Preserving capacity, General Tom Lawson, Chief of the Defence Staff, Keys to Canadian SAR
Issue link: http://vanguardcanada.uberflip.com/i/507045
20 aPRIL/May 2015 www.vanguardcanada.com P PROCUREmENT Q So where you see an opportunity where Canada doesn't have a strength for export, you would try to encourage investment in that area? Yes. I don't view the KICs as being static. I think we have a fairly good understanding of our strengths at the moment, but this is really about looking forward. How do we best want to position the defence sector for growth and success in the long term? You need to understand the growth opportunities and how we can leverage the policy and the value propositions to achieve strong outcomes and foster new capabilities. Q Given that a number of spin-offs occur beyond the defence sector, is the intent to have indirect benefits also focused on the sector or are you open to investments in other sectors? The IRB policy supported investments that have a technological value that is as high or higher than what is being procured. The ITB policy, with the release of the Value Proposition Guide, listed four criteria that are key to driving where we want to see invest- ment take place: investments in the defence sector; investments in supplier development; investments in R&D and innovation; and investments in export potential. If an investment hits all four of those criteria, then that will score better than others, all things be- ing equal. Our ultimate goal is to support economic growth, and the ITB policy does not eliminate the possibility of high-quality investments that are not in the defence sector. The Value Proposition Guide is a flexible framework and the re- quirements will be determined on a procurement-by-procurement basis. We want to engage with industry early so that they can in- form the procurement strategy decisions. If investments in other sectors make sense on a particular procurement, we want industry to let us know. Q You mentioned retaining regional plans. What other aspects of the IRB policy do you intend to keep? Most of the successful elements of the IRB policy will remain under the ITB policy. Policy features such as the Investment Framework, a tool which was recently used by Boeing Canada to invest in a small firm in Newfoundland and Labrador, will continue to be utilized to support investments in innovation and SMEs. The ITB policy will also continue to incentivize R&D activities in partnership with pub- licly funded research organizations by allowing prime contractors to receive multiplied credits for these types of investments. Fundamentally, the ITB policy strengthens the successful attri- butes of the IRB policy by requiring bidders to compete on the basis of economic benefits that they can bring to Canada. In par- ticular, whereas before bidders were selected on the basis of price and technical merit, under the DPS the government will now also assess the value propositions. Q You have set some aggressive benchmarks to measure the success of the four drivers of value propositions: growth in the sector; sales within the supply chain; R&D; and export sales. What is your 40 percent growth target in each of these areas based on? And what do you need to do to get from where you are now to that target? The use of benchmarks reflects confidence in the Canadian defence sector and the potential to leverage strong outcomes from the planned investments by the Forces and Coast Guard through the DPS, and with the complementary programming already in place. The ITB policy will play an important role in building Canadian capabilities. Industry Canada has also consulted with a small group of industry representatives about the target and they too feel that while aggressive, the target is achievable. Q All of this is predicated on good metrics. Is a role for the Defence Analytics Institute (DAI) to help measure how well you are meeting those targets? On behalf of Industry Canada, Statistics Canada performed a comprehensive survey of the sector in 2013 and it will conduct a more detailed follow up survey this year. So part of how we are going to get there is by establishing some solid metrics and we are well on our way. When the DPS was in development, Industry Canada in parallel made sure we started setting up a baseline, and we are now deep- ening our analysis. As I mentioned, Industry Canada has subscrip- tions to commercial sources of data and market intelligence, and we supplement this through consultations with industry and other government departments and agencies to ensure we have as com- prehensive a picture of the sector as we can. The government's key gap, therefore, relates not so much to gathering more data as it does to harnessing additional analytic capabilities to translate this data into policy relevant information and analysis. To that end, an external analytic function performed by an independent party could be beneficial. The government is now considering the advice it received from the interim DAI on the establishment of external analytic capac- ity to help inform various aspects of the procurement process and this includes the development and sustainment of key industrial capabilities, research and insight on the defence industrial base, information on global export market opportunities, trends and issues relating to foreign defence markets, and insights on tech- nological trends in global defence and well as Canada's industrial capability to develop new technologies in these areas. The interim DAI's mandate was to lay out what it views as the best way to set up a more permanent capacity in Canada for the analytics it believes we need, as well as to lay out a multi-year work plan and some first priorities. Q You have said you expect ITBs to apply to about 15 procure- ments per year, up from about five per year. If you have to engage earlier and delve deeper with industry, do you have the workforce for that substantial increase? This is definitely a significantly enhanced role for Industry Cana- da. It is one we embrace. I have said at a number of forums that having a tool as powerful as the ITB policy is something I wish I had to support growth, innovation and investments in other sec-