Directorate of Industry Relations,

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Nov 18, 2013 (3 years and 11 months ago)

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1

Directorate of Industry Relations,
Analysis and Policy (DIRAP)

Paul Herring, Director


“CASE FOR CANADIAN DEFENCE
INDUSTRIAL POLICY”


27 February 2012

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Canadian Defence Industrial Strategy:

“No Strategy is Not a Strategy”


Budget 2011: “
Considerable progress has been achieved in
streamlining and improving military procurement processes,
including through the National Shipbuilding Procurement
Strategy and enhancements to the Industrial and Regional
Benefits Policy. The Government is committed to continuing
these efforts by
developing a procurement strategy
, in
consultation with industry, to maximize job creation, support
Canadian manufacturing capabilities and innovation, and bolster
economic growth in Canada.”


A Defence Industrial Strategy would require a whole
-
of
-
government approach focused on:


Strategic Procurement


Export Market Development

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International Comparison


Canada is unique


No single point of accountability


Industrial base is closely linked with the U.S.


Primarily 2
nd

and 3
rd

tier suppliers


Heavy dependence on exports


U.S.


No explicit defence industrial policy


Mosaic of laws, policies and regulations resulting in 98% of
procurements being sourced domestically


Robust and comprehensive military industrial complex


Europe


Multiple sovereign nations with similar and diverging national
security interests


Robust (but not comprehensive) defence industrial base


Fragmented national defence industrial strategies


4

Key Issues


Defence spending is not optimally leveraged in
support of Canada’s broader economic goals.


Lack of a broader strategy does not maximize
economic benefits.


Current procurement approach and contracting rules
make it difficult to leverage Government investment
in S&T.


Not just a matter of adjusting procurement model


need to change defence procurement mindset.

5

Strategic Considerations


A Defence Industrial Strategy would:


Strengthen the framework to help small, medium
and

large enterprises increase innovation, develop
market share, and move up the Canadian and
global value chain;


Improve the conditions for growing businesses
and sustainable, quality jobs in Canadian
communities and in the aerospace, automotive,
marine and hi
-
tech sectors; and


Require a new mindset and mature partnership
between the Government and industry.

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Discussion


Question:

How do we leverage military
procurement to support the Canadian
defence
-
related industrial base and help
Canadian companies become more globally
competitive?


Answers:


1.
Strategic Procurement

2.
Export Market Development

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Strategic Procurement


Advanced Procurement Management


Build on CFDS and defence investment plan


No change to the key features of procurement integrity:
open, fair and transparent


Align the “pull” of defence procurement with the “push” of
defence
-
funded R&D


Identification of critical technology capabilities for industrial
regional benefits considerations


Continued emphasis on Best Value to Canada, not lowest
cost compliant


Early, effective engagement of industry through the
ACCORD model.

8

Strategic Procurement


Strategic Capability Areas


identification of defence
products, processes, technologies, and/or human
factors of strategic importance to Canada that would:


Meet the crucial operational needs of the CF in a cost
-
effective manner;


Assist the industry in making its strategic investment
decisions;


Facilitate a better ‘fit’ between industry capabilities and
defence needs;


Enable strategic industrial regional benefits; and


Promote skills and technology development in Canada.

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Strategic Procurement


Policy Integration


Modernizing the implementation of
industrial regional benefits


Creation of a defence innovation program
(buy and try)


Intellectual Property Management


Human Resources and Skills
Development

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Export Market Development


Adopting a whole
-
of
-
government approach


Alignment of existing tools and resources


Prioritization of regions/sectors


Supporting small, medium, and large companies


Coordination and follow
-
up with industry (and key
associations) to help secure export business


Establishment of a NATO
-
based Canadian
representative for the early identification of
NATO procurement opportunities.

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Implementation of a

Defence Industrial Strategy


Goals of a Defence Industrial Strategy


Stronger defence industrial base to support critical and
strategic CF operational needs


Encourage Canadian manufacturing capabilities and
innovation


Bolster economic growth in Canada


Timing is synchronized with other reviews


Innovation/R&D, which led to the release of the Jenkins
Report in October 2011


Review of Aerospace Policies and Programs


A Defence Industrial Strategy would shape new
perspectives on the Canadian defence and security
industry.

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Closing Remarks


Advantage Canada, the Canada First Defence Strategy, the
National Shipbuilding Procurement Strategy, Munitions Supply
Program, and the revised Industrial Regional Benefits program
are current examples of policy initiatives that are creating or will
create the systematic conditions for broader economic success.



Unlike many countries, Canada lacks a formal Defence
Industrial Strategy and risks becoming less competitive and
realizing reduced growth.



A formal Defence Industrial Strategy would:

1.
Leverage all phases of the
defence procurement process

so that
Canada can get more from its defence procurement dollar while
ensuring that the CF gets the capabilities it needs; and

2.
Coordinate government and industry resources to deliver on a
common
export market development

approach.

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Thank you


Merci


Questions?


Paul Herring

Director, Industry Relations, Analysis and Policy (DIRAP)

International and Industry Programs (DGIIP)

Department of National Defence

T: 996
-
7264 Email:
Paul.Herring@forces.gc.ca