Archived — The National Aerospace and Defence Strategic Framework: The Canadian Industry to 2025

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A Vision for the Aerospace and Defence Industry in Canada to 2025
Objectives of the Strategy
Securing Strategic Aerospace and Defence Investments
Technology Development and Commercialization
Skills Development
Trade Policy and Trade Development Initiatives
Sales Financing
Security and the Environment
Procurement


The aerospace and defence industry offers great potential for Canada in the future. The industry can build on the base of past successes to meet future challenges and take advantage of future opportunities.

A Vision for the Aerospace and Defence Industry in Canada to 2025

The government endorses the vision developed by stakeholders across the industry:

Canada will be home to a growing, innovative and diversified industry, recognized as a leader in serving global aerospace and defence markets and a preferred location for investment.

With the Framework, the government commits to working with the Canadian aerospace and defence industry and other stakeholders toward ambitious, achievable goals.

Through the work, commitment and collaborative partnership of governments, companies, workers, academic groups and other stakeholders, Canada will create an aerospace and defence industry that is a:

  • source of national pride and a globally recognized brand of Canadian excellence;
  • creator of national wealth and provider of challenging and rewarding jobs for Canadians;
  • key contributor to security and military readiness in Canada and among our allies; and,
  • lever for effectively achieving a wide range of public policy objectives and needs.

Objectives of the Strategy

To achieve this vision, all stakeholders in the aerospace and defence sector will have to work together to achieve certain objectives. The actions taken under this strategic framework will be directed at helping achieve a Canadian aerospace and defence industry that:

  • comprises a critical mass of top tier platform OEMs, each with a world-leading position in its respective market segment;
  • possesses robust design and systems integration capabilities throughout the supply chain;
  • offers comprehensive, in-service support solutions over the complete product life cycle;
  • serves a diversified, global customer base;
  • is at the forefront of technological innovation and productivity;
  • outperforms the global industry in selected niche markets and sustains a "Top 5" global ranking overall;
  • achieves an above-average compound annual growth rate and delivers above-average returns on investment compared with other aerospace and defence nations; and,
  • sustains a level of domestic value-added commensurate with that of its principal competitors.

The federal government is committed to doing its part to achieve this vision. Although the existing level of government support is significant, the Framework builds on it and ensures that the government's resources will be applied where most effective and in a coordinated manner among departments. To deliver on these goals, the government considers the strategic importance as well as new policy and program changes that are needed to address seven key pillars.

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Securing Strategic Aerospace and Defence Investments

Strategic Importance

Canada's aerospace and defence industry will need to build on its strengths through involvement in major strategic initiatives. Such projects include the development of strategic domestic platforms designed to build on the Canadian strength in aircraft manufacturing. It also includes Canadian industry participation in key international platforms.

Participation in major national and international strategic initiatives is also an important element of growth for the industry, as these programs are likely to provide work for the next 20 to 30 years. They are, in essence, the next wave of opportunities for Canadian suppliers — particularly for those with some systems integration capabilities. An important element to Canadian participation in strategic initiatives is the development of regional aerospace and defence clusters, which can serve to increase Canadian capabilities.

Canada is home to several domestic prime manufacturers. It will be essential for those primes and other leading OEMs to develop new platforms in Canada, adding new products to the maturing product base. These new platforms will provide opportunity for the domestic supplier base and help deal with the declining content on domestic platforms. They will sustain strategic R&D, design and integration capabilities in Canada. They will also provide a flagship for industry development, create economic growth and assist in attracting foreign direct investment.

Participation in major international platforms often requires some form of pay-to-play, whereby industry or governments make a financial commitment or contribution to participate in a program. This contribution can take the form of a cash contribution to common development costs, absorbing engineering costs and free prototypes for flight test programs. In the case of defence and space platforms, these contributions are usually government-to-government, which can guarantee access to the program or a percentage of work on it, along with benefits with respect to Canadian defence and space objectives.

Current Programs and Recent Actions

The federal government supports strategic investment in the industry by:

  • funding technology development through Technology Partnerships Canada (TPC). At present, individual projects are evaluated on a case-by-case basis, though some platform-specific funds have been established. The criteria for TPC investment include contributing to the government's strategic objectives, technological feasibility, the importance of TPC funding to the project and repayability. Several Canadian aerospace and defence firms that have been supported by TPC have used their technology to win supplier contracts on Airbus and Boeing platforms (e.g. Goodrich and CAE on the A380 program);

  • Bombardier CSeries: In May 2005, the federal government agreed to provide a repayable contribution of up to $350 million to support research and development with respect to CSeries-related R&D projects at Bombardier. The funding will support the development of new, next-generation aircraft technologies;

  • Bell Helicopter Textron Canada MAPL: In February 2005, the federal and Quebec governments announced that they would each provide Bell Helicopter with $115 million in repayable contributions for research and development of the Modular Affordable Product Line project. The project involves the design, development and production of components required to field a new family of light civil helicopters; and,

  • Joint Strike Fighter (JSF): In February 2002, the government announced formal participation in the system development and demonstration phase of the JSF program with a US$150 million commitment over 10 years. The Department of National Defence is providing US$100 million and TPC may provide US$50 million to companies developing new technologies for the JSF program. The government's investment allows Canadian companies access to the largest defence procurement in United States history that includes multinational collaboration.

New Policies and Program Initiatives

The government will:

  • establish criteria for government participation in strategic projects and develop platform specific strategies to promote Canadian industrial participation in such projects;
  • support investment in new aerospace and defence platforms through a new aerospace and defence technology development program (more details under Technology Development and Commercialization);
  • support the development and maintenance of a comprehensive and current database of Canadian aerospace and defence capabilities in partnership with Canadian industry as a tool for investment attraction, cluster development and marketing; and,
  • promote and support the adoption of the latest certification standards to ensure Canadian firms meet standards and requirements needed to participate on major platforms.

Challenges for Other Stakeholders

The Canadian industry should consider initiatives that would:

  • lead to the development and manufacturing of new platforms in Canada;
  • input into the identification and assessment process for selecting programs that could benefit from government support/participation;
  • develop deeper domestic and international industrial partnerships to better compete on major platforms. Partnerships will allow Canadian firms, especially small and medium-sized enterprises, to participate on major platforms;
  • develop competitive domestic supply chains and partners to ensure Canadians can compete for major platform work packages; and,
  • invest in new technologies, capabilities and other aerospace firms to develop systems integrator capabilities.
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Technology Development and Commercialization

Strategic Importance

One of the fundamental drivers of the aerospace and defence industry is R&D. Growth of the most successful aerospace and defence firms is directly linked to investment in R&D that leads to successful product commercialization. The Canadian industry can thrive and prosper if it strengthens its commitment to R&D at all stages (basic, pre-competitive, product development) and to the commercialization of new technologies and processes. R&D forms the basis for the development of new products designed to serve the needs of domestic and world markets. It also enables firms to increase their competitiveness through the development of new processes and manufacturing techniques that lower costs and increase productivity.

Actions under this strategic area will help address weaknesses in terms of research, technology development, validation and demonstration. These actions will put Canadian firms in a better position to take up new opportunities on domestic and foreign platforms and opportunities opened up by new and emerging areas. Increased investment in manufacturing process development will help improve the competitiveness of the sector, improve productivity and relieve pressure on the supplier base. Increased R&D efforts in MRO will help meet the challenges posed by foreign competitors. Increased R&D activity will also provide a challenging environment on which to build the skills base of the sector.

Current Programs and Recent Actions

The federal government supports technology development in the industry by:

  • funding pre-competitive aerospace and defence technology development. Since the creation of TPC in 1996–97, the program has provided nearly $1.7 billion in technology development support to the aerospace and defence industry. The government has also provided significant funding through predecessor programs to TPC, including the Defence Industries Productivity Program;

  • creating a favourable R&D environment through the Scientific Research and Experimental Development tax credit;

  • developing Technology Roadmaps for low-cost composites and aircraft design as well as MRO. Technology Insertion Roadmaps, a streamlined approach to Technology Roadmaps, have been created for aircraft cabin management systems integration and for diagnostics, prognostics and health management systems technologies. The Technology Roadmap and Technology Insertion Roadmap processes enable all sector stakeholders to work on a collaborative basis to assist with the pre-competitive development of new technologies;

  • establishing and funding the National Research Council's Institute for Aerospace Research (IAR), which has five laboratories that focus on developing and maintaining the core competencies and knowledge base crucial to the needs of the Canadian aerospace and defence community. The IAR's Aerospace Manufacturing Technology Centre was formally opened in the fall of 2005. The IAR also co-sponsored the Office of Collaborative Technology Development, a public/private sector partnership, which was established in 1999 to assist in defining and launching collaborative technology development projects;

  • providing technical and funding assistance to small and medium-sized enterprises, including support for pre-commercialization of new technologies, through the National Research Council's Industrial Research Assistance Program (IRAP);

  • supporting Defence Research and Development Canada, an agency of the Department of National Defence, which responds to the scientific and technological needs of the Canadian Forces. The government also funds the Defence Industrial Research Program;

  • supporting research projects brought through the Natural Sciences and Engineering Research Council of Canada's (NSERC) Cooperative R&D Program; and,

  • supporting the advancement and development of science and technology through various Canadian Space Agency programs, including space technologies, Earth observation, satellite communications. In particular, the Space Technology Development Program awards R&D contracts to Canadian industry to develop next-generation technologies for future missions and enhance competitiveness on world markets.

New Policies and Program Initiatives

The government will:

  • develop a new aerospace and defence technology development program as part of the restructuring of TPC. The program will:
    • position Canada's aerospace and defence sector to address new emerging aircraft program and defence platform opportunities through the development of new leading-edge technologies;
    • adopt a comprehensive framework for the support of strategic R&D and demonstration projects;
    • establish a supplier development initiative; and
    • fund collaborative technology initiatives and demonstrator projects;
  • support the development of Canada's regional aerospace and defence industrial base;
  • support the development of new Technology Roadmaps and Technology Insertion Roadmaps for upcoming aerospace and defence technologies to foster collaborative technology development and product commercialization; and,
  • work with public institutions and with the industry to enhance and promote aerospace-related research by mobilizing researchers in Canadian universities and engaging in the private, public and non-profit sectors.

Challenges for Other Stakeholders

The Canadian industry should consider initiatives that would:

  • achieve an overall increase in R&D intensity and a sustained percentage increase in private sector R&D expenditures;
  • broaden R&D investment from primarily product development to include basic research, development of critical technologies, validation and demonstration;
  • increase its involvement in collaborative research efforts, both domestically and internationally, that involve other firms, research institutes and educational institutions;
  • assist in the funding and development of Technology Roadmaps and Technology Insertion Roadmaps to guide future collaborative technology development activity, allowing greater dissemination of new technologies;
  • increase its support of aerospace research at Canadian educational institutions by supporting the research work of students and faculty and by contributing to infrastructure and equipment needs;
  • assist smaller firms in the supply chain by supporting their competitiveness and increased productivity through the adoption of new standards; and,
  • increase capital expenditures in new machinery and equipment to increase productivity.

Academia should work collaboratively with industry and other stakeholders to further R&D efforts in the industry. Attracting and retaining the best faculty could be achieved by creating a demanding research agenda.

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Skills Development

Strategic Importance

A highly skilled and trained workforce is a key enabler in the aerospace and defence industry. A labour force that is well trained, adaptable and up-to-date in its skills, underpins strong R&D performance and the world-class manufacturing and business processes that are key to high productivity. Maintaining Canada's current aerospace and defence industry production will also require a significant increase in recruitment as the workforce ages. Initiatives under this strategic area will help address skills and training issues by improving the skills base of the industry, attracting young people to the sector and improving the linkages between industry and educational institutions. Improved workforce skills will also increase productivity and competitiveness.

Current Programs and Recent Actions

The federal government supports skills development in the industry by:

  • establishing and funding activities of industry-driven human resources sector councils through the Sector Council Program at Human Resources and Skills Development Canada (HRSDC). In the aerospace sector, HRSDC has supported the Canadian Aviation Maintenance Council (CAMC) since the late 1980s;
  • CAMC is responsible for the development and delivery of human resources strategies and services for the aviation maintenance sector, including labour market research, occupational analyses and standards, industry/education/government training partnerships, youth internships and career awareness, and prior learning assessment and recognition.

New Policies and Program Initiatives

The government will:

  • support innovative skills development projects in the aerospace and defence sector through provisions of the Workplace Skills Strategy.

Challenges for Other Stakeholders

The Canadian industry should consider initiatives that would:

  • increase corporate investment in workforce skills and training;
  • assist in work of the Canadian Aviation Maintenance Council;
  • develop greater linkages between industry and educational institutions in all regions of Canada to ensure that educational programs meet the needs of the sector;
  • make direct investments in education by offering co-operative education positions, providing equipment to schools and offering staff time to educational programs;
  • work with academia through NSERC programs, particularly the partnerships programs that support research and the training of undergraduate and graduate students; and,
  • promote the aerospace and defence sector as a desirable career choice for youth.

Provincial governments have an important role in human resources and skills development, including funding and support for aerospace and defence industry training. Educational institutions need to continue to work with industry to ensure that their programs and curricula are meeting the requirements of the sector. There are also opportunities for enhanced collaboration, such as through NSERC, and funding for research infrastructure, for example, through the Canadian Foundation for Innovation.

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Trade Policy and Trade Development Initiatives

Strategic Importance

The Canadian industry is successful in international markets. Approximately 78 percent of Canadian aerospace and defence output is exported, with more than 70 percent of that sent to the US. Canadian firms require continued access to foreign markets and investment. This requires promotion of Canadian aerospace and defence firms and their capabilities as well as the development of contacts in foreign markets. Similarly, foreign direct investment increases Canadian capabilities and creates new economic opportunities.

The Canadian industry is highly integrated with that of the US. Our firms are often a small part of the global supply chain and, as such, rely on US firms to supply inputs and provide a market for our exports. Heightened security concerns in the US have the potential to disrupt this relationship.

In the defence and space sectors, Canadian firms must increasingly deal with countries that limit or eliminate competition from foreign suppliers and follow buy-at-home policies. For example, growing protectionist sentiment in the US is cause for concern and is having an impact on the goal of an integrated North American defence industrial base. Given Canada's small domestic defence market, access to foreign technology and markets is important to the success of the Canadian aerospace and defence industry. Respecting legitimate security safeguards and requirements, while continuing a relatively open exchange of technology and goods between the two nations, enhances each country's goals with regard to its defence industrial base and national security. In addition, protectionist actions by foreign governments place pressure on Canadian firms to shift work to other jurisdictions, to ensure access to those markets.

Initiatives under this strategic area will seek to address the global aspects of the aerospace and defence supply chain by working to improve the Canadian industry's presence in, and access to, foreign markets. They will also help the industry meet the increasing challenge posed by foreign competitors in the global marketplace.

Current Programs and Recent Actions

The federal government supports trade issues in the industry by:

  • being a strong advocate for Canada's aerospace and defence industry on trade and market access issues by opposing efforts of our major trade partners to limit access of our firms to their technology and to their markets or unfair aircraft sales financing and other trade practices of other countries and by seeking to improve Canada's position vis-à-vis the International Trade in Arms Regulations;
  • promoting the industry abroad through Trade Team Canada: Aerospace and Defence. Trade activities include Canadian participation at the Paris, Farnborough and other trade shows, MRO conferences, Eurosatory, Defence Systems and Equipment International, as well as the extensive network of trade officers at embassies and consulates around the world; and,
  • assisting in foreign military sales through the Canadian Commercial Corporation and the Department of National Defence.

New Policies and Program Initiatives

The government will:

  • develop and implement an investment and trade strategy that focusses on attracting and retaining foreign direct investment and promoting Canadian aerospace and defence capabilities abroad;
  • participate aggressively in key international trade shows and exhibitions (Defense Systems and Equipment International, Eurosatory, Farnborough International Airshow, Paris International Air Show, etc.) to showcase Canadian industrial strengths, competitiveness and capabilities in the aerospace and defence sector to the international community;
  • assist in foreign military sales through the Canadian Commercial Corporation and the Department of National Defence;
  • develop and implement country commercial strategies for key emerging markets with targeted initiatives in the aerospace and defence sector to support increased small and medium-sized enterprise market success;
  • engage in a proactive promotion effort with the US Department of Defense as a priority within the government's Enhanced Representation Initiative, which focusses on improving Canadian performance in US markets;
  • more proactively seek global opportunities and assist industry efforts to increase small and medium-sized enterprise participation in major platforms and aerospace and defence procurement; and,
  • continue to collect, analyse and disseminate timely, accurate and high-quality market information and intelligence about international business opportunities to Canadian firms through the implementation of comprehensive market information and intelligence programs.

Challenges for Other Stakeholders

The Canadian industry should consider initiatives that would:

  • assist in setting the priorities and strategies for an aerospace and defence investment and trade strategy;
  • actively share potential business opportunities for Canadian aerospace and defence firms as part of a market intelligence network. The network would enable firms to learn of new supplier opportunities in a timely manner;
  • assist the government with the development of action plans for target markets that would secure international sales; and,
  • relay Canadian aerospace and defence industry concerns to international suppliers and foreign decision makers.
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Sales Financing

Strategic Importance

The ability to provide sales financing support is imperative for the success of the aerospace industry. The government's ability to offer such support at times when private sector investors lack the interest or capacity to provide appropriate funding is essential. Government support when there is private sector withdrawal from the market due to elevated risk factors and buyer credit difficulties is particularly important.

Sales financing support also allows Canadian firms to access new developing markets. The federal government will continue to provide sales financing for Canadian aerospace and defence products on terms that respect our international trade obligations.

Current Programs and Recent Actions

The federal government supports sales financing in the industry by:

  • providing sales financing through Export Development Canada's Corporate and Canada Accounts for the purchase of aerospace and defence products;
  • negotiating multilateral and bilateral trade agreements/understandings to facilitate trade and develop an international framework for aircraft sales financing. For example, Canada is engaged in negotiating with Brazil on trade in regional aircraft. Canada is also negotiating multilaterally at the Organisation for Economic Co-operation and Development (OECD) to modernize the Aircraft Sector Understanding on Export Credits for Civil Aircraft;
  • maintaining discipline in providing support to Canadian aerospace firms on terms that meet Canada's international trade obligations and are consistent with market terms; and,
  • providing sales financing through the Regional Aircraft Credit Facility to ensure that Canadian aircraft manufacturers can sell aircraft in the domestic market when faced with foreign competition backed by government support.

New Policies and Program Initiatives

The government will:

  • establish an Aircraft Sales Financing Framework to provide competitive and defensible financing in a fiscally prudent manner. This will support the sale of Canadian manufactured aircraft in anticipation of the new Aircraft Sector Understanding of the OECD. Support will be consistent with Canada's international trade obligations; and,
  • actively participate in the current discussion on the Aircraft Sector Understanding of the OECD.

Challenges for Other Stakeholders

The Canadian industry should consider initiatives that would:

  • increase private sector participation in financing new aircraft sales, including Canadian and foreign program suppliers, to replace the need for government support whenever possible;
  • increase participation in sales financing from provinces with significant content in domestic aircraft programs, through mechanisms that respect Canada's international trade obligations;
  • develop innovative financing vehicles that can be supported by the government. Such vehicles must meet Canada's international trade obligations and best utilize limited financial resources; and,
  • provide input into the creation of the Aircraft Sales Financing Framework by advocating the industry's position and requirements for Canadian government sales financing policies and mechanisms.
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Security and the Environment

Strategic Importance

The aerospace and defence industry provides invaluable support to Canadian efforts to monitor and protect our environment and our approaches. Aircraft, spacecraft and ships perform these duties every day. For example, Earth observation satellites using remote sensing technology play a key role in monitoring the environment. Coast guard aircraft also patrol our shores, protecting our environment and enforcing Canadian environmental rules and regulations. Aircraft, spacecraft and ships also help promote Canadian sovereignty in the farthest reaches of our coasts and economic zones and allow Canada to ensure that its interests are being respected and its laws enforced, where necessary.

Secure access to strategic goods and services is necessary for national security reasons. A country's ability to protect itself and support its allies depends on its ability to deliver and maintain strategic materiel through its defence industrial base.

Even in the case of equipment that the federal government sources from multinational producers, there is a strategic need to be able to support that equipment in Canada. The Department of National Defence has explicitly stated that domestic sources of maintenance and repair are of national strategic importance and has invoked the national security provisions included in international trade agreements for various in-service support contracts.

Public procurement initiatives under this strategic area provide access to public procurement projects. They will also assist with the development of the supplier base by allowing Canadian suppliers opportunities to participate on domestic programs.

Current Programs and Recent Actions

The federal government supports security and the environment by:

  • providing the Canadian Space Agency with funding of $300 million a year. The Canadian Space Agency undertakes a number of activities including the development of the Canadarm I and II, civil space research, industrial development and international cooperation;
  • co-funding the Earth observation RADARSAT II satellite, which will have agricultural, marine and pollution monitoring roles as well as extensive mapping capabilities. RADARSAT II is scheduled to be launched in the second half of 2006;
  • increasing defence spending by $13 billion over five years and undertaking a modernization of the Canadian military through the procurement of new equipment and systems, including the Maritime Helicopter Program, CF-18 and Aurora patrol aircraft upgrades, etc.;
  • putting in place the Munitions Supply Program when the government privatized the production of military munitions two decades ago. For industrial policy and security of supply issues, the government decided to maintain domestic sourcing and to take advantage of a larger customer base through exports; and,
  • issuing the policy document Focussing on Opportunities: A New Policy Framework for the Canadian Shipbuilding and Industrial Marine Industry in 2001 in response to recommendations made by industry and labour representatives, which outlined a set of programs and policies aimed at encouraging trade and investment and also reiterated the government's commitment to domestic sourcing for its shipbuilding and repair requirements.

New Policies and Program Initiatives

The government will:

  • participate, when possible, in key major international security, defence and space programs, such as the federal government has done in the Joint Strike Fighter program, prioritizing those where Canada's security and industrial interests align;
  • initiate negotiations with international partners on a potential Canadian contribution to major international space exploration efforts;
  • invest in defence and security research of interest to Canada and its allies through Canadian research programs such as the Defence Industrial Research Program, the Applied Research Program, the Technology Development Program and the new aerospace and defence technology development program;
  • continue to use the Defence Research and Development Canada research establishments to foster innovation and R&D in partnership with our allies and industry;
  • apply the Industrial and Regional Benefits policy in a way that supports the aerospace and defence sector and this strategy;
  • encourage participation in international research programs (e.g. the US Defense Development Sharing Agreement and the European Union Framework Programs); and,
  • exploit opportunities for major upgrades and technological innovation in the maintenance of Department of National Defence fleets.

Challenges for Other Stakeholders

The Canadian industry should consider initiatives that would:

  • identify and develop technology areas and platforms of importance; and,
  • increase its research, development and manufacturing activities in Canada in response to the above government actions to develop innovative defence solutions.
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Procurement

Strategic Importance

Public procurement in the aerospace and defence sector is of key importance to both government and industry. For government, the need to be strategic in terms of levering outcomes from procurement planning and implementation stems from its various goals, including value for money, support for technology creation and development, commercialization, skilled labour, national control over sensitive technologies, and operations and trade with our allies that promote international peace and security. For industry, stable and well-managed domestic procurement enables it to make strategic investments in capital equipment, processes, training and R&D, and helps ensure that Canada maintains a high-value-added economy that can compete for global markets as well as an industrial base that can support our national needs. Firms find "home" country procurement essential for access to the international marketplace since this is seen as a sign of a firm's credibility.

In order for Canada to remain in the vanguard of aerospace and defence nations, strategic use of public procurement can play a central role. Other countries in the global economy explicitly use government procurement to support and further develop their industrial bases by purchasing, when possible, goods and services from their aerospace and defence companies. Examples include various domestic preference requirements that are consistently applied by our closest allies. Exporters in the aerospace and defence sector routinely must satisfy these requirements if they wish to sell into these markets leading to pressure to establish activity there. Procurement for defence and security purposes necessary for the protection of essential security interests, such as arms, ammunition and war materials or other materials indispensable for national security or national defence, may be exempted from the provisions of free trade agreements, on a case-by-case basis by appropriate levels of authority.

Current Programs and Recent Actions

There have recently been a significant number of government procurement reform initiatives and procurement trends that are having a significant impact on how the government procures aerospace and defence goods. For example, in order to reduce procurement times and costs while meeting essential operational requirements, the government has adopted procurement processes and strategies that focus on commercial off-the-shelf (COTS), high level specifications as was the case in the recently approved Hercules replacement project for National Defence, joint procurements with allies, standing offers and package procurements (total life cycle contracts). These policies can have an impact on Canadian industry.

As a result of Canada's limited ability to supply all its major defence goods domestically, the government has chosen to have an open defence market that does not discriminate against foreign suppliers, but does require industrial participation commitments by contractors. This is the case in the most recent approval to proceed with the replacement of the Hercules aircraft for National Defence. The government's Industrial and Regional Benefits (IRB) policy provides the Framework for using federal defence/security procurement as a lever to promote long-term, high-quality industrial and regional development objectives. IRBs help improve industrial competitiveness, market access and commercialization, and increase investment in high technology sectors.

The IRB policy provides broad support to the domestic industrial base on specific eligible procurements. This approach allows bidders to propose transactions that make business sense to them, while trying to satisfy a variety of operational, industrial development and other socio-economic priorities of the government. There is scope within the IRB policy to more explicitly support aerospace and defence and promote certain technologies as investment options from bidders.

New Policies and Program Initiatives

The government will:

  • better leverage long-term industrial development from defence, security and space procurements and consider policy options to meet this goal, including making the IRB policy more strategic in its outcomes and placing an increased focus on the aerospace and defence sector (e.g. the IRB policy targeting technologies of importance to the aerospace and defence industry);
  • continue to facilitate industry planning by making available the new Strategic Capabilities Investment Plan to industry, thereby allowing it to make investments in productivity and competitiveness in tune with public procurement needs;
  • seek to encourage innovation and skills enhancements through procurement; and,
  • pursue joint international procurement opportunities to increase Canadian market access.

Challenges for Other Stakeholders

The Canadian industry should consider initiatives that would:

  • increase investment in equipment and process improvements; and,
  • focus on innovation and improved competitiveness.