Western Innovation Forum

Speaking Notes for The Honourable Diane Finley, PC, MP
Minister of Public Works and Government Services

Vancouver, B.C.
April 17, 2014

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Good morning everyone. It’s wonderful to be back in this beautiful city. You must hear that a lot. I come from Southwestern Ontario, and believe me, after the winter we’ve had, it is nice to actually see some greenery outside. That’s still in short supply back home.

I’m also very glad to be part of what Western Economic Diversification Canada has made an annual event—this opportunity for participants from enterprises both large and small, as well as from government, to meet, network and engage with one another. And I want to thank Minister Michelle Rempel for inviting me to speak here today.

Vancouver is a fitting choice for an event focusing on the defence and security industries and federal procurement.

Everything I’ve witnessed has pointed to a thriving industry here, and the jobs, growth and prosperity that go along with that.

Job creation, economic growth and long-term prosperity just happen to be our Government’s top priorities.

Today, I want to talk about how Canada’s new defence procurement strategy can help us to do business better and ensure we meet those priorities.

In a nutshell, folks, our strategy is first and foremost about equipping our Canadian Armed Forces with the tools that they need in a timely manner.

In Economic Action Plan 2013, our Government committed to leverage our defence procurement in a better, more strategic way in order to create jobs right across Canada.

That was a pretty big commitment because, after a decade of darkness for the men and women in uniform, it’s our Government that made the decision to make the single, largest investment in Canada’s troops.

Think about that for a moment though. Under the previous government, all naval ship construction ceased and the shipbuilding industry in Canada was closed down through a deliberate policy decision costing thousands of jobs—a decision that certainly resonated here on the west coast, and out east.

Military strength in personnel was reduced to a 50-year low. Sovereignty surveillance activity was cut to a bare minimum.

We’ve changed that. And we need to look no further than the shipyard here in Vancouver where the tide has turned following our Government’s decision to build ships at home in Canada and revitalize the shipbuilding industry that was plagued by a boom-and-bust cycle for far too long.

Already, over 75 Canadian companies have benefitted from the investment in the Vancouver shipyard upgrade alone. And many more Canadian companies will continue to benefit from our investment in NSPS when we start cutting steel on the Offshore Fisheries and Science Vessel here in Vancouver.

Most importantly, we’re ensuring that the men and women of the Royal Canadian Navy and the Canadian Coast Guard get the equipment that they need. And the Harper Government’s decision to build these vessels right here at home means we’re creating over 15,000 jobs and $2 billion a year in economic benefits over 30 years.

That, ladies and gentlemen, is but one example of the investments that we’re making. And with that huge crane now hovering over North Vancouver—it’s an investment coming to life!

Now—before I get into an update on the Strategy and how the implementation is progressing—I have a quick housekeeping matter to discuss.

I want to talk for a moment about where we are on CF-18 replacement given the growing media speculation. Now—I’m not saying that you can’t believe everything you read in the newspapers. Ok—I guess I am saying that.

But seriously, I wanted you to hear the straight goods, directly from me, since I know that many of you in this room will be impacted by this decision.

When the Government established the Seven Point Plan for CF-18 replacement it embarked on the most independent and transparent review in the history of Canada.

An independent panel, comprised of experts, external to Government, ensured that the evaluation of options being conducted by the RCAF was both rigorous and impartial.

Now let me tell you, as a testament to how seriously we have taken this exercise, we were very careful to choose the right people for this job. We ensured that we chose people who had the technical know-how, strong financial backgrounds, detailed knowledge of Canada’s military and procurement systems and we even brought in someone who was a very public critic of the program.

We wanted to absolutely ensure that the challenge function they would play on the analysis of options was very rigorous.

I can also tell you that I met with the panel several times during the course of their work. Keith Colter, Rod Monette, Philippe Lagassé and Jim Mitchell have really kept the RCAF’s feet to the fire in this evaluation. They have taken their job very seriously and they have done a great service to Canada.

And they have now completed their work. Over the next several weeks we will be carefully reviewing a number of reports relating to the evaluation of options, industrial benefits, costs and other factors related to the decision to replace our CF-18 fleet.

But let me say, first and foremost, that in our consideration of the work that has been done by the RCAF and the Panel, we will ensure that the Canadian Forces have the equipment that they need to do the work that we ask of them.

As a Government, we ask the Canadian Forces to protect Canada’s sovereignty and its people. We ask the Forces to defend Canada’s values at home and abroad. We ask them to provide relief to those affected by natural disasters both within our borders and around the world.

This is not a small request. It requires great and unimaginable sacrifice and in return we owe them no less than to ensure that we get them the right equipment to do the job that we ask of them.

Now, getting back to the Defence Procurement Strategy.

Many of you in this room were either involved in our consultations for Canada’s new Defence Procurement Strategy or the announcement. And you’ve likely participated in some of the information sessions that officials have hosted across the country—including here in Vancouver.

Many of you—specifically CADSI, AIAC and of course Tom Jenkins and his panel—have been instrumental in getting us to where we are today.

So I’m not going to reiterate all of the new Strategy in great detail today. But for those of you who haven’t heard—and hopefully that’s not many of you—our Government committed in last year’s Budget to leverage our defence procurement more strategically to create jobs and economic benefits right here at home.

What that means in real terms is that instead of being assessed simply on a pass/fail basis in our RFPs, proposed benefits to Canada will be rated and weighted using a value proposition.

That means companies that demonstrate a willingness to invest in Canada through the transfer of intellectual property, the creation of skilled jobs, innovation-related activities and export and international business development, may have a competitive advantage when bids are evaluated.

You can expect that when value propositions are applied in a competitive process, they will account on average for 10% of the bid value. However their exact weighting will be determined on a case-by-case basis.

Again, I’m sure that you all know by now that there are thresholds to determine when a value proposition will apply. A comprehensive industrial and technological benefits plan that includes a value proposition, and a regional component, will be mandatory in all defence and Canadian Coast Guard procurements over $100 million. All defence procurements valued at or above $20 million will now be assessed for the possible application of a value proposition.

But I know what you’re wondering. You’re wondering about the specifics. You’re wondering about which upcoming procurements will have a value proposition. And you’re wondering how this new Strategy will affect the projects you’re already working on. And that’s understandable.

I can tell you this. The implementation of the new Strategy is moving along very well. The work of identifying which upcoming procurements will be subject to a value proposition is nearly complete. And the new governance structure around this decision-making will be fully in place in just a few short weeks. But we’re already making the transition.

And, I want to tell you very clearly today that, within the identified thresholds, any procurement that does not already have a final, published RFP is on the table for a consideration of a value proposition.

DND is also making strong progress towards the release of its first annual Defence Acquisitions Guide in June. This will be the first time that we have a forward-looking summary of key acquisitions that may be on the horizon. Being aware of DND’s procurement intentions is meant to help you, in industry, make more informed investment and business decisions.

Now, a lot of this weeks’ conference is about innovation. And the Defence Acquisition Guide will be a very important tool to help to foster innovation in your industry.

By knowing not only what the long term equipment needs of the Forces will be, but also the timeframe to market for these needs, you will be able to make important decisions about your company’s down-stream requirements to make investments in technology, to form strategic partnering arrangements and be at your best competitive advantage to position yourselves for these bids.

We’ve also made a lot of progress towards making the interim Defence Analytics Institute, that we announced in February, a permanent institute. The interim board members, led by chair Tom Jenkins, are meeting regularly to determine the DAI’s mandate and scope of activities. And this joint effort of industry, academia and government will be on permanent footing in no time.

Now, although we’ve seen progress being made on the implementation, I know that there are rumblings. I hear these things, you know! Rumblings of whether this new Strategy will deliver what it is intended to deliver. Whether it will be applied as we have indicated. Whether it will cause crippling delays in an already-too-slow system.

None of us should under-estimate the extent to which the new DPS is a massive sea-change in the way that we procure equipment for our Forces. This is a huge undertaking. But we’re lucky to have so many capable officials who are dedicated to this task. And you will hear from the most dedicated of these officials—Tom Ring, Phil Jennings and Rear Admiral Pat Finn at the panel following my speech.

Let me firmly say right now that the DPS should not and will not slow down the process. When fully implemented we believe that the new, co-operative structures between DND, Public Works and Industry Canada should improve the process, not delay it.

By engaging with industry earlier and more continuously, we will avoid the pitfalls and the unnecessary delays that happen all too often at the back-end.  

These conversations between industry and government go a long way toward preventing problems we’ve experienced with past procurements. Problems involving misunderstandings about both what is needed and how those needs can be met.

Additionally, as I’ve frequently said, there will now be a challenge function at DND—to help better understand, early on, the specific requirements our men and women need on equipment that we are purchasing.

But while the Government works hard to implement the Strategy, industry cannot and must not, simply be passive observers. Let me give you some examples of how I expect you to participate.

Early and continuous industry engagement is not a gimmick and it’s not a slogan. We want and we need your feedback. You will have an opportunity to participate in a way that you never have before.

When an equipment need is identified, you will be brought into the process. No more will it be the case that you don’t hear from Government until we have a draft RFP.

You will be part of early discussions on what needs are identified by the Forces. You will have input into how those needs get reduced to specifications on paper. You will have input into if and how a value proposition will be developed.

So, yes. You need to be an active participant in these discussions.

As my colleague, the Minister of National Defence said only a few weeks ago, “only the private sector has the commercial knowhow, the technological expertise and the innovative ability to rapidly deliver the kind of cutting edge solutions needed to support the 21st century operational requirements” of the Canadian Armed Forces.

There are other ways that I expect you to participate as well. The work of the Defence Analytics Institute will be fundamental to the success of the Strategy. And it will require the active participation of industry.

It will require those of you in this business to share your data and analysis with the Institute so that it can measure global supply and demand conditions in defence-related industries…and then contribute to how Canada identifies and develops Key Industrial Capabilities to which value propositions will apply.

The new Defence Procurement Strategy is truly a new partnership between industry and Government. It is, as I’ve said, a big change in the way that we’ll “do procurement.”

The key point here is that we’re making good progress, but we don’t have all of the answers just yet. But I’m committing to you to keep you informed of our progress.

In turn, I need you to commit to me that you will continue to work with us on the implementation and application of the Strategy as we move forward.

Now we’ve been talking a lot of inside baseball today. But I don’t want to lose sight of the bigger picture here.

At the heart of the new Defence Procurement Strategy is our promise to our men and women in uniform that we will provide them with the equipment that they need to do the very important job with which they’ve been tasked. This will always be the most important consideration in military and Coast Guard procurement.

But where there are multiple suppliers who can meet that need, we should not—and frankly, will not—be afraid to ensure that the successful supplier provides real economic benefits for Canada.

This is an important shift because in the context of government spending millions—sometimes even billions—of taxpayer dollars for defence equipment, Canadians have every right to know that we are getting what our troops need, at best value, through a process that will create thousands of highly skilled, high paying jobs here in Canada. That’s good for Canadian workers, businesses and taxpayers.

This strategy not only makes good economic sense, but it also helps strengthen Canada’s sovereignty and national security. This strategy really is a win/win/win.

So with that, I want to thank all of you for coming today. I’m going to sit in for the panel discussion on the Defence Procurement Strategy. I look forward to hearing your views on how we’re doing on its implementation and I will be around for a few minutes after if any of you wish to speak to me on it directly.

Thank you very much.

Merci