According to the media, the Canadian government could consider awarding Boeing, without a call for tenders, a mutual agreement contract of several billion dollars for the Canadian multi-mission aircraft project.
If an over-the-counter contract were indeed contemplated with Boeing, it would be extremely concerning for the direction of the policies favored by our country, as well as for the maintenance of the competitiveness of one of the most essential and innovative sectors of the world. countries, aeronautics.
Canada has not always been able to leverage its purchasing power to support innovation within its borders. There is a lot of room for improvement in this regard. A report from the Institute for Research on Public Policy (IRPP) addresses this Canadian policy gap1. A few years ago, Canada’s Economic Growth Advisory Council recommended that Canada use its government procurement to spur innovation and economic development in the country, leveraging the more than $100 billion in goods and services that the governments of Canada purchase each year2.
The ramifications of defense and aeronautics
Defense spending has a very significant impact on the aerospace sector. Military contracts account for a significant proportion of the revenues of major foreign aerospace companies like General Dynamics, Dassault, Boeing, Textron, Airbus and Raytheon.
Public procurement in the field of defense gives these companies a clear advantage in terms of innovation. They allow them to develop technologies that they can then transfer to their commercial entity for civil aviation applications.
There are many examples of technology transfers from the defense entities of these companies to their commercial entities: the electric, or digital, flight controls of Embraer’s KC-390 military aircraft benefited its E2 civil aircraft, the Composite wing box technology from the Airbus A400M is found in the A350XWB and composite materials developed for Boeing’s C-17 and V-22 are used for its B787.
Public statements by Gulfstream and Dassault, Bombardier’s business aviation competitors, are eloquent.
In 2021, Gulfstream released the following statement to the media, when unveiling two new aircraft programs: “Through our parent company, General Dynamics, we have been able to secure steady research and development funding Gulfstream aircraft over the past 15 years.3 »
Lack of consultation
In 2014, Canada launched the Industrial and Technological Benefits Policy which requires defense contractors to invest in Canada an amount equal to the value of their contracts. Yet, the Government of Canada does not consult proactively and strategically with its own industrial base in order to jointly develop technologies to meet its defense needs and promote exports, as is done elsewhere, particularly in the United States. United States, Europe and Brazil.
In these countries, governments frequently act as first buyers, allowing companies to develop reference projects or presentation models for export.4. By contrast, Canada’s approach to defense procurement essentially boils down to the use of off-the-shelf technologies.
The upstream mobilization of the country’s industrial base, with the aim of fostering the development of new local technologies, does not take place on a significant scale in Canada.
Our competitors have no qualms about doing so, even in the civilian sphere. The program BuyAmerica of the United States is a prime example, but there are similar policies in China, India, Japan and Brazil. In Europe, innovation partnerships allow each member country to work with its own industry to develop new technologies by becoming their first buyer. France recently used such a partnership to contract with Alstom for the next generation of high-speed trains (TGV).
Canada should focus on sectors where it has a comparative advantage.
Aeronautics is undoubtedly one of these sectors. Very few countries have the skills to design and build an entire aircraft. Canada has this strategic skill set, but we cannot take our aerospace expertise for granted and become complacent, especially in today’s global environment where blatant protectionism and supercharged industrial policies are increasingly the norm. .
We must use the full content of the policy toolbox, including innovation partnerships and strategic public procurement, to support our aerospace sector. This is why we must not award contracts, particularly in the case of the Canadian multi-mission aircraft, without genuine competition that will allow Canadian solutions to be considered seriously.
4 The planes we mention above, i.e. the KC-390, A400, C-17 and V-22, are concrete examples.