November 25, 2019 | Local, Other Defence
By James Careless
How well is Canada's defence procurement actually working, and are industry-boosters like ITBs paying off? These and other questions were tackled at the ‘Defence in the 43rd Parliament' one-day conference on November 20, 2019. It was staged by the Canadian Global Affairs Institute (CGAI) at the Chateau Laurier hotel, before a full house in the Adam Room.
During the opening session, ‘Canadian Defence Procurement – The State of the Union', DND Associate Deputy Minister Claude Rochette was cautiously upbeat about the state of Canadian defence procurements. In the last year, DND has signed about 12,000 contracts and spent about $6 billion on procurements, he said. Most of these contracts were on time and on budget.
2019's defence procurement spending is up from $4.9 billion spent by DND in 2016, Rochette noted. In addition, this year DND will “close out its budget” by spending its allocated funds, he said.
Despite some criticisms that Canadian defence procurements are not moving fast enough, “we are doing pretty well,” said Claude Rochette. But the process isn't perfect, he admitted. “We have more work to do.”
Rochette's positive assessment was echoed by PSPC Associate Deputy Minister Michael Vandergrift. 2019 “has been a very busy time” in Canadian defence procurement, he said, During the past year, the federal government issued an RfP for the Future Fighter Capability project; sole-sourced Light Armoured Vehicles from General Dynamics Land Systems-Canada; and selected Lockheed Martin to built 15 Canadian Surface Combatant ships.
Asked which defence procurements are going well and which are posing challenges, Rochette replied that smaller projects that fall within DND's $5 million spending authority are easy to manage. Where issues crop up is in large multi-million dollar projects with long time lines: Trying to cost them accurately and manage them effectively is akin to asking, “I want to have a car and buy it next year, so tell me how much I'll pay for it (right now),” he said.
In a later morning session entitled, ‘Offsets – Is the ITB Policy Delivering?', the panel considered the impact of procurement bidders ‘overcommitting' to ITBs (promising financial benefits worth more than the contracts they are bidding for) on the Canadian defence industry.
Such ITB overcommittments, which can be worth 300% or more than the contract being sought, are “introducing unnecessary risk” in the Canadian defence industry, said Rich Foster, Vice President of L3 Harris Technologies - Canada. The result of overcommitting is that contractors are “now focussed more on quantity than quality” in making their procurement decisions, he said.
The real victims of ITB overcommittments are SMEs, which lack the resources available to large companies to pay for these big ITBs. The choice facing these SMEs is to directly/indirectly seek such contracts – which can run 20-40 years – “or you go out of business,” said Brian Botting, Director of Strategic Offsets at General Dynamics Missions Systems. “It is a terrible dilemma for them to be in.”
The CGAI procurement conference ended with the panel discussion, ‘Defence Procurement Canada'. This is the name of the integrated procurement agency the Liberals proposed during the October 2019 election, to replace the multiple ministries currently sharing this responsibility.
The common sense reason for having a single defence procurement agency comes down to human nature: “If you ask two of your kids to take out the garbage, it won't get done,” quipped Alan Williams, President of The Williams Group. “If you ask one of your kids, maybe it will get taken out.” He explained that sharing procurement among ministries causes requires agreement between multiple ministers and deputy ministers – which wastes time -- and that Canada's military allies manage their procurements through single agencies.
Creating a separate Defence Procurement Canada (DPC) agency would not be easy, said Jim Mitchell, Research Associate with the University of Ottawa's Graduate School of Public and International Affairs. Speaking from his own government experience, Mitchell observed that such changes are “disruptive, costly, difficult, hard on people, and hurt efficiency and effectiveness for a few years.” Mitchell added that creating DPC would not prevent Treasury Board and other ministries from having a role in defence procurement afterwards.
CGAI Fellow Gavin Liddy was just as pessimistic about the value of creating DPC when so many defence procurements are underway. If the government wants “to do one single thing to delay the procurement agenda in the next five to seven years,” then they should instruct defence bureaucrats to create the DPC, Liddy concluded. “Nothing would divert their attention more than doing that.”
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September 9, 2019 | Local, C4ISR
by Murray Brewster The U.S.-led North American Aerospace Defence Command (Norad) asked the Canadian military to do an inventory of its bases and the surrounding civilian infrastructure, looking for critical systems vulnerable to a cyberattack. The letter to Canada's chief of the defence staff, written by then-Norad commander U.S. Admiral William Gourtney just over three years ago, was obtained by CBC News under access to information legislation. Despite the passage of time, two leading cyber experts said the request highlights an enduring concern of both defence planners and people in high-tech industries. The notion that a cyberattack could shut down civilian infrastructure — such as power grids, water treatment plants or traffic systems — in the vicinity of a military base is nothing new. What is unusual is that Norad sought reassurance, at the highest levels of the military, that Canada was on top of the evolving threat. The Norad commander asked Gen. Jonathan Vance to "identify and mitigate" Infrastructure Control Systems (ICS) vulnerabilities on Canadian military bases, particularly at "installations that are critical for accomplishing Norad missions." The March 24, 2016 letter also urged Canada's top military commander to "advocate developing capabilities to respond to cyber incidents on CAF [infrastructure control systems] and defend CAF [infrastructure control systems] if required." Gourtney's concern was not limited to defence installations; he asked Vance to "work with Public Safety Canada to identify civilian infrastructure that is critical to CAF and Norad missions. This includes developing processes for reporting cyber incidents on the identified civilian infrastructure." Vance responded to Gourtney (who has since retired and was replaced by U.S. Air Force Gen. Terrence O'Shaughnessy) three months later and directed the military to hunt for vulnerabilities. "I share Norad's concerns for the cybersecurity" of critical defence infrastructure, Vance wrote on June 10, 2016, in a letter obtained by CBC News under access to information legislation. He noted that the Canadian government has identified "adversaries" that pose "a significant threat and efforts have been made to identify and develop protective strategies for Canadian critical infrastructure." The Liberal government — through its defence strategy and overhaul of security legislation — tackled some of the concerns raised by Norad. It gave the Communications Security Establishment (CSE) and the military new powers to conduct offensive cyber operations. Perhaps more importantly, it set up the Canadian Centre for Cyber Security for civilian infrastructure, which — according to CSE — aims to "be a place where private and public sectors work side-by-side to solve Canada's most complex cyber issues." David Masson, a cyber expert, said minimizing the vulnerability of civilian, privately operated infrastructure continues to be an extraordinarily complex task. The major vulnerability is in what's known as operational technology systems, the kind of computer-driven tasks in utilities and other infrastructure that open and close valves or perform remote functions. The task of securing them is made extraordinary difficult in part by the wide variety of operating systems out there. "There's lots of them," said Masson, the director of technology at Darktrace, a leading cybersecurity company. "Look at it as 50, 60, 70 different bespoke communications systems. There's no real standardization because they're so old. Many of them were never expected to be connected to the internet." He pointed to the 2015 and 2016 cyberattacks on Ukraine's power grid, which in one instance cut electricity to 225,000 people, as examples of what's possible when hackers go after operational technology systems. It is also the kind of event that Norad is concerned about. "The kinds of equipment and machinery that supports the transport of natural gas or the provision of air conditioned services, or our water supply — all of those are critical to Canadians and our militaries," Lt.-Gen.Christopher Coates, the Canadian deputy commander, said in a recent interview with CBC News. He said Norad is focused on the capabilities that are essential to doing its job of defending North America against attack, and they try to "minimize those vulnerabilities where we can." There is, Coates said, an interesting discussion taking place at many levels of the military about what constitutes critical infrastructure. "You asked if we're satisfied. I get paid to be concerned about the defences and security of our nations. I don't think I should ever be satisfied," he added. 'Inauthentic activity' in Alberta election a possible preview of tactics in the federal campaign, report warns Privacy commissioner launches investigation into licence plate breach With ransomware on the rise, RCMP urging victims to 'be patient with police' Christian Leuprecht, a defence expert at Queen's University in Kingston, Ont., said defining critical infrastructure is a complex and evolving task. He pointed to Russian interference in the 2016 U.S. presidential election; prior to that event, he said, the definition of critical infrastructure was limited to power plants, electricity grids and even the financial system. "A lot of things people are wrestling with the question of what institutions — take, for example, democratic institutions — become critical infrastructure," said Leuprecht. The Ukrainian attacks, in the view of many defence experts, are a blueprint of what the opening shots of a future war would look like. "There's a considerable and growing awareness that our defence and critical infrastructure systems are closely tied together because countries, such as China, preserve cyberattack as a first-strike option," Leuprecht said. Masson said there are ways to limit the vulnerability of operational technology systems. Not connecting them to the internet would be a start, but many companies are choosing not to do that for efficiency reasons. He said they also can be protected with "robust" security systems. https://www.cbc.ca/news/politics/norad-cyber-civilian-1.5273917
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For decades, Canadian governments have avoided thinking about what it would take to fight a long conventional war. Now, NATO is asking members to develop national plans to bolster their defence industrial capacity. Can NATO put Canadian industry on a 'war footing'?