Nouvelles

De : Défense nationale Communiqué de presse Le 6 juillet 2020 – Ottawa (Ontario) – Défense nationale/Forces armées canadiennes Conformément à l'engagement du gouvernement du Canada à fournir aux Forces armées canadiennes l'équipement et les outils dont elles ont besoin, le ministre de la Défense Harjit S. Sajjan a annoncé que l'entreprise Logistik Unicorp Inc. a obtenu un contrat pour la fourniture de vêtements et de chaussures non opérationnels aux Forces armées canadiennes (FAC). Le contrat de vêtements et de chaussures non opérationnels (CVCNO) fournira au MDN et aux FAC des vêtements, principalement pour des t'ches non opérationnelles et non liées au combat. Le tout sera géré par une seule entreprise. Par exemple, ces types de vêtements et de chaussures sont souvent portés lorsque les militaires participent à un défilé. Les avantages de ce type de solution vestimentaire comprennent la possibilité de commander en ligne les articles nécessaires, qui pourront ensuite être expédiés à domicile. Ce contrat permet également de réduire les délais d'exécution visant à apporter des améliorations aux produits et le risque de rupture de stock. L'entreprise Logistik Unicorp sera tenue de se conformer aux exigences obligatoires en matière de contenu canadien. Cela permettra de s'assurer que la majorité de la fabrication de vêtements et de chaussures est effectuée au pays et qu'elle est conforme aux valeurs canadiennes. Le contrat contribuera à soutenir 4 500 emplois dans l'industrie textile canadienne. Citations « Du moment où nos militaires le portent pour la première fois jusqu'à leur dernier jour de service, l'uniforme est un rappel visible de leur engagement à servir les Canadiens et les Canadiennes au pays et à l'étranger. Où qu'ils se trouvent, nos militaires en uniforme font connaître les valeurs canadiennes, défendent notre souveraineté et nous protègent. Ils méritent donc d'être bien équipés pour accomplir l'important travail que nous leur demandons : et cela commence par des vêtements et des chaussures appropriés, ce qui sera fourni gr'ce à ce contrat ». – L'honorable Harjit S. Sajjan, ministre de la Défense nationale « Gr'ce à ce contrat, les membres des Forces armées canadiennes pourront obtenir et utiliser les objets courants dont ils ont besoin pour s'acquitter de leur travail important au service de la population canadienne. L'entente stimulera également l'emploi dans l'industrie canadienne du vêtement et du textile. » – L'honorable Anita Anand, ministre de Services publics et Approvisionnement Canada « Gr'ce à ce contrat, notre gouvernement encouragera des avantages économiques importants pour les Canadiens et les Canadiennes pendant de nombreuses années à venir. L'entreprise Logistik Unicorp investira dans la recherche et le développement à valeur élevée dans des domaines comme les matériaux de pointe, tout en investissant dans le développement des compétences et la formation afin de renforcer et de soutenir les emplois canadiens dans nos secteurs de l'habillement, du textile et de la chaussure. » – L'honorable Navdeep Bains, ministre de l'Innovation, des Sciences et de l'Industrie Faits en bref Le CVCNO fournira environ 1 500 articles de vêtements à plus de 160 000 personnes. Cela comprend des articles vestimentaires comme les uniformes de service de la Force régulière et de la Réserve, des shorts, des chemises, des chapeaux, des chaussures, ainsi que des articles vestimentaires spécifiques à une profession (comme ceux destinés aux pompiers civils et militaires, à la police militaire et aux conducteurs civils), et des vêtements pour les Rangers canadiens, les Rangers juniors et les cadets. Un contrat d'une valeur de 415 millions de dollars a été attribué à l'entreprise Logistik Unicorp Inc. de Saint-Jean-sur-Richelieu (Québec), pour une période initiale de 6 ans. Il comprend des options évaluées à 2,7 milliards de dollars sur 20 ans. Le contrat contient une clause relative aux considérations éthiques qui oblige l'entrepreneur à s'assurer que le travail effectué au Canada ou à l'étranger répond à des normes éthiques telles que l'absence de travail des enfants ou de travail forcé, des heures de travail raisonnables, des salaires équitables et un milieu de travail sûr. La Politique sur les retombées industrielles et technologiques (RIT), y compris la proposition de valeur, a été appliquée aux exigences de la demande de proposition du CVCNO afin d'obtenir des avantages économiques pour le Canada équivalant à la valeur de la composante des services logistiques du contrat. Par conséquent, le contrat assurera un soutien durable et à long terme aux secteurs canadiens de l'habillement, du textile et de la chaussure, gr'ce à la recherche et le développement dans des capacités industrielles clés comme les matériaux de pointe, et à des investissements dans le développement des compétences et la formation pour soutenir les travailleurs canadiens. L'entrepreneur devra se conformer aux exigences obligatoires de la Politique sur le contenu canadien et s'assurer que la fabrication des vêtements et des chaussures continue d'être effectuée au Canada, conformément aux règles d'origine modifiées pour les textiles et les vêtements canadiens. Personnes-ressources Floriane Bonneville Attachée de presse Cabinet du ministre de la Défense nationale Tél. : 613-996-3100 Bureau de relations avec les médias Ministère de la Défense nationale Tél. : 613-904-3333 Courriel : mlo-blm@forces.gc.ca Recherche d'information connexe par mot-clés: MI Histoire et science militaire | Défense nationale | Canada | Sécurité nationale et défense | grand public | communiqués de presse https://www.canada.ca/fr/ministere-defense-nationale/nouvelles/2020/07/attribution-dun-contrat-pour-la-fourniture-de-vetements-et-de-chaussures-non-operationnels.html

By Charlie Pinkerton. Published on Jul 8, 2020 10:32am Half of all late requests for military materials and equipment arrived in Canadian soldiers' hands more than two weeks behind schedule because of a problem-ridden supply chain that often forced the military to incur extra shipment costs, a new report from the Auditor General has found. “We concluded that National Defence often did not deliver on time the materiel the Canadian Armed Forces requested, and that it did not have the right controls in place to determine whether it avoided needless transportation costs,” said the report authored by Auditor General of Canada Karen Hogan, which was released on Wednesday. During the period of the audit, there were approximately 1 million requests for materiel — military materials and equipment — submitted and fulfilled by National Defence. The audit oversaw all materiel covered by the National Defence Act, with the exclusion of ammunition, bombs, missiles and large equipment like aircraft, vessels and vehicles. The Auditor General found that 50 per cent of all late materiel requests were delayed by at least 15 days and 25 per cent were at least 40 days late. Of the highest priority requests — of which there were about 86,000 observed — 60 per cent were late. Fifty per cent of all were at least six days late, and 25 per cent were at least 20 days late. The Auditor General found that 162,000 requests, about 16 per cent of all it tracked during its audit, were more than one year late, having been stalled at some point in the supply chain. The goal of National Defence's supply chain is to “fulfill materiel requirements in the most economical and timely manner possible,” the Auditor General's report says. It attempts to achieve this by keeping equipment nearby where it thinks it will eventually be used. However, most equipment bought by the military is initial delivered to Canadian Armed Forces supply depots in Edmonton and Montreal. They then supply regional warehouses, which supply smaller localized military units. Materiel is transferred at units' requests, which are made in a number of ways, but are defined as being of one of three levels of priority — high priority, essential and routine. “We found that National Defence's systems and processes often did not ensure the timely and efficient delivery of military supplies to the Canadians Armed Forces,” Hogan's report says. Stock shortages caused delays, National Defence poorly managed priorities and costs for transportation were bungled. Per it's report, the Auditor General made three recommendations. It suggested that National Defence review its materiel forecasting to ensure it sufficiently stocks items at the correct locations, that it improve its oversight of high-priority requests so that the categorization is only used when necessary, and that it provide clear guidance on how to select the proper mode of transportation for items to ensure that decisions about shipments are based on fully understanding how much it'll cost. In a statement released shortly after the Auditor General's report, Defence Minister Harjit Sajjan said he “welcome(s)” its findings and accepts all recommendations. Similar concerns were raised a few years ago by the Auditor General's office about National Defence's equipment supply. In the fall of 2016, it raised issues with the military's ability to properly account for its inventory. The same fiscal year, National Defence announced a 10-year inventory management plan to address the Auditor General's concerns. The Trudeau government also released its multi-decade defence policy in the spring of 2017. One of the focal points of Strong, Secure, Engaged was to ensure the military was properly equipped. “Providing (the women and men of the Canadian Armed Forces) the training, equipment and care they deserve is the most important objective of this policy,” reads a line from the opening paragraph of Sajjan's opening message in more than 100-page policy. Upon being re-elected, Sajjan was again reminded of his responsibility to “ensure the Canadian Armed Forces have the capabilities and equipment required to uphold their responsibilities,” in the mandate letter assigned to him by Trudeau. In an emailed statement to iPolitics, Conservative Defence Critic James Bezan said “effective and efficient supply chains are crucial to the operating capability of the Canadian Armed Forces.” “Our military heroes rely on these supply chains to defend Canadians at home and abroad. It is clear that more work needs to be done in order to make these supply chains better for our men and women and uniform,” Bezan said. “The delivery of supplies must be timely so that materiel reaches military members when they need it,” Hogan's recently released report said. Defence Minister Harjit Sajjan said in a statement Wednesday that the Canadian Armed Forces will enhance its data analytics capabilities and “rely on real data to ensure” the military has the right supply chain approach for its ever-evolving requirements and to help better anticipate future needs. “These steps will make sure that we have the right equipment, in the right quantities, at the right places to meet the challenges we ask our members to face now and in the future,” he said. https://ipolitics.ca/2020/07/08/canadian-armed-forces-equipment-delivered-late-half-the-time-auditor-general-finds/

Dear members, On July 3, 2020, the Government of Canada announced it will review applications for the export of “sensitive military items” or “sensitive goods” destined to Hong Kong with the same considerations as it does for those items destined for the People's Republic of China. Whether or not to approve a permit will now be a case-by-case political decision taken by the Minister of Foreign Affairs. What constitutes “sensitive military items” and “sensitive goods” will be determined by Global Affair Canada (GAC), on a case-by-case basis, from items that are found on any of the seven Export Control Group Lists (ECL). Permits for what are considered "sensitive military items" will not be approved. While Canadian firms have exported very little in the way of ECL Group 2 items to Hong Kong in recent years, these changes appear to create a high level of regulatory risk for companies considering new business opportunities that would require exporting items found on the Export Control Group Lists. You are encouraged to review your business development plans and reconsider accordingly. You can read the details of the: July 3 Statement here. (link: canada.ca/en/global-affairs/news/2020/07/canada-takes-action-following-passage-of-national-security-legislation-for-hong-kong.html) July 7 Notice to Exporters (Serial No. 1003) here. (link: international.gc.ca/trade-commerce/controls-controles/notices-avis/1003.aspx?lang=eng) Canada's Export Control Group Lists (ECL) here. (link: international.gc.ca/controls-controles/about-a_propos/expor/guide-2018.aspx?lang=eng) CADSI is working with GAC to inform impacted companies. If you have any questions, please contact your GAC Permit Officer and let CADSI know of any impacts on your company by emailing Mindy Pearce, Policy Advisor: mindy@defenceandsecurity.ca.

BY CORMAC MACSWEENEY Posted Jun 30, 2020 9:17 am MDT OTTAWA – The new NAFTA will come into effect on Wednesday amid the economic uncertainty caused by the COVID-19 pandemic. The negotiations caused months of fear in business and economic circles, with U.S. President Donald Trump threatening to pull out of the trade agreement both our economies and Mexico rely on. But after ratification earlier this year, the new NAFTA — formally the U.S.-Mexico-Canada Agreement — comes into force appropriately on Canada Day, bringing with it protections for the auto parts sector, more American access to our dairy market, stricter labour rules for Mexico, and measures to reduce the prices of pharmaceutical drugs. Colin Robertson with the Canadian Global Affairs Institute says this deal gives businesses confidence that Canada still has privileged access to our largest trading partner, but the COVID-19 pandemic has left a lot of questions about the future of our economies. “What it will depend on will be the growth of both economies' ends. The pandemic puts the big question mark on recovery and what that means for the future, so that one I can't answer,” he says. Meanwhile, Marc Agnew with the Canadian Chamber of Commerce says the COVID-19 pandemic may delay some of the benefits we get from this deal. “I don't think the new NAFTA is going to, necessarily, have a chance to really show its true value, probably until two or three, four years down the line,” he explains. However, Agnew believes this is a vital deal, regardless, because it will give businesses in Canada the security and confidence to plan for the years ahead. He adds the moment is soured by Trump once again threatening tariffs on Canadian aluminium. “It runs exactly counter to both the kind of spirit and the intent of what we're trying to do with this agreement,” Agnew says. Canada and the U.S. do $2 billion in trade a day. The USMCA is expected to bring modest gains to Canada's economy, with close to a $7-billion boost in the next five years, “It's still the biggest, single bilateral trading relationship in the world,” Robertson notes. https://www.660citynews.com/2020/06/30/new-nafta-canada-day-tariff-threats-covid-19/

DAVID PUGLIESE, OTTAWA CITIZEN Updated: July 2, 2020 The defence department denies it ever misjudged the cost of a project to buy new naval ships even though the price tag jumped from $2.3 billion to $4.1 billion in less than two years. And DND admits the cost to taxpayers for the vessels could rise even more in the coming years. The Liberal government acknowledged on June 15 that the cost of the project to buy two Joint Support Ships has increased to $4.1 billion. The vessels are needed by the Royal Canadian Navy as they would provide fuel, ammunition and other supplies to warships at sea. But the $4.1 billion price tag is just the latest in a series of steadily increasing cost figures. In June 2018, the government acknowledged the cost of the ship project had, at that time, jumped from $2.3 billion to $3.4 billion. But Seaspan, the Vancouver shipyard that is to build the vessels, provided a new set of numbers in October 2019 and by February 2020 government approval was received for a new budget of $4.1 billion, DND confirmed in an email to this newspaper. “As with any large-scale procurement project, all project values are best estimates that are based on the data and figures available at the time,” the email added. There has been no misjudging of costs on the JSS project, the department noted. In 2013, the Parliamentary Budget Officer questioned DND's JSS cost estimates and warned that the project would require $4.13 billion. DND stated in its email to this newspaper that taxpayers can be assured they are getting value for money on JSS and that those working on the shipbuilding project in both the department and Public Services and Procurement Canada are top notch. “The Department of National Defence and the Canadian Armed Forces, along with our counterparts at PSPC, have a first-rate cadre of experienced, professional procurement officers, subject matter experts and financial administrators who take great pride in their work and in their accomplishments,” DND said in an email. “Our team has – and will continue to – ensure that Canadians get value from their investments in the Armed Forces.” But DND also acknowledged costs could continue to rise. “While the total project budget includes contingency funding for these types of reasons, some events may happen unexpectedly and thus excel what the contingency funding allowed for,” the DND email noted. “As a result, it's possible that cost estimates may change for a variety of reasons that can't be controlled or predicted.” Conservative MP Kelly McCauley said DND's claim that project costs weren't misjudged is “BS.” “I don't even have faith in their latest cost of $4.1 billion,” added McCauley, who is behind the effort to get the Parliamentary Budget Officer to do a new report looking at JSS. “It's going to go up.” McCauley said the JSS design is based on the Berlin-class, an existing and proven German Navy ship. But he noted that DND and PSPC keep making changes to the ship, driving up costs and adding delays. DND noted that, “it's not uncommon for the cost estimate to change throughout the duration of a project, especially for a first-of-class ship.” DND also pointed out the construction contract with Seaspan may be changed throughout the duration of the project but added that does not necessarily mean the project budget will increase. The Standing Committee on Government Operations and Estimates recently passed McCauley's motion to request the Office of the Parliamentary Budget Officer undertake a costing analysis of building the JSS in Canada as well as the leasing of Asterix, a commercial ship converted into a supply vessel for the Royal Canadian Navy to use. The PBO report will be presented to the committee by Oct. 15. The Asterix, converted by Davie shipyards in Quebec, was at the centre of the two-year legal battle Vice Adm. Mark Norman found himself in when the RCMP charged him with breach of trust. The police force alleged Norman had tipped off Davie that the Liberal government was planning to delay its Asterix deal. The legal case against Norman collapsed in 2019, forcing the federal government to pay the naval officer an undisclosed financial settlement as well as prompting questions about whether the charge had been politically motivated. The Asterix turned out to be a procurement success and since 2018 has been used to refuel and resupply Royal Canadian Navy and allied warships. The Liberal government tried to derail the Asterix project shortly after being elected in the fall of 2015. The move came after cabinet ministers, including Scott Brison and defence minister Harjit Sajjan, received a letter from the Irving family with a complaint that the Irving proposal for a similar supply ship was not examined properly. Irving has denied any suggestion it was involved in political meddling. But after receiving the letter from the Irvings, the Liberals decided to put Asterix on hold. The government, however, had to back off that plan after news of its decision leaked out to the news media. Shortly after, the RCMP began investigating Norman. https://o.canada.com/news/national/defence-watch/dnd-denies-misjudging-supply-ship-cost-even-though-price-tag-jumped-to-4-1-billion/wcm/6743dc85-efb0-457c-90b9-be1b2d204868

As outlined in Canada's defence policy, Strong, Secure, Engaged, the Government of Canada is committed to equipping the Canadian Armed Forces with modern and capable equipment needed to support its operations. As outlined in Canada's defence policy, Strong, Secure, Engaged, the Government of Canada is committed to equipping the Canadian Armed Forces with modern and capable equipment needed to support its operations. This includes supporting the Royal Canadian Navy's (RCN) fleet of combat vessels to ensure they remain operationally effective and capable until the transition to its future fleet is complete. Today, the Government of Canada announced the award of an in-service support contract to Fleetway Inc. of Halifax, Nova Scotia. Valued at $72.6 million for the first six years, with options to extend for up to 22 years, this contract will provide a full range of technical data management and systems engineering support services for the RCN's fleet of Halifax-class ships. This contract will secure an expert team to store and manage thousands of critical ship documents, in addition to producing complex designs to support the installation of new equipment on board the ships. Their specialized knowledge and skills will make sure key information is up-to-date to support maintenance teams, and will enable the maintenance of the Halifax-class operational capability in support of CAF missions. Awarded as part of the National Shipbuilding Strategy, this contract will ensure that the RCN and supporting shipyards continue to have the technical data required to support ongoing ship maintenance during planned docking work periods, while also providing local economic benefits. Work for the contract began in April 2020, and will continue until the fleet is retired in the early 2040s. This contract is expected to sustain an estimated 140 Canadian jobs. Quotes “The women and men of the Canadian Armed Forces deserve the best equipment and tools available. By investing in our fleet of Halifax class frigates, we will be able to provide our members in uniform what they need to continue advancing peace and security around the world. Our government's defence policy, Strong, Secure, Engaged is delivering real results for Canadians and those who protect us.” The Honourable Harjit S. Sajjan, Minister of National Defence “The National Shipbuilding Strategy continues to support the members of the Royal Canadian Navy and is reinvigorating the marine industry. This engineering service contract award to Fleetway Inc. of Halifax, Nova Scotia, will help provide our navy with safe, reliable ships to carry out their important work on behalf of the Government of Canada, while also creating jobs and generating significant economic benefits in the regions of Canada.” The Honourable Anita Anand, Minister of Public Services and Procurement “Our Halifax-class frigates remain the backbone of our Navy, enabling us to maintain our presence at sea both at home and abroad. As we continue to transition to our future fleet, it is essential that we continue to foster an environment that enables the RCN to keep our frigates floating, moving, and fighting. Fleetway Inc. brings world class technical data management and systems engineering support services which will help to ensure the RCN is ready to help, ready to lead and ready to fight.” Vice-Admiral Art McDonald, Commander of the Royal Canadian Navy “Nova Scotians are deeply proud of the women and men in the Canadian Armed Forces, and it's fitting that companies across the province are providing important support to the National Shipbuilding Strategy. This contract with Fleetway Inc. will keep skilled workers employed here at home, while supporting the Canadian Armed Forces in their work abroad.” Darren Fisher, Member of Parliament for Dartmouth-Cole Harbour Quick facts An initial contract of $72.6 million has been awarded to Fleetway Inc. for their services. It will be amended over the contract period based on the amount of work required for a total value of up to $552 million. This type of contract is fully compliant with our Sustainment Initiative, which ensures performance, value for money, flexibility, and economic benefits. This contract is one of more than 100 existing support contracts required to effectively support maintenance of the Halifax-class. This new in-service support contract will replace the services provided by Fleetway Inc. through the previous in-service support contract that will expire in October 2020. The new contract was awarded through an open, fair, and transparent procurement process. All technical documentation, manuals, and engineering drawings of ship systems/equipment must be regularly updated to track any changes following maintenance or upgrades. This information is used to help monitor the state of the ship, and is also used by maintenance crews to support ongoing work. Halifax-class ships monitor and control Canadian waters, defend Canada's sovereignty, facilitate large-scale search and rescue activities, and provide emergency assistance when needed. The ships operate with and integrate into the United Nations, the North Atlantic Treaty Organization and coalitions of allied states in support of international peace and security operations. Introduced into service in the 1990s, the Canadian-built Halifax-class ships were recently modernized to remain operationally effective and relevant until the Canadian Surface Combatants enter into service. The Canadian Surface Combatants will replace the Halifax-class frigates and the retired Iroquois-class destroyers, and will ensure the RCN has modern and capable ships to monitor and defend Canada's waters, to continue to contribute to international naval operations for decades to come, and to rapidly deploy credible naval forces worldwide on short notice. https://www.miragenews.com/canada-awards-contract-to-support-halifax-class-ship-maintenance/

By Adil Khan, Jim Adams and Steve Beckey Forbes; KPMG Contributor Jun 23, 2020 The current economic disruption—coming on the heels of the 737MAX suspension—has varying impact across A&D segments. The impact on commercial aerospace has been immediate and extensive, while the defense sector has largely remained unscathed. However, it is hard to see how it will remain so, given the extensive fiscal measures being taken. What will this mean for M&A in A&D? Some trends are beginning to emerge that will affect the entire deal life-cycle (from deal strategy through integration and value creation). Yet, as in other times of economic disruption, new opportunities will emerge, which leads us to believe that the slowdown of M&A activity will be short-lived. As we enter this next phase, deal makers who adapt quickly to the realities of the new industry landscape could be well positioned to maximize value. Pre COVID-19 environment Not too long ago, commercial aerospace was booming, with year-over-year ramp ups in build rates and record backlogs. There were expectations of another golden decade — further extending the unprecedented 14-year “super up-cycle”, defying the long-standing cyclicality of the sector. However, in 2019, the historic correlation between GDP, air-traffic growth, carrier profitability, orders and build rates was suddenly disrupted. GDP and airline profitability levels remained relatively healthy, but new orders and build rates dropped as the industry grappled with the 737MAX shock, as well as a slowdown in the twin-aisle segment. Other undercurrents also emerged — slowdowns in world trade from escalating tariff tensions, weakness in high-growth geographic markets such as China and India, and declining consumer confidence. In contrast, U.S. defense spending was on the rise, averaging 4 percent1 annual growth over the past 5 fiscal years; the $738 billion FY2020 defense bill2 ensured this momentum would continue. The government services sector was also set to benefit from continued funding increases to modernize IT infrastructure and address evolving national security challenges. With general confidence in the long-term fundamentals of the sector and a favorable budgetary environment, players in certain A&D segments pursued M&A to build scale. Others “re-realized” that content matters and initiated vertical and horizontal integration strategies to capture more value and drive cost competitiveness, or acquired targeted niche capabilities and emerging technologies. We also saw the emergence of Super Tier I's through scale-driving consolidation aimed at broadening capabilities and potentially exerting greater influence on OEMs. Deal volume in the A&D sector reached record levels — almost doubling over the last 5 years and outpacing the broader M&A market by 40 percent.3 Valuations remained elevated on the strength of high bidder interest, limited supply of attractive assets, high A&D stock valuations (which outperformed the S&P 500 by 8 percent),4 as well as healthy balance sheets and strong cash positions. TEV/EBITDA multiples for A&D transactions averaged 11x,5 outpacing increases in the overall M&A market. Although, deal volumes moderated in the second half of 2019, amid elevated uncertainty about defense spending heading into a presidential election year, the overall outlook remained optimistic. COVID-19 impact COVID-19 caused a precipitous collapse in air traffic. With travel restrictions and stay-at-home orders, carriers around the globe made unprecedented cuts to capacity, idled fleets, and began deferring or canceling new aircraft deliveries. Also, the MRO (maintenance, repair, and overhaul) and aftermarket segments, which had benefited from the prolonged 737MAX grounding and high fleet utilization, suddenly faced stiff headwinds. Thus far, the defense industrial base has not experienced a COVID-19 demand shock. There is no noticeable disruption in appropriations or major delays and cancellation of military programs. However, as in the commercial sector, defense contractors are actively monitoring their supply base and taking steps to preserve liquidity, minimize supply chain disruption, and taking measures to comply with CDC and local government guidelines. The range of scenarios for defense spending is bookended by two scenarios: an elevated national security threat that would preserve or accelerate funding, or a reordering of budget priorities to fund social and other mandatory programs, resulting in sequestration-type measures, similar to 2011. With these developments, volatility in the financial markets, lack of access to financing, alternative more pressing liquidity needs by corporates and most importantly, uncertainty in the marketplace, deal flow in A&D has come to an immediate standstill. Several “in-flight” processes have been halted, new deals in the pipeline have been deferred, and even some announced transactions terminated. Access to the new public offering market is effectively closed. The gap in expected valuations between buyers and sellers has widened considerably, due to disparate perceptions of the extent of economic disruption caused by COVID-19; contrasting views on reopening of the economy and the pace of return to normal; and diverse perspectives on what the post-COVID-19 new reality looks like. This has rendered financial forecasts and pre-COVID-19 market perspectives obsolete. Further, the extent and nature of unusual and non-recurring events6 impacting financials, present considerable challenges for deal makers to form a credible view of normalized earnings and cash flows. With the lack of reliable projections, it is nearly impossible to form a credible view on valuations let alone bridge this gap. Additionally, although M&A teams have attempted to navigate through practical challenges with offsite due diligence, virtual facility tours, video conferences, etc., adapting to a virtual M&A environment, especially for cross-border deals, has been challenging. Developments to watch as economies reopen Given the health concerns, changes in social behaviors (some of which may be slow to reverse) and anticipated lead-time to an effective vaccine, a V-shape recovery in air traffic appears increasingly unlikely. As governments move from combating coronavirus to reopening economies, the pace and extent of the economic recovery is expected to vary significantly around the world. Further, some long-lasting or permanent developments may trigger some dramatic shifts in the sector: KPMG Implications for M&A trends and outlook KPMG Although we probably do not expect to see M&A activity return to the pre-crisis levels immediately, we expect M&A activity to drive realignment of the industry landscape in the post COVID-19 environment. Implications for M&A Capabilities As we enter the next phase, deal makers will need to adapt to the realities that impact how deals get done. Examples include: KPMG While the challenges are intimidating, the opportunities will be vast, and those who move quickly and decisively are likely to be rewarded for years to come. Those who take this unique opportunity to prepare and are ready to act will stand ready to reshape the A&D industry. 1. 2019 DoD Comptroller Data (Green Book) 2. Department of Defense 3. CapIQ, Institute for Mergers, Acquisitions, and Alliances 4. Year return, S&P A&D index vs S&P 500 5. Trailing 12-month average to June 2019 and avg. 16x for deals >$500M in value; CapIQ, Dacis Company reports and Press releases 6 Worker furloughs, facility shut-downs, loss of business or order cancellation, idled or underutilized facilities, CARES Act funding, changes to performance-based compensation structures or payouts, health and sanitization related measures, IT infrastructure investments to adapt to remote working environment, deferral of payroll taxes, carryback of NOLs, increased interest expense tax deduction, etc KPMG Contributor

Murray Brewster · CBC News · Posted: Jun 25, 2020 5:03 PM ET | Last Updated: June 26 One of the companies bidding to sell Canada a new fleet of fighter jets made a public pitch today highlighting its long-standing, cross-country economic relationships and history of delivering high-paying aerospace jobs. The presentation by Boeing executives and an independent research firm arrives against a background of a pandemic-ravaged economy and a looming federal deadline to submit bids to replace the air force's aging CF-18 fleet. The aerospace giant, headquartered in Chicago, Ill., is one of three companies that will hand in their final submissions at the end of July with the aim of delivering new jets by 2025. The other two are Lockheed Martin — with its F-35 stealth jet — and Saab, which will offer up the latest version of its Gripen fighter. Boeing plans to pitch its Super Hornet fighter. The most up-to-date version of the jet, known as the Block 3, was delivered recently to the U.S. Navy for use on aircraft carriers. In its presentation, the company estimates the value of its direct economic activity in Canada — both commercial and defence — at $2.3 billion, resulting in 11,000 jobs across the country. The independent report estimates that when indirect spending is taken into account, the U.S. multinational contributes $5.3 billion and 20,700 jobs to Canada's economy. Boeing's decision to make its case publicly is significant in part because federal finances are reeling under the weight of an anticipated $252 billion deficit and staggering levels of unemployment brought on by the COVID-19 pandemic. Defence spending tends to suffer whenever federal governments — regardless of their political stripes — grapple with high deficits. There has been bad blood between the Liberal government and Boeing ever since the U.S. company led the charge against Quebec aerospace manufacturer Bombardier in a trade complaint over passenger jets. The disagreement led to the federal government cancelling a planned sole-source order for a handful of Super Hornets as an interim arrangement while the replacement competition continued. The U.S. Navy, one of Boeing's biggest customers for fighter jets, recently said it wanted to begin focusing on a replacement for the Super Hornet, which was designed and entered service in the early 2000s. Jim Barnes, a senior Boeing executive, told a conference call of reporters on Thursday that there is no planned retirement date for the Super Hornet. He claimed the warplane offers the most economical solution for Canada in terms of the cost of flying and operating fighter aircraft. He said he foresaw the fighter being in service with the U.S. Navy for "decades to come." The company's argument was recently given a boost when Germany decided to buy 45 Super Hornets as a replacement for its Tornado fighters. The deadline for final submissions in Canada's competition is now July 31, after it was pushed back on at least two occasions. Barnes said Boeing is ready to submit and will meet the deadline. He acknowledged the company asked for the latest extension because of the pandemic. https://www.cbc.ca/news/politics/boeing-jet-fighters-cf18-1.5627353

The two leading candidates to provide the Royal Canadian Air Force (RCAF) with a new remotely piloted aerial system (RPAS) are offering American and Israeli aircraft, but the federal government will be leveraging the project to grow Canadian capabilities and capacity in the unmanned aerial system (UAS) sector. “The scope and scale of this procurement gives us a unique opportunity to strategically position Canada's UAS sector for future success,” John MacInnis, director of the project at Innovation, Science and Economic Development, told a webinar hosted by Unmanned Systems Canada on June 22. Canada's modest UAS sector amounts to about five to eight per cent of the global market, generating between $400 million and $700 million in revenue in 2018, he noted. But it is projected to grow substantially as opportunities open up in adjacent sectors, including law enforcement and public safety. At present there are over 100 companies employing between 2,000 and 2,500 people in skilled jobs, but 90 per cent are small firms of under 250 employees. “We see this procurement as an opportunity to build upon and develop new and lasting local supply chain relationships in the sector,” said MacInnis. Previously known as the Joint Unmanned Surveillance Target Acquisition System (JUSTAS) project, RPAS has been a work in progress since 2005. That's when the RCAF formally stood up a project office in the Directorate of Air Requirements and assigned the task of assessing unmanned capability to a lieutenant-colonel and CC-130 Hercules pilot, who mused that he was probably being a heretic for developing the requirements for an aircraft without a pilot in the cockpit. Over the ensuing years, the Air Force has gathered the lessons of allies and acquired some of its own – from 2008 to 2011, the RCAF leased an Israel Aerospace Industries (IAI) Heron, the CU-170, to support operations in Afghanistan, flying around 550 hours every month – to craft a statement of requirements. Given the range of missions the government wants answered by a single aircraft, and the complexity of operating in the Arctic, the slow pace of the procurement might have spared the Air Force a poor investment. Successive RCAF commanders have noted that any platform acquired in the years after the project office was initially established would now be obsolete due to the rapid pace of UAS technology changes. As a former project director observed in 2013: “Canada is trying to do a lot of things with this UAV ... Where the United States would have a couple of different families of UAVs, we're probably going to have one or two. So, we're looking for a general-purpose system that can accomplish everything in one project.” The RPAS project will acquire a medium altitude, long endurance (MALE) intelligence, surveillance and reconnaissance (ISR) and precision strike system with ground control stations, munitions, long-term sustainment and infrastructure to deliver up to three concurrent lines of operation at home or abroad, explained Mike Barret, project manager for the Department of National Defence. The high-level mandatory requirements so far include the ability to operate in all weather, day or night; identify, track and prosecute targets over land or sea; reach the edge of Canada's domestic area of operations from a main base or established forward operating locations; and have the endurance to monitor or prosecute targets of interest such as a ship at that extreme edge for a minimum of six hours before handing off to a manned or unmanned aircraft. The platform, which is expected to serve for 25 years, must also have the ability to operate in low to medium threat environments and in appropriate class civil airspace under adverse weather conditions; integrate new payloads as technology evolves; accept and share data with and from Canadian platforms such as the CP-140 Aurora, CF-188 Hornet or Halifax-class frigate and its CH-148 Cyclone helicopter and with allies; and conduct air strikes with precision-guided munitions. Since 2012, the government has conducted multiple information gathering exercises with industry and in May 2019 issued a formal invitation to qualify as a supplier. That process confirmed two teams able to offer a NATO Class III RPAS capable of beyond-line-of-sight flight above 18,000 feet, at least 28 hours endurance in zero wind conditions, and able to employ a minimum of two precision-guided munitions. Team Artemis is led by Quebec's L3 Harris MAS while Team SkyGuardian is led by General Atomics Aeronautical Systems, supported by the U.S. government. The procurement process is now in a “review and refinement phase” as the government obtains feedback from suppliers on the preliminary requirements, explained Sandra Labbe, senior director for the RPAS project at Public Services and Procurement Canada. The department expects to issue a draft request for proposals (RFP) in October 2020, followed by the formal RFP in March 2021. The project, which has an estimated cost of between $1 billion and $5 billion, would include the aircraft and associated equipment, munitions, training, materials support and a period of in-service support. Infrastructure such as hangars at a main operating base or forward locations would be acquired under a separate process. As with all procurements valued at over $100 million, RPAS will be subject to the government's Industrial and Technological Benefits (ITB) policy. Both bid teams will have to submit a value proposition demonstrating their economic investment in Canadian industry, which will be weighted and rated along with cost and technical merit. MacInnis said one of the aims of the project will be to strengthen and expand the global profile of the Canadian sector “beyond the completion of the program.” He highlighted core areas where companies could contribute, such as payloads, data management and onboard processing, command, control and communications, and sustainment services, and encouraged collaborative R&D between the prime and suppliers to spur innovation in areas such as artificial intelligence (AI), cyber resilience and systems integration. Value proposition commitments should also help build advanced skills and capacity in the sector through training programs, scholarships, technology transfer and other initiatives, and increase the “participation of women and other underrepresented groups in the Canadian workforce,” he said. Team SkyGuardian, which includes CAE, MDA, and L3Harris, is proposing the MQ-9B SkyGuardian, a variant of the MQ-9 Reaper, a fleet that has accumulated over three million flight hours with U.S. and allied partners. Significantly for future suppliers, it is a fleet with global growth, both for military operations and for border security, humanitarian operations, disaster assistance and others, said Benjamin Brookshire of General Atomics. He welcomed the application of the ITB policy and said previous experience with national offsets policies has taught the company that a strong local supply base can be crucial to meeting unique customer needs. “We have our own vested interest in making sure that Canadian industry is involved in this program,” he said. Areas of opportunity for Canadian companies are sensor technology, integrated training, communications, avionics, composite manufacturing, AI and propulsion systems. Recalling General Atomics' start as a small company of seven guys in a garage, he encouraged proposals from companies of all sizes if they can fit the business case. “If you are like General Atomics and you've got a hairbrained idea like flying an airplane with nobody in it, we're definitely excited to hear about it.” For Team Artemis, L3 MAS has partnered with Israel Aerospace Industries to offer the IAI Heron TP, a mature platform “with tens of thousands of flight hours” over the past decade, noted Neil Tabbenor, director of business development for special missions and ISR. IAI will supply green, certified aircraft and ground control stations while L3 MAS will provide the systems integration and fleet management expertise. The Heron already has some confirmed Canadian content – the engine will be a Pratt & Whitney Canada PT6 turboprop – but he opened the door to “any R&D effort” and “any capability” that will fit the program, though composites, tooling, wire harnesses and other manufacturing components were at the top of his list. https://www.skiesmag.com/news/rpas-pursuing-unmanned-success/