Keynote Address from Minister Qualtrough at CANSEC 2019

Speaking Notes for

The Honourable Carla Qualtrough
Minister of Public Services and Procurement and Accessibility

Keynote Address at CANSEC 2019

Ottawa, ON

May 30, 2019

Check against delivery

Good morning everyone. Before I begin, I would like to recognize that we are meeting on the traditional unceded territory of the Algonquin nation. I pay respect to their elders past and present, and extend that respect to all other Indigenous people present here today.

I would like to thank HICO Canada Inc. for sponsoring this morning’s networking reception, as well as Seaspan for sponsoring this breakfast.

Thank you all for being here.

Our government deeply values the relationship we have with CADSI, your leadership, your staff and your members. And we know how important your industries are to the safety and well-being of this country.

It’s been two years since my colleague, National Defence Minister Sajjan, launched Canada’s new defence policy—Strong, Secure, Engaged.

As many of you know, it features a significant increase in defence spending, and my job is to make sure those purchases are made in a timely and responsible manner, and in a way that benefits Canadians.

For nearly four years now, our government has been focused on putting people first in everything we do.

When it comes to defence procurement, that means our number one priority is our women and men in uniform.

We ask them for so much, and they answer the call with bravery and courage.

Whether it’s responding to natural disasters, defending our sovereignty, or contributing to peace and security abroad, we have a duty to make sure they are equipped to succeed in any operation, and that they have our full support.

Putting people first also means that, when possible, we give our support first and foremost to industries in Canada, because the jobs and growth you generate for hard-working Canadians are important to our economy.

Finally, it also means that we ensure our procurement processes are fair, open and transparent, and provide best value and benefits for all Canadians.

These are important goals, and ones we strive for diligently, day in and day out. But above all else, we need to make sure we are delivering the goods.

We’re doing just that, supporting our military in the air, on the seas and on the ground.

I could tell you about how we’re procuring a new fleet of medium capacity logistics trucks and new armoured vehicles, and how we’re revitalizing Canada’s light and heavy logistics vehicle capabilities.

I could also talk about the wide range of electronics, systems, weapons, and munitions we’re acquiring, not to mention our ongoing regular purchases to support our military.

Today, I want to outline just how far we’ve come on three major fronts—in our aerospace procurements, our National Shipbuilding Strategy, and our efforts to streamline processes. 

The aerospace side of things is a good place to start.

When we released Strong, Secure, Engaged two years ago, we announced our intention to procure remotely piloted aircraft systems to support our domestic and international operations.

I can tell you that we’re making progress on that procurement.

Earlier this month, we issued a formal invitation to qualify. Today, I’m happy to announce that we have officially released our list of qualified suppliers.

Now, as part of our collaborative approach, we will work with these qualified suppliers to review and refine preliminary requirements—to make sure we deliver the right systems that enhance our capabilities and strengthen our Canadian Armed Forces, as promised.

Two years ago, we also committed to enhancing our Manned Airborne Intelligence, Surveillance and Reconnaissance abilities for the CAF.

I’m proud to say that following an agreement with the U.S. Government, we are acquiring three Beechcraft King Air 350 aircraft with integrated systems. We are engaging Canadian aerospace and defence sectors to ensure they are well-positioned to participate in supporting these aircraft.

We’re also making progress on the replacement of fixed-wing search and rescue aircraft. Those aircraft help save the lives of thousands of Canadians every year, and I’m happy to say that we are on track to accept the first aircraft for operational testing this year. Right on schedule and on budget.

For the pilots and aircrews that serve Canada so bravely, we remain committed to our Future Aircrew Training Program for the Royal Canadian Air Force, establishing a list of qualified suppliers in December. 

We continue to work with them to refine and finalize the Request for Proposals.

Let me also tell you about our efforts to permanently replace Canada’s fighter fleet.

Four years ago, we made a promise to make the future fighters procurement open, transparent and competitive.

We understand just how vital these aircraft are to protecting the safety and security of Canadians and meeting our international obligations. We also know the best outcome will stem from a fair and competitive process.

I can tell you we’re keeping that promise.

Since launching the process in 2017, our approach has been to continuously engage with suppliers along the way so that they are able to make informed decisions.

And we are working hard to address their feedback to ensure a level playing field, with as many eligible suppliers as possible.

We have listened to suppliers, and a number of important changes have been made while maintaining our government’s policy objectives.

Examples include how we will assess the stealth requirements, and how we’ll ensure interoperability in the 5 eyes and 2 eyes contexts.

And very recently, we informed bidders of a change regarding the contractual obligation under the Industrial and Technological Benefits Policy.

Let’s be clear: every bid must still include a plan for ITBs equal to 100 percent or more of the contract value. That doesn’t change. This procurement is a generational opportunity for the Canadian aerospace industry that will generate good middle class jobs across the country.

What will change is that it will be up to each supplier to decide whether they will also provide a contractual obligation for their ITBs.

No one should misunderstand this: our government remains committed as strongly as ever to the ITB policy in this competition. And that commitment is reflected in two more modifications.

One is that bidders will score more points if they choose to back their ITB proposal with a contractual obligation than if they do not. This will ensure that the best proposals in the ITB category are fairly rewarded.

And the final change in this area is that we will increase the overall weighting of the economic benefits category, while keeping the capability category unchanged with by far the largest weighting.

The innovations and modifications we are adopting will enable participation from all eligible suppliers while applying the same rules to everyone on a level playing field.

This is a complex process. As complex as any the federal government has ever conducted. The field is comprised of very different entities – and dynamics. Conducting a truly open and fair competition among them is indeed a challenge.

It’s a challenge that our predecessors did not even attempt. And their failure to advance fighter jet procurement resulted in lost years when this process should have been underway.

We are getting thereby doing it the right way. I expect the final and official RFP will be issued in less than two months’ time. That’s later than we had envisioned, but not by much.

And I firmly believe that the time we have taken to engage with all interested suppliers and their national governments, and the resulting innovations will be worth the time and effort.

Worth it for the women and men in the RCAF, and for all Canadians.

We’re getting the fighter jet for the RCAF’s needs, at the right price, and with the right economic benefits for Canada.

Now I’d like tell you about another major priority for our government—Canada’s National Shipbuilding Strategy.

Since 2015, a great deal has been accomplished.

These coming months will demonstrate that success and prove critical to the future of our strategy.

Seaspan will launch the second state-of-the-art Offshore Fisheries Science Vessels within weeks, with a third ship is already under construction. The Coast Guard will take delivery of two of the vessels later this year. Seaspan is also continuing construction of the Royal Canadian Navy’s two Joint Support Ships.

Right now, Irving is working on four Arctic and Offshore Patrol Ships after launching the first ship just last year. The first AOPS will be delivered to the Navy later this year.

In Quebec, Chantier Davie delivered the first of three icebreakers, the CCGS Molly Kool, in December, in time for the icebreaking season. Conversion of the other two icebreakers continues.

And earlier this month, we announced a contract with Davie for the refit of Canada’s largest icebreaker, the Louis S. St-Laurent.

We also announced our intention to enter into a contract with Chantier Davie to build two new ferries, following our Budget 2019 commitment to build the ferries which will operate on important routes in eastern Canada.

Going forward, we expect to award new contracts to Irving, Chantier Davie and Seaspan for maintenance support services for 12 Halifax-class frigates which could reach a combined value of $7 billion.

Of course, I have to mention the biggest of all our NSS projects—the Canadian Surface Combatant project—a multibillion dollar project that will span the next 20 to 25 years, resulting in ships that will form the backbone of our Royal Canadian Navy.

After careful consideration and rigorous evaluation, we announced that Lockheed Martin Canada had been selected for the design for this project. Irving Shipbuilding has awarded a sub-contract to Lockheed Martin Canada for work to finalize the design.

I would also like to recognize the important contribution of Canada’s smaller shipyards.

Like Hike Metal and Kanter Marine in Ontario, Chantier Forillon in Quebec and Newdock in Newfoundland and Labrador. They are building, respectively, new search and rescue lifeboats, and new Channel Survey and Sounding Vessels, and refitting the CCGS Hudson.

And just this month, we awarded a contract to Ocean Industries Inc. from Isle-aux-Coudres, Quebec for the acquisition of four Naval Large Tugs.

We are seeing success, and we are determined to take the next step in the National Shipbuilding Strategy—by renewing the Canadian Coast Guard.

Last week, the Prime Minister announced a 15.7 billion investment in the Canadian Coast Guard—the single largest investment ever made in the Coast Guard—to renew their fleet with up to 18 new large ships, to be built in Canadian shipyards.

The men and women of the Coast Guard protect Canadians on our waters every day. They also protect the environment, and ensure the safe and efficient movement of vessels that are key to our economy.

At the event to announce the new ships, the Commissioner of the Canadian Coast Guard told me just how important this new investment is to ensuring they can get the job done and do their important work for Canadians—today and well into the future.

The fact is, there is an urgent need to renew the Coast Guard’s fleet. And as the Prime Minister said, “Canadians deserve better than to have this fleet rust out.”

In addition to work already underway, these 18 new large ships are vital to that renewal.

Irving will build two new Arctic Offshore Patrol Ships, which will be adapted to perform a range of critical missions, and Seaspan will build 16 Multi-Purpose Vessels.

We’re also investing in vessel life extensions, refits, and maintenance work at shipyards throughout Canada so that the current fleet can continue to deliver critical missions while the new ships are built.

But the average age of the Coast Guard vessels is 38 years.

And with the amount of work and timelines in which these ships are needed, we need all hands on deck.

That’s why we also announced our plan to add a third shipyard as a partner under the National Shipbuilding Strategy.

A competitive, rigorous process to select that shipyard will be launched in the coming weeks and months.

This is an important undertaking with a significant investment to back it up—and it means even more jobs, more opportunity and more economic development right across the country, while ensuring our Coast Guard has what it needs to get the job done.

It’s amazing to think of just how far we’ve come.

Most of us can remember a time when the shipbuilding industry in this country nearly ceased to exist.

Today, the picture is very different.

Shipyards across Canada are revitalized with billions of dollars in government contracts, supporting jobs and meeting our seafaring needs.

And smaller Canadian companies are benefiting too. Last year alone, our government awarded approximately $1.8 billion in new contracts to Canadian companies under the NSS. Of that amount, more than $173 million went to small and medium sized businesses across the country.

Looking at all contracts awarded under the NSS, we expect a contribution of almost $11 billion to our GDP and over 10,000 jobs annually. That is significant to the revitalization of Canada’s shipbuilding industry.

Our government is seeing success—for the military, for the coast guard, for our economy, for all Canadians—and we intend to carry that success forward.

These are just some of our major procurement achievements.

In everything we do, you’ll notice a running theme—just how much we engage with your industry at all stages of the procurement processes.

Continuous engagement is part of how this government does business—rooted in the principles of openness, transparency and inclusiveness.

Over the last four years, we’ve taken many steps forward to modernize our processes and practices, and they’re paying off.

Under Strong, Secure, Engaged, we are seeing a 70% increase in defence spending with a matching increase in military procurement.

Needless to say, finding efficiencies is important to delivering on our commitments.

One important achievement is the launch of a new risk-based approvals project, which is helping to streamline defence procurement.

This pilot aims to help Canadian Armed Forces members receive the equipment they need faster, without compromising on oversight and due diligence.

Normally, my department—PSPC—is required to seek approval of Treasury Board Ministers for all defence contracts above its contracting limits, regardless of the risk and complexity of a particular project.

But now, as part of this pilot, procurements considered low risk and low or medium complexity are recommended for approval within PSPC, helping us to cut processing time and get even more projects out the door.

I am pleased to say that early result are very promising.

Since the start of the pilot, we found that over 50 percent of our submissions for defence procurement have been eligible. 

These lower risk and complexity procurements have been approved within my department, and not the Treasury Board.

This includes important procurements like the Foreign Military Sale of new medium range air-to-air missiles for our CF-18s, and a competitive process for engineering support services for our Navy.

This is saving us months in the life of those processes.

I can tell you that this session, we are approving contracts that would not have even been considered a year ago due to capacity limitations.

This is probably one of the most significant developments in improving our defence procurement processes.

It lets us focus and direct our resources more effectively to our larger and more complex procurements, allowing us to deliver faster on all fronts.

Before I go, I’d like to reiterate the importance of the relationship between your industry and our government.

We’ve seen many accomplishments, and there are so many more I did not mention.

As the Minister responsible for government procurement, I understand how important our work to support our military is to the well-being of this country.

As a mom with a son in the Navy, our accomplishments are especially meaningful to me.

In partnership with the leaders of industry in this room, we have come a long way in a short period of time—and there is a real sense of momentum on several fronts.

We want to keep that momentum going.

We will continue to be transparent and open, to work with you to improve our processes, and we will always strive to ensure our procurements generate innovation, jobs, and opportunities for all Canadians.

But most importantly—for our sons, daughters and loved ones who serve so bravely—we will make sure they have what they need to keep Canada safe and secure for years to come.

Thank you. Merci.