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Harper Government Supports Canadian Jobs and Industry by Maximizing Military Procurement

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EDMONTON, ALBERTA -- (Marketwire) -- 03/22/13 -- The Honourable Rona Ambrose, Minister of Public Works and Government Services and Minister for Status of Women, highlighted the Economic Action Plan 2013 commitment to better leverage future investments in equipment for the Canadian Armed Forces while welcoming the delivery of the upgraded light armoured vehicles (LAV) III now rolling out of the General Dynamics Land Systems - Canada's (GDLS-C) Edmonton plant.

"Our Government is committed to supporting the Canadian Armed Forces, Canadian workers, and the Canadian economy," said Minister Ambrose. "Our Government will continue to leverage military procurement, in consultation with industry, to maximize job creation, support Canadian manufacturing capabilities and innovation, and bolster economic growth in Canada."

Sixteen LAV III vehicles will be delivered by spring 2013 and final assembly will continue through to 2018. In total, over 600 upgraded LAV III units will be assembled in Edmonton. This project will sustain approximately 2400 Canadian jobs in both the Edmonton and London GDLS-C plants.

Canada's LAV III vehicles are the backbone of the Canadian Army, having served our Armed Forces in Afghanistan and other areas of operation. They are state-of-the-art combat vehicles used to transport infantry on the battlefield while providing defensive protection and firepower.

"Our Government's investments in renewing and modernizing the Canadian Armed Forces' capabilities on land, sea and air are creating thousands of high-quality, skilled jobs all across the country," said the Honourable Kerry-Lynne D. Findlay, Q.C., Associate Minister of National Defence and Member of Parliament for Delta - Richmond East. "At the same time, we are delivering on our promise to build a first-class, modern military that is ready to take on the challenges of the 21st century. Today's announcement is welcome news for the Canadian Armed Forces."

The LAV III upgrade project implementation phase contract is necessary to improve the protection of these vehicles against mines and improvised explosive devices, improve their mobility, improve the safety of Canadian Armed Forces members travelling on board the upgraded LAV III, and incorporate ergonomic and information management improvements.

The LAV III upgrade project is one of four Family of Land Combat Vehicles projects announced in July 2009 that aims to capitalize on both existing and evolving technology and improving the protection, mobility and lethality of the Light Armoured Vehicle III fleet.

Canada's defence and security industries employ over 90,000 Canadians.

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BACKGROUND

Improving Military Government Procurement

The Harper Government remains focused on what matters to Canadians-jobs, growth and long-term economic prosperity. It is estimated that every billion dollars in defence and security spending creates or sustains 18,000 jobs and creates $710 million in Gross Domestic Product. Our Government is committed to buying military equipment in a way that benefits Canadian families.

Delivering on Commitments

As a part of its procurement renewal strategy, the Harper Government developed a new approach comprising four key elements:

1. Early Engagement: bringing clients and suppliers together as soon as the need is first identified;2. Effective Governance: providing oversight and establishing mechanisms to allow dialogue between suppliers and clients;3. Independent Advice: using third-party expertise and ensuring integrity and fairness; and4. Leveraging the Buy: using procurement as an engine of economic growth, job creation, and socio-economic benefits.



The Harper Government will continue to build and improve upon this new approach.

This new approach was part of the National Shipbuilding Procurement Strategy (NSPS). Under the NSPS, the principles of extensive industry consultations, along with the establishment of a strong governance structure and the involvement of independent third parties, were applied in a comprehensive and innovative way and contributed to the success of the strategy.

Creating Jobs by Building Equipment for the Canadian Armed Forces in Canada

Canada's defence spending aims at providing the Canadian Armed Forces with high quality equipment in order to defend our national sovereignty and vital interests. Simultaneously, these investments can provide Canada with a strong manufacturing base with a capacity for leading-edge technology and innovation. The potential benefits for the Canadian economy are significant.

In Budget 2011, the Harper Government committed to develop a procurement strategy, in consultation with industry, to maximize job creation, support Canadian manufacturing capabilities and innovation, and bolster economic growth in Canada. The Harper Government is making important progress in the development of its strategy for procuring equipment for our military.

In September 2012, Mr. Tom Jenkins, Executive Chairman and Chief Strategy Officer of OpenText Corporation, was appointed as a special advisor to further inform this work. Mr. Jenkins was asked to engage a range of stakeholders involved in Canada's defence-related industries with a view to establishing criteria and a process to identify key Canadian industrial capabilities. Mr. Jenkins released his report on February 12, 2013. The report frames the unique "once in a century" opportunity presented by major investments in Canada's Armed Forces to create jobs and economic growth, while enhancing Canada's ability to protect its sovereignty.

As noted in Mr. Jenkins' report, many of the most highly industrialized countries have clear strategies to promote their defence sectors. These strategies are based on a recognition that it is in the national interest to have a strong domestic defence-related manufacturing base that produces leading-edge equipment. For Canada, such a strategy can generate high-value exports and supports high paying jobs for Canadians.

The Harper Government endorses Mr. Jenkins' proposal to use key industrial capabilities as a means of fully leveraging defence procurement projects to support economic opportunities for Canadians. A key opportunity for doing so is by targeting, as estimated by Mr. Jenkins, the $49 billion in Industrial and Regional Benefit (IRB) obligations that foreign prime contractors are expected to accumulate by 2027 to support high-skill and high-value opportunities and jobs in Canadian industries. These opportunities would be selected based on the needs of the Canadian Armed Forces, the potential to have access to global markets and on the potential for increasing investments in Canadian research and innovation. In addition, the Government will actively promote the significant export opportunities of Canadian-produced goods and services.

To better leverage future investments in equipment for the Canadian Armed Forces, the Harper Government will work with industry sectors and stakeholders such as the Canadian Association of Defence and Security Industries (CADSI) to identify areas of Canadian competitiveness, as well as trends in global demand and supply in defence-related industries. Further, the Harper Government will ensure that all major procurements include a plan for participation by Canadian industry prior to approving the project.

This spring, the Harper Government will expedite the analysis of the recommendations made by Mr. Jenkins with respect to selecting a series of interim key industrial capabilities to help guide immediately pending defence procurement projects. The Harper Government will also develop a refined set of key industrial capabilities for use over the long-term and will examine how existing policies and programs can be tailored to support a Government-wide strategy while remaining cognizant of Canada's international trade obligations. At the same time, the Harper Government will reform the current military procurement process to improve outcomes. This will include thorough and rigorous options analyses, a challenge function for military requirements, early and frequent industry engagement, and strengthened oversight with the use of third-party expertise.

Light Armoured Vehicle III Upgrade Project

Canada's Light Armoured Vehicle (LAV) III-which has served the Canadian Armed Forces in Afghanistan and other areas of operation-is a state-of-the-art combat vehicle used to transport infantry on the battlefield while providing defensive protection and firepower.

The recent experiences of the Canadian Armed Forces and other nations in Afghanistan and other areas of operation continue to demonstrate the ongoing requirement for a highly protected, yet highly mobile, Light Armoured Vehicle.

The LAV III Upgrade Project is one of four Family of Land Combat Vehicles (FLCV) projects announced in July 2009, and it both capitalizes on existing and evolving technology and improves the protection, mobility and effectiveness of the LAV III fleet. The other FLCV projects are the Close Combat Vehicle, the Tactical Armoured Patrol Vehicle, and the Force Mobility Enhancement. These projects aim to provide the Canadian Armed Forces with the next generation of land combat vehicles.

The upgrade project modernizes a portion of the existing LAV III fleet to ensure that it remains a highly protected and operationally mobile combat vehicle and the backbone of domestic and expeditionary task forces.

This project extends the lifespan of the LAV III to 2035.

In July 2010, General Dynamics Land Systems - Canada (GDLS - C), the original equipment manufacturer, was awarded a contract to determine the scope of the work required to upgrade the vehicle.

GDLS - C built model Risk Reduction Units, which are LAV IIIs fitted with the various planned upgrades. The Risk Reduction Units were delivered in the fall of 2010. General Dynamics Land Systems - Canada then conducted rigorous testing and validated the performance of the selected upgrade packages.

In October 2011, GDLS - C was awarded a $1.064 billion non-competitive contract to perform upgrades to 550 LAV III vehicles, with an option for additional deliveries.

The following upgrades will be performed on the LAV III:

-- upgrade of mobility systems such as the power train, suspension, running gear and brakes;-- upgrade of the weapon system;-- installation of additional armour, strengthening its protection against increased threats; and-- improved crew ergonomics.



This work is necessary to improve the protection of this vehicle against mines and improvised explosive devices; improve its mobility; improve the safety of Canadian Armed Forces members travelling on board the upgraded LAV III; and incorporate ergonomic and information management improvements.

In October 2012, GDLS - C was awarded a contract amendment for the additional delivery of 66 upgraded LAV IIIs to support the Canadian Armed Forces' reconnaissance and surveillance capability. On January 24, 2013, the Harper Government announced the delivery of its first upgraded LAV III vehicle.

General Dynamics Land Systems - Canada has facilities in both Edmonton and London. This contract will sustain high-value, high-tech jobs. This work will help to maintain employment for approximately 2,400 GDLS - C personnel in London and Edmonton, as well as for the employees of the company's supplier base of 500 Canadian companies. Approximately 40 per cent of the work will be done at GDLS-C's Edmonton facility and 60 per cent at GDLS-C's London facility.

The Industrial and Regional Benefits (IRB) Policy applies to this contract. The IRB Policy ensures that defence procurements are leveraged to generate economic benefits to Canada, which means that General Dynamics Land Systems - Canada is required to place 100 per cent of the contract value in business activities in the Canadian economy. For a list of Government of Canada procurements where the IRB Policy applies, see http://www.ic.gc.ca/eic/site/042.nsf/eng/h_00017.html.



Contacts:
Amber Irwin
Office of the Honourable Rona Ambrose
819-997-5421

Media Relations
Public Works and Government Services Canada
819-956-2315



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