CADSI Breakfast to Accept the Jenkins Report

Speaking Notes for Rona Ambrose
Minister of Public Works and Government Service and Minister for Status of Women

At the CADSI Breakfast to Accept the Jenkins Report Entitled Canada First: Leveraging Defence Procurement Through Key Industrial Capabilities
Chateau Laurier Hotel
Ottawa, Ontario
February 12, 2013

Check against delivery

Thank you, Tim, for that warm introduction.

Good morning ladies and gentlemen and thank you all for joining us this morning.

I am very pleased to take receipt of this report.

I can honestly say I have been looking forward to tackling this issue since Tom Jenkins began working on his innovation report in October 2010.

As many of you will know, this is the second time that Tom has been asked to provide insights to our Government on how to improve innovation in order to better support the Canadian economy.

When he issued the 2011 report, “Innovation Canada: A Call to Action”, he devoted a chapter to procurement.

In that chapter, he asked me, in particular, to … and I quote: “… take advantage of planned defence and security procurement by taking bolder steps in directions already established.”

As CADSI members, you know me well and you know that I take my ministerial responsibilities very seriously.

And so when Tom called me out in his report, I thought the first bold step was to call Tom back to Ottawa to do some more work on the issue!

Isn't that every business person's dream? To interact with Ottawa on a daily basis?

During that time, I was also having roundtables with many of you in this room.

Without exception, you asked me to look at how the federal government could better support the Canadian defence and security industries while preserving integrity and competition in purchasing.

In September 2012, I appointed Tom as my special advisor to help improve Canada's defence procurement process to better support jobs and economic growth of Canada's defence and manufacturing related industries.

I am very grateful to Tom and his panel—Peter, David, Christyn and Ray—for their hard work and for their enthusiasm.

The panel has accomplished a remarkable amount of work in a short period of time.

Our Government will closely review the report and consider your recommendations.

But I want to take this opportunity to touch briefly on some of the important issues outlined by the panel in their report, and its importance to the Canadian economy.

As the panel states, there are two KIC-centric operations for us to consider.

The first is how to select the KICs and how to track them over time. I am very grateful for an initial identification of six KICs categories, which we will take back and study.

The second is how to incorporate KICs across government.

As stakeholders, you have repeatedly asked us to create an environment where companies can plan ahead, better positioning yourselves to compete for defence contracts both in Canada and in the global marketplace.

To properly sustain the KICs strategy, I am very keenly aware that there must be changes in the process of how we purchase military equipment at PWGSC.

The panel has also identified changes that need to be made to programs such as Industrial Regional Benefits and how we can support KICs through trade.

Access by Canadian firms to the higher end of the in service support or repair market is heavily dependent on contracting terms and conditions established at the front end of a major acquisition.

I note with interest that Tom and his panel have examined this in service support and intellectual property. I will be considering this very carefully.

I am grateful for the encouragement and support I have received so far from my colleagues and from you, and I am confident we can continue our efforts.

We are committed to developing a procurement strategy, in consultation with industry, to maximize job creation, support Canadian manufacturing capabilities and innovation, and bolster economic growth in Canada.

The second major issue highlighted by the report is the opportunity a KICs strategy presents for the Canadian economy.

I firmly believe that leveraging the buy—getting a bigger bang for your spending dollar—can be achieved as part of a very competitive procurement process.

Let's put this all in perspective.

This strategy alone will not immediately create jobs or contribute to a more innovative or competitive economy.

However, a broader acquisition strategy and procurement plan where we do a better job leveraging the money spent on the equipment the Canadian Armed Forces needs will.

The Harper Government is committed to improving procurement writ large, in consultation with Canadian industries, so that we can maximize job creation, support Canadian innovation and bolster economic growth across the country and in all sectors.

It is critical that the Federal Government, in its procurement activity, leverage its buying power to the maximum extent as well as achieve administrative efficiencies and cost savings.

We at Public Works recognize that we are in the relationship business as well as in the buy and sell business.

There exists in Canada an excellent supply chain of organisations manufacturing and supporting military equipment.

My department takes on 55,000 procurement-related transactions a year, worth close to $17 billion.

The Canada First Defence Strategy outlines a $490 billion investment in the Canadian Armed Forces.
$240 billion will be allocated to military procurement.

Using the supply chain to its full extent to make these purchases, will not only strengthen the Canadian defence industry, especially the small to medium enterprises that are the backbone of the supply chain, but can help to build and sustain growth in other sectors across the country.

We are already creating and sustaining good quality jobs right here in Canada through From work on high technology aerospace as well as simulator and training technology in Quebec to LAV III work in London and Edmonton.

Not to mention the work under the National Shipbuilding Procurement Strategy on our Atlantic and Pacific coasts—military procurement is creating and sustaining jobs throughout Canada.

• Engagement of industry was early, constant, and effective;
• Oversight was reinforced and our governance was clear, enabling timely decision-making;
• Independent advice was used throughout to ensure integrity and fairness; and
• We leveraged the buy through value propositions as well as traditional IRBs.

This approach is indicative of our way forward.

It lays the groundwork for us to consider the approaches in the panel's report to further maximize the impact of military procurement on the Canadian economy.

The panel states in the report: “it is in the national interest to have a strong domestic defence industrial base, one that goes well beyond the basic capability of maintenance and repair to the actual sovereign production of key goods and services.”

I agree.

The panel's report sets a way forward, using military procurement as a lever of growth and development.

As Tom says, Canada has a unique “once in a century” opportunity to create jobs and growth while enhancing sovereign capability.

Tim will now moderate a very brief question and answer session.

Thank you.