bureaucracy.

    Are these new employees they will be taking on or current employees within that process?

    As I mentioned earlier, initially we will be importing people in from existing locations—

    Okay. Those existing locations are the current procurement offices that you mentioned that are government. These are not new employees.

    No, they're not new employees. They're existing employees, because we're consolidating defence procurement.

    Will those departments that do the procurement right now that are giving employees to the Defence Investment Agency bureaucracy be stood down?

    Over time—

    The intent is to stand down the—

    If you could let me answer the question, I'll give you a fulsome answer.

    There are hundreds of people across multiple departments involved in defence procurement. It's decentralized. That's the problem. We're bringing them together.

    You're bringing personnel, as you said—we heard your answer.

    Those departments will get smaller. Are they eventually going to be stood down and have one super department, or are we going to maintain the three current departments plus another department that's going to then report to you? This doesn't seem to be a hierarchy of reporting.

    The stated end goal is the Defence Investment Agency will be the one-stop shop for defence procurement.

     Will they be working alongside three other departments that will have people drawn from there, and will those departments still be stood up?

    No.

    Maybe the deputy could answer, if that would be clearer.

    Give me a yes or no. Will the other three departments you mentioned, which people are being drawn from, still exist, yes or no?

    They will be drawn into the Defence Investment Agency over time.

    All three of those departments into one....

    That's fair enough. Thank you.

    How many new employees, other than Mr. Guzman, are going to be hired for this new department?

    We'll take a look once we have the agency fully up and running. We'll look at any additional resources we need.

    You're not sure, then. Some people would be drawn from the three current departments, and there may be some new employees as well. Is that fair to say?

    I guess anything is possible in the future, but right now, we're focused on bringing in folks we already have, consolidating them in one location so that we have one location for—

    I'm just having a hard time with the one location when they are reporting to you, but your department is one of those three other departments that are being drawn on.

    It's called a special operating agency, so—

    They're reporting to you, though.

    They're reporting to me, yes.

    Some of those people will be coming from your department to the new department, though.

    I'll let the deputy explain.

    Just answer yes or no, please.

    I'll let the deputy explain.

     First off, as the minister indicated, there will be a special operating agency. For the time being, in phase one, it will reside in PSPC. We will be drawing from PSPC, DND and ISED.

    In terms of the two organizations running side by side, there is currently a floor of $100 million. We will be porting over the projects and the various elements as we go.

    This sounds very complicated to figure out just the process, let alone the procurement.

    Will the ongoing review of the already chosen F-35 be conducted by the Defence Investment Agency bureaucracy, or will it continue where it is right now?

    The Defence Investment Agency...? No, it won't.

    They will not be doing the—

    It won't.

    Okay. Will they be taking over the procurement of the F-35, though?

    At this point, that's not a planned option.

    It will stay with the old department, then, so that's not one of their new projects.

    It's important to understand how that is structured right now. It's an MOU. It's different from all the other procurements we have. It's managed by DND and it always has been. Unless something changes—and I'm not aware of a change—DND will continue to manage that under the MOU.

    Okay, thank you very much.

    I'm out of my time.

    Thank you, Mr. Chair.

    Thank you, Secretary.

    We will move over to you, Ms. Lapointe. You have five minutes.

     Thank you, Chair.

    Before I ask my question, Secretary, I want to give you an opportunity to respond to, and to clarify, the reporting structure question that was asked by my colleague.

    I appreciate that. Thank you very much.

    The Defence Investment Agency has an elected official at the top. In this particular case, it happens to be me. It then has a senior public servant, and in this case, it will be Mr. Guzman, acting as a chief executive officer, equivalent to an ADM or a DM.

    Underneath him will be a structure similar to what we see in other government departments—DGs, people working on procurement teams—and it will be set up in a way similar to what we see in other departments, except that it will be one place where the procurements come and where the procurements are dispatched.

    Thank you.

    If you would permit me, I could just add to that. It's a two-phase strategy. Machinery-of-government changes are always complex, so in the short term, I will remain the deputy accountable for that special operating agency and will support the minister as we move to that longer-term version in the coming months.

    Secretary, one of the Defence Investment Agency's core mandates is to bring together experts in operations, industry engagement and project management so that we can deliver procurement results that align with strategic objectives.

    I will tell you that, as MP for Sudbury, in northern Ontario, we have institutions like NORCAT, Laurentian University, CEMI and MIRARCO that are already developing technologies like automation, remote operations, underground communications and autonomous systems, which overlap with defence priorities for situational awareness, mobility and resilience in changing environments.

    How will this new agency ensure that these types of regional innovation ecosystems are systematically connected to defence procurement planning so that proven Canadian expertise from places like Sudbury can directly inform and supply the technologies being prioritized for Canada's future defence capabilities?

    I think one of the benefits of having this agency, and there are many, is that this is all we focus on. I personally am out all over the country. I'm in other countries figuring out where all this awesomeness exists—the capability and the capacity. I'm personally involved.

    If you think about the old way of doing it, the three ministers who were in charge of it had massive departments that were in charge of many things and defence procurement was one of those things. This is all I do. My personal connection to the things that you talk about is obviously a lot better than it would be if there were a bunch of ministers involved because they're doing other things as well.

    More specifically, the defence investment strategy that we should see in the coming months, should—I'm hoping; I've seen drafts and it's still a work in progress—start to tie all this together. It's a road map that explains how we're going to get from where we are to where we want to go. Between the strategy and this agency's ability to just be on the ball more because this is all it's focused on, I think the probability of getting it right is a lot higher than what we had before.

    Secretary, I'll tell you that there's a lot of awesomeness in Sudbury. I'll invite you to come and see for yourself.

    Something I hear a lot is that small and medium-sized enterprises sometimes struggle to access large defence contracts.

    How will your department be making sure that SMEs, including those in regions like northern Ontario, can participate as qualified subcontractors or component suppliers?

    Did you want to weigh in on that?

    I would love to.

    What's interesting is that, obviously, Canada is made up of a lot of strong SMEs and we want to have access to them. Sometimes in the traditional model of bidding and accessing federal procurement, that might be daunting. We heard earlier about clear documentation.

    We're doubling down on the efforts we have with our regional offices to have a “concierge service”, so that SMEs know what's coming. That is another key difference that the DIA will offer: better clarity, better alignment and better access, so people can forecast to see what the opportunities are. Additionally, we're going to offer them services for how to register, how to compete and how to find the opportunities. With the buy Canada sectoral piece that's been announced by the Prime Minister and our interest in these areas, we're hoping to fuse it together.

    We know that many of our large Canadian defence suppliers want to have a supply chain made of SMEs, so making sure the opportunity, the access...and matching that skill set with a forecasted revenue of potential contracting opportunities is really key. Even in our contracts now, we talk about new skill sets and new models. We want to make sure we have that clarity in the supply chain, so we really have that Canadian opportunity for entrepreneurs.

    Thank you, Deputy Reza. I appreciate that.

    Mr. Anderson, I think you're up for five minutes.

    Thank you.

    Secretary, do you report to the minister of procurement?

    Now that we have delegated authorities, I will have his authorities in my portfolio, so as of now, I do not. I'm housed under him. His authorities have been delegated to this agency for procurement.

    Do you report to the Minister of Defence?

    No.

    Do you report to the Prime Minister?

    Yes.

    The agency reports to you. This sounds like there's an extra step of bureaucracy in the middle here.

    Earlier this year, Mr. Doug Guzman donated the maximum individual amount to the Prime Minister's account. Did that affect his decision at all?

    I don't think it would have. I did, too, and so did many Canadians.

    That's good to know.

    Do you believe that Mr. Guzman should be paid about 10 times the average salary of the Canadian worker?

    I think we've covered this, but since you bring it up—

    Let's cover it again.

    I think Doug Guzman took a massive pay cut to come and serve the country, just like we all are doing around this table.

    That's fair enough, but he's a banker. He's not really qualified to do that. We can say that we all took sacrifices in the public sector. We could all be making more money in the public sector—at least most of us.

    In the private sector.... Well, I think your leader would probably disagree.

    Armatec had a contract to refurbish 25 light armoured vehicles to be sent to Ukraine. That was recently quietly cancelled.

    How much of the $250-million contract did we lose on that cancellation?

    I think that was covered by the Minister of National Defence during his appearance.

    Can you cover it?

    No.

    You don't know.

    I don't know.

    Okay. Was the contract included in the 2% for NATO budget?

    Military—

    That's a yes or no answer.

    I'm going to answer the question. The military assistance coordination centre is an agency within DND that handles all support for Ukraine and any other country, so that's a question for the Minister of National Defence, and I believe he answered it.

     It's okay. You don't know the answer.

    Can you give us any insight as to why the deal was cancelled?

     I don't know, because it's not part of the mandate of the DIA. It's part of the military assistance coordination centre within DND.

    Yesterday we were told that delays in approving the F-35 had not caused the amount to rise, yet it was said that costs escalated. Can you explain the discrepancy? Did it cost more because of these delays?

    We haven't upset the timeline. We haven't stopped anything. This has been said multiple times. The program is in review.

    I know it's in review. The costs are rising as it's in review. We were told yesterday. Is that not true, or is that true? Are the costs rising, or aren't they rising?

    Costs may be rising for inflation or any other reason, but nothing is slowing—

    If we had bought the F-35s earlier—

    Nothing is slowing down. The program is under review. Nothing has been stopped or delayed. The program continues. It is being reviewed.

    I understand what's happening. I'm asking if the minister is wrong. Are costs rising or not on the F-35?

    That's not my file, so I can't answer the question.

    So you don't know.

    When taking into account the amount of money invested in F-35 infrastructure, isn't it time to say this is a fait accompli already? Why are we building infrastructure for F-35s if we're in review and we're not quite sure if we're going to get them?

    As you know, the 16 jets are under contract. They're being built right now at the manufacturer in the U.S. We will need infrastructure for those jets when they arrive. The program is under review. No decision has been made.

    We're building all this infrastructure for 16 jets, possibly. Is that correct?

    The decision has not been made to alter the program we're on.

    I know, but you're saying it's in review. We haven't decided to buy the F-35s, but we are building the infrastructure as if we're buying the F-35s.

    I don't know how many ways I can repeat myself here. Nothing has been stopped or slowed down. The program is simply in review. That means that current activity is continuing. When we have a decision on the way forward, we will make it. That's where we're at.

    Bear with me here.

    According to Wikipedia, you're a former supporter of the Conservative Party. Is that correct? You quit because you said that the procurement process was too convoluted. Are you a little bit worried about the process being convoluted here?

    The process is exactly what we needed. This is what many parties have said over many years. This is exactly what this committee.... I don't know if you were on this committee in the previous Parliament.

    I was not.

    You were not.

    The recommendations of this committee are virtually similar to how this agency has been built out.

    Thank you, Secretary.

    Thank you, Mr. Anderson.

    My apologies for cutting you off. It's time for Ms. Sherry Romanado, our PS.

    Thank you very much, Mr. Chair.

    Through you, I'd like to thank the witness for being here today.

    I want to clarify some points, because there seems to have been some confusion. On a previous question about the movement of experts from PSPC, ISED and DND, there was an allusion that these other departments would close. I want to make sure we're clarifying that the Defence Investment Agency is pulling experts from various departments under one house.

    PSPC does things other than just defence procurement. PSPC will live on and continue to do the other work it does, procurement for things other than defence. These departments are not closing down. I want to make sure that people understand that is not what the point of this is. This is the point of moving at the speed of relevance, to quote you, Mr. Secretary.

    You also mentioned that ministers are doing other things. For instance, the Minister of National Defence is doing what he needs to do. The minister of PSPC is doing what he needs to do. Your focus, working with Mr. Guzman, is to make sure that, when you receive the statement of requirements from the Canadian Armed Forces and DND saying what we need, you and your agency are going out there, working with industry and letting industry know the opportunities and what we're looking for.

    Am I correct in that assumption?

     You're 100% correct.

    Thank you.

    You mentioned you've been working with many industry partners and so on, and you've also been talking to international partners and talking to other industry overseas, and you mentioned the capabilities of those agreements to allow other countries to then buy Canadian product.

    Can you elaborate on what you are doing in terms of international engagement?

    This job has me travelling a lot, so when I have the opportunity to engage with other countries on procurement topics, oftentimes I will bring up what we have to offer: our excess capacity and our awesome capability.

    I'll give you one shining example: shipbuilding is a great one. We have spent the last 15 years building up the most modern shipbuilding capacity in the world. There are only really a handful of countries on the planet that can build a heavy icebreaker, and if you take off Russia and China, that whittles it down to just a couple. Because our shipbuilding capacity is so new, we have the most modern shipbuilding capacity, and people are starting to recognize that as we've pushed products out. I think we've built nine-plus brand new large ships. They are world class, and people see that and they want them. The north, as we know, is opening up and icebreakers are a hot topic. Canada can build and deliver icebreakers, so we are in a very good position moving forward.

    When I have the opportunity to speak to nations whose icebreakers I know are aging out, I bring this up, hopeful that they will look at Canada as a place to buy their icebreakers moving forward.

    Thank you.

    I also want to clarify another point. There's a question in terms of the structure of the DIA. You mentioned something, and I think my colleague across the way didn't catch what you were saying. You mentioned that we are bringing in these experts from around the various portfolios and that Mr. Guzman brings to us a wealth of expertise with respect to project management and engagement of industry as well as identifying opportunities for the Canadian economy.

    You also mentioned something about what you are bringing to the table. Can you elaborate for the committee that you are a veteran of the Canadian Armed Forces with over 20 years of experience in the armed forces, and, therefore, it's not really a necessity for Mr. Guzman to also be a member of the Canadian Armed Forces? He is adding a complement to the agency. Would you agree that's correct?

    I think that's very true and it is correct.

    It's like having a team. When you have a team of people, you need various skill sets. You're not going to have one person who has all the skills that you need.

    I need procurement experts. I need contract experts. I need military experts. I need all these types of folks. I have a pretty diverse background in a number of things, so I speak all these languages. It doesn't necessarily make me an expert on any given thing, but I understand what people are saying, so it makes it a little easier for me to engage.

    Doug Guzman has been very successful. He has delivered large capital projects and he is exactly what we need—he has the skill set we lacked and the one we needed—and I am super happy to have him on the team.

    I am out of time, but I wanted to thank you and thank your team. We're looking forward to working with you.

    Mr. Chair, this is not a question for the secretary, but there were questions that had been asked, and I am just asking if he would be able to provide the committee in writing a clarification, since Mr. Guzman reports to him, of whether Mr. Guzman has filed all potential conflicts of interest that he has with the Ethics Commissioner so that we are aware of that.

    Mr. Secretary, can you provide that in writing?

    Yes, I'll look into it and provide the committee with what we can find out.

     Thank you.

    Before I ask for adjournment, thank you very much for appearing, all three of you, and for your testimony and your service to Canada. We appreciate that.

    Bill C-11 will commence next week. We ask you to provide names of witnesses as we proceed. I want to advise the committee of a change in the date. The minister is not available to attend on Tuesday the 28th due to unforeseen circumstances for travel. We're moving our meeting to Monday. We're going to keep to the same witnesses and itinerary so as not to lose that opportunity to meet with the minister.

     I'm moving that to Monday. It's at 3:30 in the afternoon.

    What is the topic?

     The minister is appearing on issues of Bill C-11. We'll get something out to you in due course.

    The meeting is adjourned.