NSPS to Wider Industrial Policy February 27th 2012 September-21-18 © 2012 CADSI All Rights Reserved

NSPS STRENGTHENS OUR ECONOMY AND SECURITY October 19th, 2011 – CADSI today saluted the federal government’s fair and balanced approach to acquiring new naval and coast guard vessels to protect and promote Canada’s maritime interests in a way that will properly equip our men and women in uniform and maximize jobs, innovation and economic activity in Canada. CADSI congratulates Irving Shipbuilding and Seaspan Marine on their success in being selected as the lead shipyards for this multi-year, multi-billion dollar program. On behalf of our 860 members, we strongly support the government’s decision to build its naval and coast guard fleets in Canada and to manage their production in a way that mitigates the boom-and-bust cycles normally associated with ship fleet construction, said CADSI President Tim Page. Canada has a proud and internationally renowned maritime heritage. Today’s NSPS announcement is a tangible demonstration of the federal government’s commitment to provide world-class ships to the men and women of the Royal Canadian Navy and Canadian Coast Guard and to strengthen the economy and the security of Canada. September-21-18 © 2012 CADSI All Rights Reserved

NSPS STRENGTHENS OUR ECONOMY AND SECURITY Today’s announcement is good news for Canadian workers in the defence and security sectors who have the expertise and know-how to deliver state-of-the art ships and equipment to the Royal Canadian Navy and the Canadian Coast Guard, said Page. Following this milestone accomplishment, CADSI encourages the federal government to move to contracts with the down-selected shipyards as quickly as possible, ensuring an appropriate balance of risk between the Crown and private industry. CADSI members will continue to work collaboratively with the government in the months to come on a series of equally important decisions regarding how best to engage Canada’s marine, systems integrators and defence electronics sectors. This will increase the role of Canadian workers to complete the yards’ work with state-of-the-art mission and weapon systems and further contribute to the government’s jobs, innovation, and economic agendas. September-21-18 © 2012 CADSI All Rights Reserved

Sovereignty, Security and Prosperity Government Ships Designed, Built and Supported by Canadian Industry The Report of the CADSI Marine Industries Working Group – May 2009 Canada’s Marine Industries are broader than the ship construction that occurs in shipyards. They include project management, ship design, and systems integration and equipment supply involving many hundreds of Canadian companies, most of them Small and Medium Enterprises. Systems and equipment are generally categorized as either platform (e.g. propulsion, electrical and hotel services) or mission specific (e.g. command and control, sensors, guns, missiles, helicopter operations, underwater systems). Operational Fleets Ships designed, built, & supported in Canada Employment in Canada A Strong Economy/ National Security SOVEREIGNTY − September-21-18 © 2012 CADSI All Rights Reserved

CADSI’s Overarching Policy Goal March 22nd 2011 Federal Budget: The Government is committed to … developing a procurement strategy, in consultation with industry, to maximize job creation, support Canadian manufacturing capabilities and innovation, and bolster economic growth in Canada. Creation and implementation of a Defence Industrial Strategy for Canada, based on: Articulating key Industrial Capabilities (KIC) based on sovereignty, security and/or economic value to Canada Establish and nurture centres of excellence in those capabilities Target federal R&D, export support and procurement strategies around those capabilities and Canadian champions Focus the IRB program around the KIC list September-21-18 © 2012 CADSI All Rights Reserved

Key Industrial Capabilities CADSI believes that Canada needs to identify the Key Industrial Capabilities (KICs) need for the purpose of: Sovereignty Security (assured access) Economic value to Canada Defence is not a free market – rather it is a managed market internationally – September-21-18 © 2012 CADSI All Rights Reserved

Key Industrial Capabilities (cont’d) CADSI proposes that the KICs are: (IA/Cyber) IT Security Architectures, Systems Integration, and In Service Support Space-Based Radar Surveillance Systems Integration Platform In Service Support (ISS), Integrated Logistics Support, Maintenance Repair and Overhaul C4ISR Systems and Solutions Ordinance/Ammunition Small Arms Shipbuilding and Marine Industries Armoured Vehicles September-21-18 © 2012 CADSI All Rights Reserved

Key Industrial Capabilities (cont’d) Aircraft, Special Mission Aircraft and Aircraft Missionization Simulation and Training Systems and Solutions CBRNE Detection, Protection, and Decontamination. Chemical, Biological, Radiological, Nuclear, and Explosive (CBRNE) (PPE) Personal Protective Clothing and Equipment for Defence and Security Shelters & Containers (Services) IT, Procurement, Management, Test & Evaluation, and R&D Services Engines and Power Generation Basis for a structured dialogue with officials to establish a robust list of KICs September-21-18 © 2010 CADSI All Rights Reserved

Reform to the procurement process  At the same time, is urgent and should include: Require Cabinet approval of a domestic industrial plan at the PPA stage Modify PWGSC’s Canadian content policy to allow directed procurement to Canadian sources in the defence sector Rate requirements based on KIC list and direct Canadian industrial participation Buy what the government co-invests in with Canadian industry Obtain IP at time of acquisition if OEM is foreign Stop single point of accountability with a foreign OEM for ISS Balance risk, based on the CADSI paper, that allocates risk where it can best be managed Canada as a first buyer September-21-18 © 2010 CADSI All Rights Reserved

NSPS to Wider Industrial Policy Why is NSPS special? Supported by Canada’s Shipbuilding Policy Applies to a group of procurements Long term predictable recurring requirement Can the approach be applied in other areas? Air fleet ISS? Land vehicle production? Soldier System requirements? September-21-18 © 2012 CADSI All Rights Reserved

Timothy I. Page, President Janet Thorsteinson, Vice-President Questions Contact Information Timothy I. Page, President tim@defenceandsecurity.ca Janet Thorsteinson, Vice-President janet@defenceandsecurity.ca CADSI 130 Slater Street Suite 1250 Ottawa, ON K1P 6E2 cadsi@defenceandsecurity.ca 613-235-5337 September-21-18 © 2012CADSI All Rights Reserved