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2007-08
Departmental Performance Report

National Defence

Supplementary Information (Tables)

Table 1: Loans, Investments and Advances
(Non-Budgetary)

			2007-2008
($ thousands)	Actual 2005-2006¹	Actual 2006-2007	Main Estimates	Planned Spending	Total Authorities	Actual
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces
Imprest Accounts, Standing Advances and Authorized Loans²	3,086	624	0	2,583	69,418	7,560
Canadian Forces Housing Projects³	(40)	0	0	0	0	0
Conduct Operations
Imprest Accounts, Standing Advances and Authorized Loans	496	101	0	264	14,027	1,527
Canadian Forces Housing Projects	(6)	0	0	0	0	0
Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values
Imprest Accounts, Standing Advances and Authorized Loans	149	30	0	153	5,896	642
Canadian Forces Housing Projects	(2)	0	0	0	0	0
NATO Damage Claims⁴	29	55	0	15	0	87
Total	3,712	810	0	3,015	89,341	9,816

Source: Assistant Deputy Minister (Finance and Corporate Services) Group

Notes:

The PAA allocation of Actual 2005-2006 figures for Imprest Accounts, Standing Advances and Authorized Loans, and Canadian Forces Housing Projects differ from those published in the RPP 2006-2007 due to changes in the allocation ratios used for the 2006-2007 Public Accounts.
This account was established for the purpose of financing: (a) public funds imprest and public funds advance accounts; (b) standing advances; (c) authorized loans and advances to employees posted abroad; and (d) authorized recoverable advances to establish military messes and canteens. The total amount authorized to be outstanding at any time is $120,000,000 as last amended by National Defence Vote L11b, Appropriation Act No. 4, 2001-2002. Due to the nature of this account, it is very difficult to forecast the flow of activities that occur during a fiscal year.
Advances were made to the Canada Mortgage and Housing Corporation, in respect of loans arranged by the Corporation for housing projects for occupancy by members of the Canadian Forces. The final loan installment was paid May 1, 2005.
Article VIII of the NATO Status of Forces Agreement signed April 4, 1949, as amended, deals with claims for damages to third parties arising from accidents in which a member of a visiting force is involved. This account is charged with the amount recoverable from other states, for claims for damages amount recoverable from other states, for claims for damages that took place in Canada, and is credited with recoveries.

Table 2: Sources of Respendable and Non-Respendable Revenue

Respendable Revenue

($ thousands)	Actual ² 2005-2006	Actual 2006-2007	2007-2008
($ thousands)	Actual ² 2005-2006	Actual 2006-2007	Main Estimates	Planned Revenues	Total Authorities	Actual ¹
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces
Recoveries from Members	122,441	124,849	118,888	118,888	132,345	132,345
Recoveries from OGDs	6,071	5,432	12,272	12,272	5,708	5,708
Recoveries from Other Governments/UN/NATO	19,642	16,993	4,900	4,900	889	889
Other Recoveries	43,570	45,965	25,991	25,991	41,077	41,077
Subtotal	191,725	193,239	162,051	162,051	180,019	180,019
Conduct Operations
Recoveries from Members	3,403	3,470	1,592	1,592	2,362	2,362
Recoveries from OGDs	780	697	296	296	522	522
Recoveries from Other Governments/UN/NATO	23,376	20,224	7,577	7,577	18,617	18,617
Other Recoveries	3,496	3,688	899	899	1,673	1,673
Subtotal	31,055	28,079	10,364	10,364	23,175	23,175
Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values
Recoveries from Members	815	831	1,005	1,005	616	616
Recoveries from OGDs	11,365	10,168	6,959	6,959	7,330	7,330
Recoveries from Other Governments/UN/NATO	226,613	196,052	208,883	208,883	211,517	211,517
Other Recoveries	5,921	6,247	5,686	5,686	21,584	21,584
Subtotal	244,714	213,298	222,533	222,533	241,047	241,047
Total Respendable Revenue	467,494	434,616	394,948	394,948	444,242	444,242

Non-Respendable Revenue ³

($ thousands)	Actual ² 2005-2006	Actual 2006-2007	2007-2008
($ thousands)	Actual ² 2005-2006	Actual 2006-2007	Main Estimates	Planned Revenues	Total Authorities	Actual ¹
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces
Return on investments	18,568	9,030	N/A	-	-	4,669
Refunds of previous years' expenditures	86,870	64,535	N/A	-	-	48,421
Proceeds from disposal of surplus Crown assets	15,898	19,200	N/A	-	-	15,149
Other revenue	10,174	9,674	N/A	-	-	28,903
Subtotal	131,510	102,439	-	-	-	97,143
Conduct Operations
Return on investments	144	70	N/A	-	-	93
Refunds of previous years' expenditures	13,941	10,357	N/A	-	-	10,214
Proceeds from disposal of surplus Crown assets	823	994	N/A	-	-	1,688
Other revenue	1,595	1,516	N/A	-	-	5,576
Subtotal	16,503	12,937	-	-	-	17,571
Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interest and Values
Return on investments	617	300	N/A	-	-	25
Refunds of previous years' expenditures	3,896	2,894	N/A	-	-	5,330
Proceeds from disposal of surplus Crown assets	229	276	N/A	-	-	563
Other revenue	1,014	964	N/A	25,584	25,584	3,515
Subtotal	5,756	4,435	-	25,584	25,584	9,433
Total Non-Respendable Revenue	153,769	119,811	-	25,584	25,584	124,147
Total Revenue	621,263	554,427	394,948	420,532	469,826	568,388

Source: Assistant Deputy Minister (Finance and Corporate Services) Group

* Due to rounding, figures may not add up to totals shown

Notes:

The Respendable Revenues are $49.3 million higher than initial Planned Revenues due to the following: an increase in Revenue of $32.8 million associated with increased recoveries from foreign militaries for training, fuel, facilities operating costs, communications and North Warning System cost sharing arrangements, increased revenue for facility rentals were $6.0 million over planned estimates and Other Revenue increase $10.5 million from a number of diverse financial recovery areas.
The Respendable Revenue allocation by PAA is different than the 2005-2006 Actual reported in Table 7 Sources of Respendable and Non-Respendable Revenue in the 2006-2007 RPP due to an improved methodology used for the allocation by PAA.
The planned Non-Respendable Revenue of $25.6 million relating to the payment due from Germany for its share of the costs of any future cleanup of the training area at CFB Shilo of unexploded ordinance was received in 2007-2008 and the majority of the Non-Respendable Revenue was recorded under Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces.

Table 3: User Fees Act

User Fee	Fee Type	Fee Setting Authority	Date Last Modi-fied	2007-2008					Planning Years
User Fee	Fee Type	Fee Setting Authority	Date Last Modi-fied	Forecast Revenue ($000)	Actual Revenue ($000)	Full Cost ($000)	Performance Standard	Performance Results	Fiscal Year	Forecast Revenue ($000)	Estimated Full Cost ($000)
Fees charged for the processing of access requests filed under the Access to Information Act(ATIA)	Other products and services (O)	Access to Information Act	2008	12	11,9	3,792	Response provided within 30 days following receipt of request; the response time may be extended pursuant to section 9 of the ATIA. Notice of extension to be sent within 30 days after receipt of request. The Access to Information Act provides fuller details: http://laws. justice.gc. ca/en/A-1/ 218072.html.	The most common performance measurement is the percentage of “on-time” responses as stipulated by the performance standard. For this reporting period those are 75.2% for the Access to Information Act and 40.4% for the Privacy Act.	2008-2009 2009-2010 2010-2011	12 12 12	5000 5000 5000
				Sub-Total (R) Sub-total (O) Total	Sub-Total (R) Sub-total (O) Total	Sub-Total (R) Sub-total (O) Total			Sub-total: Sub-total: Sub-total:	2008-2009 2009-2010 2010-2011 Total	2008-2009 2009-2010 2010-2011 Total
Other Information: The number of requests received under the Access to Information Act for this reporting period remain high. The main contributor is Canada's presence in Afghanistan.

Source: Assistant Deputy Minister (Finance and Corporate Services) Group

Table 4a: Details on Project Spending (Capital Equipment Program) Greater than $30M

Projects listed in the table below have been identified as either: (1) projects in which the estimated expenditure exceeds the delegated approval authority granted to DND by the Treasury Board ($30 million with substantive cost estimates), or (2) projects in which the risk is particularly high, regardless of the estimated amounts.

PROJECT NUMBER	PROJECT TITLE	PHASE	Main Estimates 2007-2008 Total Estimated Cost	Current Estimated Total Cost ($000)	Previous Expenditures to end 2006-2007 ($000)	Planned Spending 2007–2008 ($000)	Actual Spending 2007–2008 ($000)	VARIANCE ($000)
Program Activity: GENERATE AND SUSTAIN RELEVANT, RESPONSIVE AND EFFECTIVE COMBAT-CAPABLE INTEGRATED FORCES
MARITIME EFFECTS
1216	Arctic/Offshore Patrol Ship	D	42,800	42,434	0	1,689	2,001	-312
1487	Canadian Towed Array Sonar System	C/O	120,926	120,651	120,651	275	0	275
2549	Canadian Submarine Capability Life Extension	I	869,832	887,856	753,719	54,462	43,212	11,250
2573	Maritime Environmental Protection Project	I	55,507	55,507	46,610	2,300	1,834	466
2586	Halifax Class Modernization/Frigate Life Extension (FELEX)	D/I	22,952	800,951	9,272	14,480	10,728	3,752
2640	Evolved Sea Sparrow Missiles	I	504,000	504,000	486,443	5,253	2,088	3,165
2664	Advanced Electro-optic Sensor	I	240,528	240,499	77,290	44,766	40,586	4,180
2673	Joint Support Ship	D	37,525	50,173	15,884	27,400	23,308	4,092
2796	YAG 300 Training Vessel Replacement	I	99,020	98,840	49,937	20,687	27,621	-6,934
TOTAL MARITIME EFFECTS			1,993,090	2,800,911	1,559,806	171,312	151,378	19,934
LAND EFFECTS
58	Wheeled Light Armoured Vehicle Life Extension	I	159,250	160,454	74,482	21,533	16,753	4,780
84	Army GPS Equipment Replacement	I	43,963	40,509	26,306	9,653	6,368	3,285
224	Defence Information Broker	I	37,910	44,047	18,007	14,074	13,877	197
1017	Lightweight 155mm Towed Howitzer (M777 LWTH) (Note 3)	I	87,632	87,264	62,559	14,695	11,469	3,226
1070	Armoured Patrol Vehicle	I	123,683	123,684	93,381	18,606	19,588	-982
1203	Armoured Heavy Support Vehicle	I	108,247	148,827	1,868	96,739	65,222	31,517
1204	Light Armoured Vehicle Remote Weapon System	I	41,272	42,326	2,272	33,024	7,907	25,117
1241	Main Battle Tank	I	285,000	208,882	0	95,247	99,008	-3,761
1436	Low Level Air Defence Modernization	I	1,093,179	1,091,549	1,073,352	8,890	8,642	248
2058	Weapons Effect Simulator	I	108,002	119,307	95,305	9,791	17,599	-7,808
2346	Medium Support Vehicle System	D	24,585	1,066,680	3,076	20,398	5,222	15,176
2349	Light Utility Vehicle Wheeled	I	298,400	302,965	280,129	7,900	5,934	1,966
2556	Canadian Forces Point Biological Agent Detection, Sampling and Identification Project	I	48,155	40,049	7,885	17,935	15,080	2,855
2637	Armoured Personnel Carriers	I	2,343,695	2,348,900	2,058,864	138,196	76,375	61,821
2652	Multi Mission Effects Vehicle (Work Suspended Pending Gov’t Decision to Terminate Project)		0	5,004	2,923	0	347	-347
2684	Improved Landmine Detection System	C/O	33,663	33,489	31,802	1,073	771	302
2731	Armoured Personnel Carriers Life Extension	I	345,939	352,162	321,525	18,667	12,527	6,140
TOTAL LAND EFFECTS			5,182,575	6,216,098	4,153,736	526,421	382,689	143,732
AEROSPACE EFFECTS
86	Operational Flight Program	I	111,521	111,521	40,708	21,624	7,967	13,657
113	Advanced Distributed Combat Training System	I	187,675	187,742	146,427	12,165	5,606	6,559
180	CF-18 Multi-purpose Display Group Project	I	98,761	61,959	61,617	222	0	222
273	CF-18 Advanced Multi-role Infrared Sensor	I	186,060	186,060	834	45,656	34,591	11,065
295	Aurora Communication Management System Replacement	I	89,745	88,770	63,494	16,753	3,078	13,675
317	Aurora Electro-optical System Replacement	I	49,162	49,137	46,167	1,705	2,143	-438
410	Aurora - Flight Deck Simulator	I	40,862	40,906	37,141	3,434	682	2,752
423	Aurora - Electronic Support Measures Replacements	I	194,457	194,379	111,887	27,843	11,944	15,899
428	Aurora - Imaging Radar Acquisition	I	280,018	284,676	132,277	35,061	30,940	4,121
451	Primrose Lake Evaluation Range TSPI System	I	42,615	42,615	23,343	7,459	4,016	3,443
536	Aurora – Operator Mission Simulator	I	44,633	44,754	6,020	2,050	7,251	-5,201
583	CF18 - Engineering Change Proposal 583	I	987,308	851,946	829,559	23,656	15,057	8,599
609	Fixed Wing Search and Rescue Project	D	8,200	4,912	4,905	3,263	7	3,256
743	Tactical Control Radar Modernization	I	36,764	39,019	2,278	5,668	1,025	4,643
1007	Medium to Heavy Lift Helicopters	D	8,488	2,014,542	3,221	3,255	6,153	-2,898
1036	Airlift Capability Project (Tactical)	I	6,297	3,061,677	2,557	3,400	159,209	-155,809
1117	Airlift Capability Project (Strategic)	I	1,609,000	1,805,171	170,069	1,060,000	928,405	131,595
1686	CF18 - Advanced Air to Air Weapon - Short Range	I	36,685	36,685	20,863	2,090	78	2,012
2320	Military Automated Air Traffic System	I	164,865	157,015	150,154	6,161	2,143	4,018
2371	Advanced Navigation and Precision Approach	I	97,830	98,039	69,075	22,423	5,658	16,765
2517	Canadian Forces Utility Tactical Transport Helicopters	I	1,093,100	1,093,098	1,072,477	5,800	4,133	1,667
2526	Region/Sector Air Operation Centre	I	134,668	137,568	124,798	9,801	2,964	6,837
2619	Air Combat Manoeuvering Instrumentation System	I	33,290	33,289	30,913	1,890	580	1,310
2657	CC150 Strategic Air-to-Air Refuelling (SAAR)	I	126,253	133,305	111,490	8,953	9,942	-989
2678	Canadian Search and Rescue Helicopter	I	779,239	772,138	763,238	6,123	1,037	5,086
2680	Maritime Helicopters	I	3,160,300	3,160,349	709,067	425,841	143,665	282,176
2754	CF-18 Advanced Medium Range Air-to-Air Missile	I	138,488	100,250	69,056	6,382	4,973	1,409
5832	CF18 - Engineering Change Proposal - Phase 2	I	413,394	423,280	132,559	103,014	56,036	46,978
TOTAL AEROSPACE EFFECTS			10,159,678	15,214,802	4,936,194	1,871,692	1,449,283	422,409
JOINT, NATIONAL, UNIFIED, and SPECIAL OPERATIONS
402	Canadian Forces Joint Experimentation	I	30,992	52,347	5,806	18,753	571	18,182
439	Allied Vaccine Development Project	I	31,684	24,440	20,962	1,331	1,593	-262
625	Polar Epsilon Joint Space-Based Wide Area Surveillance and Support	I	57,509	25,482	3,528	4,060	3,502	558
2398	Joint Command System	I	32,965	29,937	22,117	4,377	3,621	756
2469	Canadian Forces Command System I (CFCS)	I	65,416	67,221	63,921	433	1,890	-1,457
2783	Identification Friend or Foe (Amalgamated with FELEX)	I	38,176	0	572	601	0	601
2800	Canadian Forces Health Information System	I	49,345	78,436	29,367	21,202	14,057	7,145
Various	Canadian Cryptographic Modernization Project	D	102,988	119,036	35,202	27,448	7,640	19,808
XXXX	Clothe The Soldier Omnibus Project	I	276,617	214,258	190,349	35,290	21,341	13,949
TOTAL JOINT, NATIONAL, UNIFIED, and SPECIAL OPERATIONS			685,692	611,157	371,824	113,495	54,215	59,280
TOTAL GENERATE AND SUSTAIN RELEVANT, RESPONSIVE AND EFFECTIVE COMBAT-CAPABLE INTEGRATED FORCES			18,021,035	24,842,968	11,021,560	2,682,920	2,037,565	645,355

Program Activity: CONDUCT OPERATIONS
276	Intelligence, Surveillance, Target Acquisition & Reconnaissance	D/I	134,715	100,949	43,289	23,500	7,010	16,490
2803	Protected Military Satellite Communication	I	507,543	531,450	310,769	32,393	24,029	8,364
TOTAL CONDUCT OPERATIONS			642,258	632,399	354,058	55,893	31,039	24,854

Program Activity: INTERNAL SERVICES
2272	Materiel Acquisition and Support Information System	I	179,164	200,321	176,598	862	17,439	-16,577
2400	Defence Integrated Human Resource System	I	87,200	92,566	78,553	4,677	10,915	-6,238
2536	Role Three Health Support	I	42,453	40,179	37,732	2,179	0	2,179
TOTAL INTERNAL SERVICES			308,817	333,066	292,883	7,718	28,354	-20,636

TOTAL PROGRAM ACTIVITIES			18,972,110	25,808,433	11,668,501	2,746,531	2,096,958	649,573

Source: Assistant Deputy Minister (Materiel) Group

Legend: D = Definition, I = Implementation, C/O = Close-Out

Notes:

Employee Benefit Plans (EBP) are not included in project expenses.
Projects listed have been identified as either:
1. those in which the estimated expenditure exceeds the delegated approval authority granted to DND by the Treasury Board ($30 million with substantive cost estimates); or;
2. those in which the risk is particularly high, regardless of the estimated amounts.
$5,450 of the $11,469 expenses incurred in 2007-2008 are expenses related to the accrual budgetary portion of the M777 project.

TABLE 4b: Capital Construction Program (Spending Over $60M)

Project #	Project Name ($ thousands)	Total Project Amount	Past Years Expendi-tures at 31 March 2007	Planned Spending 2007–2008	Actual Spending 2007–2008	Planned Future 5‑year Spending
Alberta
0886	Upgrade Roads/Utilities (Cold Lake) (PD/PI)	60,627	2,290	7,860	985	49,000
British Columbia
0221	Replace “A ” Jetty (OA)	250,000	480	1,000	0	6,000
4360	FMF Cape Breton Phases I to IV (PI) (Note 1)	314,000	106,270	16,910	7,966	174,000
4451	Colwood Refueling Facility (PI)	64,035	60,730	3,305	2,141	795
New Brunswick
0344	RTA Sedimentation Remediation (Gagetown) (PD/PI) (Note 2)	72,680	4,270	3,810	0	0
0453	Utilities Upgrade Gagetown (PD/PI)	80,680	18,160	21,720	7,841	54,140
Nova Scotia
0511	Replace Jetty NJ & NK1 Halifax (OA) (Note 3)	54,650	1,650	0	0	0
Newfoundland
0640	Pleasantville Consolidation (PD) (Note 1)	142,118	1,520	4,840	1,521	95,449
Qu�bec
0457	5 Combat Engineer Regiment Facility in Valcartier (OA) (Note 4)	60,800	0	4,390	0	0
Ontario
0411	RMC Kingston Dormitories (PI) (Note 1)	70,784	31,100	14,550	8,054	29,947
0402	Joint Experimentation Centre Ottawa (PI)	67,580	1,681	24,890	132	65,000
Various
0407	Omnibus Cadet Support Training Centre (PD/PI) (Note 5)	41,441	33,794	3,996	156	6,740
	Total	$1,279,395	$261,945	$101,271	$28,796	$481,071

Source: Assistant Deputy Minister (Infrastructure and Environment) Group

Notes:

Cost estimates to complete the project have increased. Revised expenditure authority will be sought from Treasury Board in 2008. The table reflects the new cost estimates.
This project is being restructured along program lines, with smaller individual projects within the overall program.
Project has been cancelled. Jetty NJ will now be funded as part of the Arctic Offshore Patrol Ship project and Jetty NK will not be rebuilt.
Project has been put on hold.
Total project cost was previously estimated at $63,030K. Cost estimates have been revised down from that in RPP 2007-2008 and are now below the reporting threshold.
All figures include capital costs only and are exclusive of GST/HST.
Past years expenditures are as of March 31, 2007.

Table 5: Status Report on Major Crown Projects

Table of Contents

Airlift Capability Project – Strategic (ACP-S)

Airlift Capability Project – Tactical (ACP-T)

Arctic/Offshore Patrol Ship (AOPS)

Armoured Heavy Support Vehicle System (AHSVS)

Armoured Personnel Carriers (APC)

Canadian Cryptographic Modernization Program (CCMP) Omnibus Project

CF18 Modernization Project

Canadian Forces Supply System Upgrade (CFSSU)

Canadian Forces Utility Tactical Transport Helicopter (CFUTTH) Project

Canadian Search and Rescue Helicopter Project

HALIFAX Class Modernization/Frigate Equipment Life Extension (HCM/FELEX)

Intelligence Surveillance, Target Acquisition and Reconnaissance (ISTAR)

Joint Support Ship (JSS)

Light Utility Vehicle Wheeled (LUVW)

Main Battle Tank

Maritime Helicopter Project (MHP)

Material Acquisition and Support Information System (MASIS)

Medium To Heavy Lift Helicopter (MHLH)

Medium Support Vehicle System Project (MSVS)

Military Automated Air Traffic System (MAATS) Project

Protected Military Satellite Communications (PMSC)

Submarine Capability Life Extension

Airlift Capability Project – Strategic (ACP-S)

1. Description: The objective of the Airlift Capability Project - Strategic is to acquire four new aircraft that will provide the global reach and speed necessary to operate effectively over long distances to deliver personnel and cargo directly into a theatre of operations, including a threat environment.

2. Project Phase: Implementation

3. Leading and Participating Departments and Agencies:

Lead Department or Agency	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Departments and Agencies	Industry Canada and its Regional Agencies

4. Prime and Major Sub-Contractors:

Prime Contractor

The Boeing Company, St-Louis, Missouri, USA

5. Major Milestones:

Major Milestones	Date
Memorandum to Cabinet	June 6, 2006
Synopsis Sheet (Effective Project Approval)	June 22, 2006
Advanced Contract Award Notice Posted on MERX	July 5, 2006
Contract Award	February 1, 2007
Delivery First Aircraft	August 8, 2007
Delivery Second Aircraft	October 18, 2007
Delivery Third Aircraft	March 7, 2008
Delivery Fourth Aircraft	April 3, 2008
Initial Operational Capability (IOC)	September 20, 2008
Full Operational Capability (FOC)	Summer 2009
Project Close-out	Spring 2010

6. Progress Report and Explanations of Variances: The project received Effective Project Approval from Treasury Board on June 22, 2006 for the purchase of four Strategic aircraft, setup of in-service support for 20 years, ancillary contracts and project office. The contract with the Boeing Company for the Direct Sales Contract was established on February 1, 2007. A Foreign Military Sales case, through the United States Air Force to Boeing, for worldwide in-service support was established on January 31, 2007. All four aircrafts have been accepted on schedule and have already completed several operational missions. The project office is currently working on the implementation phase in support of this acquisition.

7. Industrial Benefits: Industrial and Regional Benefits (IRBs) are equivalent to 100% of the acquisition contract, Boeing's share of the in-service support Foreign Military Sales contract value and the value of the engines. (A separate IRB agreement was negotiated with Pratt and Whitney USA for the value of the engines for the C-17). The three IRB agreements total $1.9B. Boeing and Pratt and Whitney USA are currently searching for Canadian capability to fulfill their obligations. All regions of Canada will benefit from these contracts.

Airlift Capability Project – Tactical (ACP-T)

1. Description: The objective of the Airlift Capability Project – Tactical is to ensure a continued tactical airlift capability. In combination with the Fixed Wing Search and Rescue project, this project will replace the Canadian Forces’ ageing CC 130E/H Hercules fleet. This project will provide the Canadian Forces with an assured and effective tactical airlift capability that allows the requisite operational flexibility and responsiveness to support international and domestic operations.

2. Project Phase:Implementation

3. Leading and Participating Departments and Agencies:

Lead Department or Agency	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Departments and Agencies	Industry Canada and its regional agencies

4. Prime and Major Sub-Contractors:

Prime Contractor

Lockheed Martin Corporation, Marietta, Georgia, USA

5. Major Milestones:

Major Milestones	Date
Memorandum to Cabinet	June 22, 2006
Revised Preliminary Project Approval (PPA)	June 22, 2006
Solicitation of Interest and Qualification (SOIQ)	August 31, 2006
Issue of Request For Proposal (RFP)	August 3, 2007
Effective Project Approval	December 13, 2007
Contract Award	December 20, 2007
First Aircraft Delivery	Fall/Winter 2010
Initial Operational Capability (IOC)	Fall 2011
Full Operational Capability (FOC)	Winter 2013/2014
Project Close-out	Spring 2014

6. Progress Report and Explanations of Variances: Lockheed Martin Corporation provided a response to the RFP on August 30, 2007. The Department of National Defence received Effective Project Approval through Treasury Board on December 13, 2007.

7. Industrial and Regional Benefits: This procurement will provide industrial regional benefits equivalent to 100% of the contracted value for both the capital acquisition and in-service support. For the in-service support portion, 75% of the contract value will be direct work performed by Canadian companies. The selected contractor will be required to identify, as specific work packages, 60% of the total acquisition commitment. These Industrial and Regional Benefits requirements will be negotiated and accepted by Industry Canada prior to contract signing.

Arctic/Offshore Patrol Ship (AOPS)

1. Description: The Arctic/Offshore Patrol Ships (AOPS) has been established in order to deliver to the government of Canada a naval ice-capable offshore patrol ship to assert and enforce sovereignty in Canada’s waters including the Arctic. When the project completes, the six to eight fully supported AOPS delivered to the Canadian Forces will be capable of:

conducting armed sea-borne surveillance of Canada's waters, including the Arctic;
providing government situational awareness of activities and events in these regions; and
cooperating with other elements of the Canadian Forces and other federal government departments to assert and enforce Canadian sovereignty, when and where necessary.

2. Project Phase: Definition

3. Leading and Participating Departments and Agencies:

Lead Department or Agency	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Departments and Agencies	Industry Canada and the regional agencies

4. Prime and Major Sub-Contractors: No prime contractor has been selected. Final selection of the prime contractor will occur at Effective Project Approval, planned for January 2010.

5. Major Milestones:

Major Milestones	Date
Treasury Board Preliminary Project Approval	May 31, 2007
Release of Definition, Engineering, Logistics and Management Support Request for Proposals (DELMS RFP)	December 13, 2007
DELMS RFP Closes	February 19, 2008
Memorandum to Cabinet	January 2008
DELMS Contract Award	May 7, 2008
Effective Project Approval (SS(EPA))	January 2010
Award of Implementation Contract	January 2010
Delivery of First Ship	Fall 2013
Initial Operating Capability (IOC) of First Ship	March 2014
Project Complete	March 2019

6. Progress Report and Explanations of Variances: The project continues to progress steadily since obtaining Preliminary Project Approval in May 2007. Treasury Board granted expenditure authority of $42.465M ($BY), full up including GST, for definition phase. Treasury Board also acknowledged the indicative full up cost of $3,067M ($BY) including GST, for acquisition. So far, no variances in cost estimates have been identified.

7. Industrial and Regional Benefits: Industrial and Regional Benefits (IRBs) for this project are equivalent to 100% of the contracted value for both the capital acquisition and in-service support.

Armoured Heavy Support Vehicle System (AHSVS)

1. Description: The Armoured Heavy Support Vehicle System (AHSVS) is an Immediate Operational Requirement in response to an existing capability deficiency and concurrent threats from Improvised Explosive Devices (IEDs) and ballistic attacks facing Op ATHENA in Afghanistan, directly impacting soldier safety and survivability.

Four variants, in support of the current fleet and new vehicles, are requested under the main contract: Wrecker, Cargo, Palletized Loading System and Tractor. Subsequently, authority from the Treasury Board Secretariat was sought to exercise the contract option and two more variants were added to the fleet: Heavy mobile repair team and Flat deck recovery system.

2. Project Phase: Implementation

3. Leading and Participating Departments and Agencies

Lead Department	Department of National Defence
Contracting Authority	Public Works & Government Services Canada
Participating Department	Industry Canada

4. Prime and Major Sub-Contractors

Prime Contractor	Daimler AG Special Truck Division (Mercedes-Benz) Woerth, Germany
Major Sub-Contractors	EMPL, Fahrzeugwerk, Kaltenbach, Austria Land Mobility Technologies (LMT) Holdings (Pty) Ltd., Irene, South Africa Doll, Fahrzeuzbau, Gmb H, Oppenau, Germany

5. Major Milestones

Major Milestones	Date
Request for Price & Availability	August 4, 2006
Treasury Board Approval	October 16, 2006
Statement of Interest and Qualifications	October 6, 2006
Request for Proposal Issue	January 25, 2007
Contract Award	March 30, 2007
Initial Operating Capability	May 15, 2008
Full Operational Capability	October 2008

6. Progress report and Explanation of Variances: Treasury Board granted approval for an initial 82 vehicles with all variants, with a remaining option for additional 26 vehicles and related equipment. A Treasury Board amendment seeking expenditure authority for the option for purchase of additional vehicles, tank transport trailers and personnel Pods was approved in the Fall of 2007.

7. Industrial and Regional Benefits (IRB): An obligation of 100% of the contract value in CCV (Canadian Content Value) as Direct and Indirect IRB transactions needs to be achieved by the OEM (as detailed in the contract) by the end of the Achievement Period i.e., period commencing on Contract Award and ending 6 years following the effective date of the contract.

Armoured Personnel Carriers (APC)

1. Description: The Armoured Personnel Carrier (APC) is essential for all foreseeable Canadian Forces roles, including territorial defence, UN peacekeeping and peace enforcement operations, other international commitments, and Aid of the Civil Power. The existing APC fleet does not meet the minimum operational requirements when compared to the modern, technically sophisticated weapons and vehicles Canadian soldiers encounter during operations. They suffer shortcomings in protection, self-defence capability, mobility, carrying capacity and growth potential. The APC Project is fielding a fleet of modern, wheeled, armoured personnel carriers. 651 Light Armoured Vehicles (LAV) III are to be procured in six configurations: Infantry Section Carrier, Command Post, Engineer, Forward Observation Officer, and TOW (Tube Launched, Optically Tracked, Wire Guided) Under Armour, and LAV III Less Kits.

2. Project Phase: Implementation

3. Leading and Participating Departments and Agencies

Lead Department	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Departments and Agencies	Industry Canada and its regional agencies

4. Prime and Major Sub-Contractors

Prime Contractor

General Dynamics Land Systems - Canada, London, ON

5. Major Milestones

Major Milestones	Date
Treasury Board approval	December 1995
Contract award	December 1996
First vehicle delivery	July 1998
Exercise of first option	July 15, 1998
Exercise of second option	July 15, 1999
Exercise of third option	July 15, 1999
Last vehicle delivery	October 15, 2007
Project completed	March 2011

6. Progress Report and Explanation of Variances: In August 1995, the Government approved in principle the procurement of up to 651 APCs. In January 1997, the Government announced the award of a contract to General Dynamics Land Systems – Canada (GDLS-C) to build 240 new eight-wheel-drive APCs. The contract contained three options for an additional 120, 120 and 171 APCs. All three options have been exercised. All vehicles were delivered by October 2007.

The vehicles are equipped and configured to meet the demands of operational employment at the battle group level by Land Force infantry elements. The APC vehicle will provide a rapid response capability, both strategic and tactical, allowing the Canadian Forces to meet all taskscurrently envisaged.

On March 29, 2004, Treasury Board authorized $129M for indoor accommodation for LAV III to facilitate regular maintenance and training programs, and prevent any deterioration that would result from outdoor storage. Construction will take place in six locations: Edmonton, Wainwright, Petawawa, Montr�al, Valcartier, and Gagetown. Construction activities are wellunder way and are scheduled for completion in early 2011. The project can then close in March 2011.

7. Industrial Benefits: This project includes the following regional and small business achievements:

Region	Cash Benefits
Atlantic Canada	$233.7M
Qu�bec	$181.7M
Western Canada	$391.3M
Small Business	$767.8M
Total	$1,574.5M

Canadian Cryptographic Modernization Program (CCMP) Omnibus Project

1. Description: The Canadian Cryptographic Modernization Program (CCMP) is a 12-year program (fiscal year 2004/2005 to 2015/2016) that will modernize the Government of Canada’s aging cryptographic equipment and infrastructure in order to safeguard classified information and maintain Canada’s ability to establish secure communications both nationally and internationally.

The CCMP Omnibus Project includes the following sub-projects:

a. Secure Voice / Telephone Re-key Infrastructure

b. Secure Voice / Telephone Replacement

c. Classified Security Management Infrastructure

d. Combat Identification Replacement

e. Link Encryption Replacement

f. Network Encryption Replacement

g. Secure Radio Replacement

h. Secure Mobile Environment

2. Project Phase: Definition/Implementation

3. Leading and Participating Departments and Agencies

Lead Department	Communications Security Establishment Canada
Contracting Authority	Public Works & Government Services Canada
Participating Departments & Agencies	Government of Canada departments & agencies using cryptographic equipment to protect classified information

4. Prime and Major Subcontractors

Prime Contractor	N/A
Major Sub-Contractors	Various allied manufacturers of cryptographic equipment

5. Major Milestones

Project / Sub-project Major Milestones	Date
a. Preliminary Project Approval for the CCMP Omnibus Project	March 7, 2005
b. Preliminary Project Approval for a CCMP Omnibus Project sub-project: Classified Security Management Infrastructure	November 2, 2006
c. Secure Voice/Telephone Re-key Infrastructure – Initial Operational Capability	December 21, 2006
d. Secure Voice/Telephone Re-key Infrastructure – Full Operational Capability	June 2009
e. Classified Security Management Infrastructure – Phase 1A Completed	2010
f. Classified Security Management Infrastructure – Phase 1B Completed	2011
g. Network Encyption Replacement – Completed	2011
h. Secure Voice/Telephone Replacement – Completed	2011
i. Secure Mobile Environment – Completed	2012
j. Link Encryption – Completed	2013
k. Classified Security Management Infrastructure – Phase 2 Completed	2014
l. Classified Security Management Infrastructure – Phase 3 Completed	2016
m. Combat Identification Replacement – Completed	2016
n. Secure Radio Replacement – Completed	2016
o. CCMP Omnibus Project – Project Close-out	2016

6. Progress Report and Explanations of Variances

Fiscal year 2007-2008 was the fourth year of this 12-year program.

On March 7, 2005, Treasury Board granted Preliminary Project Approval to the CCMP Omnibus Project at an estimated full-up cost of $839M with expenditure authority for the project definition phases and management of the program at a substantive full-up cost estimate of $80M.

On November 2, 2006, Treasury Board granted Preliminary Project Approval to the Classified Security Management Infrastructure (CSMI) project at an estimated full-up cost of $182M with expenditure authority for the implementation of Phase 1A at a substantive full-up cost estimate of $31M.

On February 22, 2008, the Secretary to the Treasury Board granted expenditure authority for a subsequent phase of the CSMI project; i.e., implementation of Phase 1B at a substantive full-up cost estimate of $12M, and definition of Phase 2 at a substantive full-up cost estimate of $3M.

The CSMI Phase 1A implementation is in progress; Phase 1B definition is complete; and Phase 1B implementation and Phase 2 definition are about to begin.

Link Encryption Replacement is progressing.

The CCMP is currently under-spending relative to initial forecasts. In three instances, PPA approvals have occurred late in the fiscal year, causing spending to lag behind the approved cash flow.

The following completion dates have changed from those recorded in the CCMP Omnibus Project PPA approved on March 7, 2005.

a. Secure Voice Re-key Infrastructure project achieved Initial Operational Capability on schedule in December 2006. The close-out date was recently moved to June 2009 to allow time to incorporate support for a new algorithm.

b. Secure Voice/Telephone Replacement was completed for the majority of Government of Canada departments and agencies by September 2007. The close-out date for this sub-project has been moved to December 2011 to allow time to coordinate the software upgrades that secure phones need in order to transition to a new algorithm.

c. Classified Security Management Infrastructure Phase 1 completion was moved from 2008 to 2011. Phase 1 was divided into Phase 1A and 1B to reduce the complexity of managing the project.

d. Combat Identification Replacement completion was moved from 2010 to 2016 due to changes in the US program schedule.

e. Classified Security Management Infrastructure Phase 2 close-out was moved from 2011 to 2014 due to delays in the US Key Management Infrastructure program.

f. Link Encryption closure will occur ahead of schedule in 2013 instead of 2016, because Phases 1 and 2 have been combined.

g. Secure Mobile Environment is a new crypto family that was added to the CCMP in June 2007.

7. Industrial Benefits N/A

CF18 Modernization Project

1. Description: The CF188 is Canada’s only fighter aircraft. The CF188 fleet, based on 1970s technology, was acquired by Canada in 1982 and had an original Estimated Life Expectancy (ELE) of 2003. The requirement to modernize aircraft systems was recognized at the outset and fleet modernization was originally planned to commence in the early 1990s. DND conducted an airframe structural test program aimed at determining the economic life of the airframe with an objective of extending the airframe life to the 2017-2020 timeframe. In response to documented avionics system deficiencies, the CF188 Modernization project was initiated.

The CF188 Modernization project is composed of 17 different projects. Seven of these projects represent the bulk of the work to be done and are grouped under the CF 188 Incremental Modernization Project (CF 188 IMP). The remaining 10 smaller projects include associated systems such as the Night Vision Imaging System (NVIS), Air Combat Manoeuvring Instrumentation (ACMI), Precision Guided Munitions (PGM), Advance Multi-role Infrared Sensor (AMIRS), and others. To acquire and implement these projects, TB has approved $2.65B full-up cost (GST included).

The seven projects included in CF 188 IMP are divided into two installation and integration phases. Phase I (Engineering Change Proposal 583 (ECP 583)) integrated core avionics that formed the foundation upon which other CF188 IMP projects could be installed and integrated. Phase II of the modernization effort consists of ECP 583 Revision 2 (R2), developed by McDonnell Douglas Corp, a wholly owned subsidiary of Boeing Company, for Canada, and the United States Marine Corps that will procure, install, and integrate the major and most complex systems of Phase II.

2. Project Phase: Implementation

3. Leading and Participating Departments and Agencies:

Lead Department or Agency	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Departments and Agencies	Industry Canada

4. Prime and Major Sub-Contractors:

Phase I and Phase II

Prime Contractor	Boeing/McDonnell Douglas, St Louis, Missouri, USA
Major Sub-Contractors	L3 Canada MAS, Mirabel, Qu�bec, Canada

5. Major Milestones:

Major Milestones	Phase I	Phase II
Treasury Board Effective Project Approval	August 22, 2000	October 25, 2004
Contract - Awarded	March 29, 2001	February 15, 2005
First Aircraft delivery	May 14, 2003	July 10, 2007
Last Aircraft delivery	August 31, 2006	March 2010
Implementation - Project Closed-Out	December 2008	September 2010

6. Progress Report and Explanations of Variances: Phase I of the IMP project received Treasury Board approval on August 22, 2000, with a full up cost of $1,158M (BY) (GST included). The prime contract was awarded to the Boeing Company on March 29, 2001. Engineering Change Proposal 583 procured, installed and integrated the following avionics systems: a new radar, a jam resistant secure communications, a Combined Interrogator / Transponder (CIT), a Stores Management System (SMS) and integrated an Embedded Global Positioning / Inertial Navigation System (EGI). The first Squadron received modernized CF188 aircraft in November 2003. The last of 80 CF188s to be modernized under Phase I was delivered on schedule in August 2006. All Canadian Fighter Squadrons are now flying the modernized aircraft with extremely positive feedback on its state-of-the-art capabilities.

Phase II received TB Effective Project Approval on October 25, 2004 for a substantive cost of $476M (BY) (GST included). The commercial sale contract was awarded to Boeing on February 15, 2005. Three of the subsystems to be installed are being procured via Foreign Military Sales (FMS) with the US Navy (Helmet Mounted Display (HMD), Multi-functional Information Distribution System (MIDS) & ALE-47 Counter Measures Dispensing System) and one is being purchased commercially (Multi-purpose Display Group (MDG)) under a joint program with the Royal Australian Air Force. The following items are also included in the ECP 583R2 Project: Multi-purpose Display Group (MDG), Cockpit Video Recorder (CVR), and the Naval Aircrew Common Ejection Seat (NACES). ECP 583 R2 is now in full implementation. To date a total of 24 of 79 R2 jets have been delivered. The 79th Phase II production aircraft upgrade is scheduled for completion in March 2010. The remaining funds are apportioned to a number of smaller sub projects.

7. Industrial and Regional Benefits:

ECP 583: Industrial and Regional Benefits are equivalent to 75% of the contract value on this project. The Contractor, McDonnell Douglas Corp, a wholly owned subsidiary of Boeing Company, has committed to deliver Industrial and Regional Benefits of $377.9M US. Boeing has currently satisfied $340.7M US of their obligation to the Government of Canada. The remaining $37.2M US will need to be completed by the end of 2008. Boeing has been working with industry in all regions of Canada on this project.

ECP 583 R2 Industrial and Regional Benefits are equivalent to 100% of the contract value on this project. The Contractor, McDonnell Douglas Corp, a wholly owned subsidiary of Boeing Company, has committed to deliver Industrial and Regional Benefits of $137.8M US. They have also committed to a 25% direct requirement. Boeing has currently satisfied approximately $39.6M US of their obligation to the Government of Canada. The remaining $98.2M US will need to be completed by the end of 2012. Canadian industry in the following regions of Canada will benefit from the CF188 Modernization Project.

Region	Benefits Phase I	Benefits Phase II
Atlantic Canada	$5.0M	$0.2M
Qu�bec	$158.0M	$0.9M
Ontario	$152.0M	$38.0M
Western Canada	$25.0M	$0.6M
Unallocated	$37.9M	$98.1M
Total	$377.9M	$137.8M

Canadian Forces Supply System Upgrade (CFSSU)

1. Description: The Canadian Forces Supply System Upgrade (CFSSU) project will meet the future supply requirements of the Canadian Forces during all operational situations while effectively and economically managing the Department of National Defence inventory. The system will have an inherent flexibility to manage changes in force structure, size and all types of missions. The CFSSU project will employ information technology to modernize Canadian Forces military supply operations. Not only will this technology dramatically improve productivity, it will also enhance the capability for performance measurement, greatly increase asset visibility, and provide a powerful management tool for provisioning. Additionally, the new supply system will have a deployed capability. This capability has successfully been installed on three West Coast ships to date. The deployed solution is complementing the existing September 2001 corporate implementation to Bases and Wings, as well as the November 2002 implementation, which include all remaining CFSS users, at home and overseas.

2. Project Phase: Close-Out

3. Leading and Participating Departments and Agencies:

Lead Department or Agency	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Departments and Agencies	Industry Canada and its regional agencies

4. Prime and Major Sub-Contractors:

Prime Contractor	EDS Canada Inc. Ottawa, Ontario, Canada
Major Sub-Contractors	Mincom Pty. Ltd. Brisbane, Australia ADGA Group Ottawa, Ontario, Canada

5. Major Milestones:

Major Milestones	Date
Contract Award	January 1995
Initial Site Installation	December 1995
Warehouse Management Information System Delivery	July 1997
Test Development Centre Delivery	October 1999
Commence System Development	November 1999
Complete System Development	March 2001
Commence System Pilot	June 18, 2001
Complete System Pilot	August 1, 2001
Commence System Rollout	September 2001
Complete System Rollout (Official Acceptance)	June 13, 2003
projectClose-out (E Status)	September 21, 2004
projectClose-out (I Status)	Fall 2008

6. Progress Report and Explanations of Variances: Treasury Board initially approved the CFSSU project with an estimated cost of $289.3M. The Treasury Board approved in April 2000, the de-scoping of certain functionality and an increase to project contingency funding of $9.8M. In addition, $5M was approved in order to permit DND the option of restoring the Distribution Resource Planning (DRP) component. The Implementation Phase of DRP was de-scoped and the project budget remained at $304.1M.

The CFSSU Project has been transferred from implementation to Close-out in September 2004. Close-out funding is $3.6M. On March 9, 2006, DND Program Management Board approved the usage of Close-out funds for the project; these funds are to be used until fully expended or the work is completed.

The CFSSU project is to be completed by Fall 2008.

7. Industrial and Regional Benefits:

Region	Benefits
Atlantic Canada	$51M
Qu�bec	$48M
Ontario	$26M
Western Canada	$105M
Unallocated	$10M
Total	$240M

Canadian Forces Utility Tactical Transport Helicopter (CFUTTH) Project

1. Description: The purpose of the Canadian Forces Utility Tactical Transport Helicopter (CFUTTH) Project is to acquire helicopters in support of national and international tactical aviation roles. The project supports the Land Force, Air Force, Deputy Chief of Defence Staff (DCDS) operations and Civil Emergency Preparedness, as well as a wide range of defence objectives. It replaces three aging helicopter fleets – the CH118 Iroquois, the CH135 Twin Huey and the CH136 Kiowa. The Bell 412CF/CH146 was procured as a single role multi-mission helicopter capable of supporting a majority of the tasks previously undertaken by fleets it replaced. The operational requirements for the CFUTTH defined the principle task requirements of the CFUTTH to include the tactical lift of troops and equipment, logistical lift, reconnaissance and surveillance, direction and control of fire, aero-medical support and casualty evacuation, command and liaison, and communications assistance. These mission capabilities are employed in support of DND operational commitments, United Nations peacekeeping missions, and support to other Government Departments and Agencies, including Aid of the Civil Power.

The project has delivered 100 Bell 412CF/CH146 Griffons, a flight simulator, composite maintenance trainer, facilities, mission kits (including defence electronic warfare suites), as well as other equipment, documentation and services.

2. Project Phase: Implementation

3. Lead and Participating Departments and Agencies

Lead Department	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Department	Industry Canada and its regional agencies

4. Prime and Major Sub-Contractors

Prime Contractor	Bell Helicopter Textron Canada, Mirabel, QC
Major Sub-Contractors	Pratt & Whitney Canada, Montr�al, QC BAE Systems Canada Inc., Montr�al, QC CAE Ltd., Montr�al, QC

5. Major Milestones

Major Milestones	Date
Contract Award	September 9, 1992
Critical Design Review	April 21, 1993
First Helicopter Delivery	March 21, 1995
Simulator Acceptance	June 1996
Last Helicopter Delivery	December 24, 1997
Project Completion	November 2009

6. Progress Report and Explanation of Variances: This project receivedCabinet approval on April 7, 1992 and Treasury Board approval on September 8, 1992, with an original budget of $1.293B. Following directed reductions to the project budget and by assuming certain performance risks, the project will be completed in November 2009 for approximately $200M less than the initial Treasury Board budget approval. Remaining work consists of modifying the CH146 to accommodate the Radar Laser Warning Receiver (RLWR) functionality as well as the implementation of the Single-Channel Ground and Airborne Radio System (SINCGARS) capability.

7. Industrial Benefits: To date, Bell Helicopter has claimed $289.5M direct and $252.1M indirect industrial regional benefits, totalling $541.6M, representing 107% of the overall commitment. Bell Helicopter Textron Canada has committed to achieving $506.7M in Canadian value-added industrial regional benefits as follows:

Region	Cash Benefits
East	$10.0M
Qu�bec	$420.2M
Ontario	$32.1M
West	$12.0M
Unallocated	$32.4M
Total	$506.7M

Canadian Search and Rescue Helicopter Project

1. Description: Maintaining a national search and rescue capability is a direct departmental objective. The purpose of the Canadian Search and Rescue Helicopter (CSH) project was to replace the CH-113 Labradors with a fleet of 15 new helicopters. The new helicopters address the operational deficiencies of the CH-113 Labrador fleet, eliminate the supportability difficulties of these older airframes, and given expected aircraft availability rates provide a fleet size sufficient for continuous operations well into the 21^st century.

2. Project Phase: Completed

3. Leading and Participating Departments and Agencies

Lead Department	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Department	Industry Canada and its regional agencies

4. Prime and Major Sub-Contractors

Prime Contractor	Agusta Westland International Limited (formerly E.H. Industries Ltd. (EHI)),Farnborough, United Kingdom
Major Sub-Contractors	GKN Westland Helicopters, United Kingdom Agusta Spa, Italy General Electric Canada Inc., Canada

5. Major Milestones

Major Milestones	Date
Treasury Board Effective Project Approval	April 2, 1998
Contract Award	April 6, 1998
First Aircraft Delivery (at plant in Italy)	September 29, 2001
Final Aircraft Delivery (at plant in Italy)	July 3, 2003
Project Completion (Effective Project Completion)	September 15, 2004

6. Progress Report and Explanation of Variances: Treasury Board (TB) granted original Preliminary Project Approval on February 8, 1996, providing Expenditure Authority for $3.3M for Definition Phase activities and approval-in-principle for $704.2M. An amendment to the Preliminary Project Approval was granted on April 24, 1997, providing Expenditure Authority for $6.4M for total Definition Phase activities and approval-in-principle for $708.2M.

Treasury Board provided Effective Project Approval on April 2, 1998 including Expenditure Authority for $788.0M (BY) net of GST, which included Definition funding expenditures of $6.4M.

On April 6, 1998, E.H. Industries (EHI) Limited (renamed AgustaWestland International Ltd (AWIL)) was contracted to supply 15 AW511 Cormorant search and rescue helicopters, along with initial logistics support to the Canadian Forces. The initial support package includes training, publications, warranty, a repair and overhaul program providing coverage until October 2004, and software support until 2006.

The project has procured the required aircraft spares, maintenance and support equipment, a Cockpit Procedures Trainer and facilities for the four Canadian Forces search and rescue bases. The project has also established and funded the first two years of an in-service support contractor for follow-on support.

As of July 2003, all 15 Cormorant helicopters have been delivered. Spare parts and infrastructure are in place to support operations. Initial training is complete. The Cormorant have been operational at the squadrons in Comox, BC, Gander, NF, Greenwood, NS and Trenton, ON. However, CH149 operations at 424 Squadron in Trenton have been suspended temporarily due to the lack of aircraft availability and difficulty to maintain adequate aircrew training.

It should be noted that although Effective Project Closure was achieved on the September 15, 2004, work is still ongoing and will remain so for many years to come. The Major Milestones still outstanding are tied to a three year Technical Publication Revision Service which is not expected to begin until fiscal2008-2009, and a number of milestones related to outstanding aircraft deficiencies which are expected to take at least three years to address.

7. Industrial and Regional Benefits: The contractor (AWIL) committed to providing direct and indirect industrial benefits valued at $629.8M, within eight years from the date of contract award. It is estimated that these benefits created or sustained roughly 5,000 person-years of employment in Canada, and that all regions of Canada benefited from this project. The contractor has completed its obligations to Canada in regard to Industrial and Regional Benefits under the CSH contract. Small businesses in Canada will also benefit from the project by the placing of $67.0M in orders.

Region	Cash Benefits
Atlantic Canada	$43.1M
Qu�bec	$317.7M
Ontario	$146.5M
Western Canada	$86.2M
Unallocated	$36.3M
Total	$629.8M

HALIFAX Class Modernization/Frigate Equipment Life Extension (HCM/FELEX)

1. Description: The HCM/FELEX project is the principal component of the overall HALIFAX Class modernization (HCM) initiative. The project will plan and manage HALIFAX Class mid-life refits, acquire the major elements of the new combat system, and deliver stability enhancements, degaussing improvements and a Commander Task Group capability in four ships. As the Design Integration Authority for the HCM, PM HCM/FELEX is responsible for the ship level design integration of all elements of the HCM including any unique/specific engineering changes required to address integration requirements. To ensure that the overall modernization initiative is achieved in a timely, efficient and coordinated manner, the HCM/FELEX project will conduct overall design integration, coordinate schedules, manage inter-project risk, and manage equipment installation during the mid-life refits. Major equipment acquisitions through HCM/FELEX will include a modernized Command and Control System, Multi-Link, Identification Friend or Foe Mode S/5, upgrades to the radars, new Electronic Support Measures System, upgrades to the Internal Communications system, and an upgraded Harpoon Weapon System. These acquisitions will both sustain current capability and contribute to the new littoral operations role of the HALIFAX Class.

Implementation of the HCM/FELEX project will occur through three principal contracts: two Multiship Contracts (MSC) for docking work periods/refits and one Combat System Integration (CSI) contract to develop, procure and install the majority of the combat system elements of the project.

2. Project Phase: Definition/Implementation

3. Leading and Participating Departments and Agencies

Lead Department	Department of National Defence
Contracting Authority	Public Works & Government Services Canada
Participating Departments and Agencies	Industry Canada and its regional agencies

4. Prime and Major Sub-Contractors

In-Service Support Contractor (Class Design Agent)	Fleetway Incorporated, Halifax, NS, Canada
Internal Communications System	DRS Flight Safety, Kanata, ON, Canada
Multi-Ship Contract (East)	Halifax Shipyard, Halifax, NS, Canada
Multi-Ship Contract (West)	Victoria Shipyard, Victoria, BC, Canada

5. Major Milestones

Major Milestones	Date
Preliminary Project Approval (PPA) Approval	February 28, 2005 (FELEX) February 2007 (HCM/FELEX)
Refit Procurement Strategy Approval by TB	March 2007
Revised Preliminary Project Approval (Part 1)	June 7, 2007
Multi-Ship Contracts (MSC) Awarded (Docking Work Periods & Refits)	March 17, 2008 (West) March 31, 2008 (East)
Effective Project Approval (EPA) Approval (Part 2)	October 2008
Combat System Integration Contract Award	November 2008
Refits Begin	October 2010
Refits Completed	June 2017
Project Closure	March 2018

6. Progress Report and Explanation of Variances: Treasury Board approved the consolidation of the five projects listed above into the HALIFAX Class Modernization/Frigate Life Extension Project and provided Expenditure Authority for Part 1 (the Non-CSI component) of the implementation at a substantive full-up cost estimate, including GST, of $822.6M (BY) on June 7, 2007.

After providing industry with detailed insight into the project’s combat systems integration (CSI) requirements and technical documentation, three qualified contractors were selected through a Solicitation of Interest Qualification process. All three contractors attested, in writing, that they could deliver the design/build/installation and set-to-work of all twelve CSI systems, including the upgrade of all system trainers and delivery of a complete Integrated Logistics Package at a firm fixed price of $1,100M.

The Project is presently in its definition phase. Design integration work is continuing, the Combat System Integration Performance Specification is being finalized, and the CSI Request for Proposal documentation was released in February 2008. Documentation is being finalized for an October 2008 submission to Treasury Board seeking Effective Project Approval and Expenditure Authority for Part 2, the CSI component of the project, at a full-up cost estimate, including GST, of $2,242M (BY). Total full-up project cost, including GST, is $3,108.4M (BY). The HCM/FELEX project is currently within budget.

A Request for Proposal for the Multi-Ship Contracts (docking work periods and refits) resulted in two successful bidders, Halifax Shipyard on the east coast and Washington Marine Group (Victoria Shipyard) on the west coast. Final negotiations with both shipyards have been completed and contracts awarded.

7. Industrial Benefits: The HCM/FELEX input into the long-term Multi-Ship refit contracts will provide approximately, including GST, $273M (BY) in industrial benefits to east and west coast shipyards. These contracts will provide continuous workflow and thus sustainment of a skilled ship repair work force through most of the next decade. The CSI component of the project will provide approximately $1,100M in industrial benefits to the combat system industry through the next 10 years.

Intelligence Surveillance, Target Acquisition and Reconnaissance (ISTAR)

1. Description: The purpose of this project is to develop, deliver and evolve an integrated, interoperable, ISTAR capability that will improve the ability of commanders to visualize the operational area, manage sensors and information collection resources, and to plan and implement actions to successfully complete operational missions. The project will provide enhancements to existing capabilities and include the acquisition of new capabilities in the areas of communications, command and control and sensors. The project includes the acquisition of Unmanned Aerial Vehicles (UAV), Weapon Locating Sensors (WLS) and transformation or enhancement of existing sensor platforms to include Electronic Warfare (EW), Light Armoured Vehicle III, Coyote Reconnaissance Vehicle, Ground Based Air Defence, Geomatic support and Tactical Meteorology Systems. ISTAR is an omnibus project that received Treasury Board approval for definition phase activity on April 3, 2003. Implementation through sub-projects is anticipated upon completion of the definition activities. Although initial delivery of equipment was estimated to occur sometime in fiscal 2005-2006, the Unforecasted Operational Requirement (UOR) for an UAV and other sensor upgrades has resulted in the delivery of a partial tactical UAV and EW capability in Afghanistan in 2003-2004. Early deliveries of ISTAR capabilities for Op ARCHER UORs will continue during 2008 and the first sub-projects will be achieving Full Operational Capability (FOC) and will close in 2008.

2. Project Phase: Implementation

3. Leading and Participating Departments and Agencies

Lead Department	Department of National Defence
Contracting Authority	Public Works & Government Services Canada
Participating Department	Industry Canada and its regional agencies

4. Prime and Major Sub-Contractors

Prime Contractor for the UAV UOR Op ATHENA sub-project	Oerlikon Contraves Inc., Saint-Jean, QC
Major Sub-Contractor for the UAV UOR Op ATHENA sub-project	SAGEM SA, France
Prime Contractor for Beyond Line of Sight Satellite (BLOS) UOR Op ARCHER	ND Satcom, Germany
Prime Contractors for Mobile Electronic Warfare Team (MEWT) UOR Op ARCHER	Agilent Technologies, Ottawa, ON Digital Receiver Technology Inc, Maryland USA Signal Technology Associates Inc., Kanata, ON Xwave, Stittsville, Ontario
Prime Contractor for Mini UAV UOR Op ARCHER	Thales Canada, Ottawa, ON
Major Sub-contractor for the Mini UAV UOR Op ARCHER	Elbit Systems, Israel
Prime Contractor for Acoustic Weapon Locating System (AWLS) Op ARCHER	SELEX Sensors & Airborne Systems Ltd, Basildon Essex, United Kingdom
Type 1 Radios Data Link Communication (DLC) project - Foreign Military Sales (FMS)	US Army, USA
Light Weight Counter Mortar Radars (LCMR) – Foreign Military Sales (FMS)	US Army, USA

5. Major Milestones

Major Milestones	Date
Treasury Board Preliminary Project Approval	April 3, 2003
MND Approval UAV UOR	July 24, 2003
Treasury Board Project Approval in Arrears UAV UOR Full Operational Capability Close-out	August 2005 April 25, 2008 February 2009
Communications & Data Link Component Treasury Board Effective Project Approval Initial Operational Capability	December 7, 2006 October 2008
Command and Control (C2) Treasury Board Effective Project Approval Initial Operational Capability	February 28, 2008 March 2009
EW Sensors Treasury Board Effective Project Approval Phase 1Amendment 1 (AL 1)Initial Operational Capability	November 11, 2005 February 28, 2008 March 28, 2008
In Service Sensors Enhancement Treasury Board Effective Project Approval	March 2009
Medium Range Radar Treasury Board Effective Project Approval	March 2009
WLS Acoustic SensorInitial Operation Capability (IOC)Full Operational Capability	November 11, 2005 March 3, 2007 September 2008
Family of Mini UAV Treasury Board Effective Project Approval (UOR)Family of Mini UAV Treasury Board Effective Project Approval AL 1	November 11, 2005 March 2009
Light Weight Counter Mortar Radar Effective Project ApprovalInitial Operation Capability (IOC)Full Operational Capability (FOC)	March 29, 2007 March 28, 2007 December 2009
Deliveries Complete all ISTAR sub-projects	September 2013
Project Completion	March 2014

6. Progress Report and Explanations of Variances: Given the ISTAR project staffs are still managing the UOR procurement for Op ATHENA and Op ARCHER and that the approval process is taking longer than forecasted it is expected that the project will be completed on the original schedule. Although, there is as much as a year’s delay in achieving some of the ISTAR project approval, delivery after effective approval are either on schedule or ahead of schedule. ISTAR initial operational capabilities have been procured and the overall project is expected to complete on the original schedule.

Delivery of equipment actually started with UORs in Op ATHENA, and final deliveries are scheduled out to 2013. The currently approved sub-projects in support of Op Athena and Op ARCHER are:

a. UAV UOR Op ATHENA

b. BLOS Op ARCHER

c. MEWT Op ARCHER

d. Mini UAV UOR Op ARCHER

e. AWLS Op ARCHER

f. LCMR Op ATHENA

In addition the Data Link Communications project received TB approval in December 2006 and PWGSC received TB contract approval for radios February 22, 2007. The FMS cases for 1300 radios has been accepted and initialdelivery of equipment is anticipated for March 2008. Some of this equipment is needed for Op ATHENA. On February 28, 2008, TB approved the ISTAR Electronic Warfare and Command and Control sub-projects. Implementation has now started.

7. Industrial Benefits: A competitive procurement process was held for the UAV UOR. Oerlikon Contraves won with Sagem SA as the manufacturer of the SPERWER UAV system. How Canadian industry in Canada will benefit from the ISTAR project will be determined during the approval of the implementation procurement strategy for each sub-project.

Joint Support Ship (JSS)

1. Description: The JSS is a Major Crown Project which will maintain the Canadian Navy’s current naval task group logistic support, while ensuring that the Canadian Forces has an adequate, assured strategic sealift capability to allow it to deploy and sustain operations in support of government policy and enhancing Canada's capability for joint command and control of forces ashore. This will be accomplished by awarding two separate contracts to one contractor for the design and construction in Canada of three vessels and another for In-Service Support of the units throughout their operational life. The ships will replace the two ageing Protecteur class support ships currently in service on the east and west coast.

2. Project Phase: Definition

3. Leading and Participating Departments and Agencies:

Lead Department or Agency	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Departments and Agencies	Industry Canada and the regional agencies

4. Prime and Major Sub-Contractors: No prime contractor has been selected. Final selection of the prime contractor will occur at Effective Project Approval, currently planned for 2008.

5. Major Milestones:

Major Milestones	Date
Memorandum to Cabinet	April 14, 2004
Treasury Board Preliminary Project Approval - (SS-PPA)	November 22, 2004
Invitation for Bids Posted on MERX	June 27, 2006
Project Definition – Contract Award	December 1, 2006
Treasury Board Effective Project Approval - (SS-EPA) – Approval	To be determined
Project Implementation - Contract Award	To be determined
First Delivery	2012
Initial Operational Capability (IOC)	2013
Full Operational Capability (FOC)	2016
Project Close-out	2016

6. Progress Report and Explanations of Variances: The project continues to progress steadily since obtaining Preliminary Project Approval in November 2004. The Minister of Public Works and Government Services Canada (PWGSC) awarded two Project Definition contracts on December 1, 2006. Treasury Board granted expenditure authority of $72.2M, full up including GST, for the pre-qualification and definition phases. Treasury Board also acknowledged the indicative full up cost of $2,012.9M ($BY), including GST, for implementation. The total full up indicative cost including GST, for implementation is now $2.1B($BY). This new cost figure reflects an increase of $16M to accommodate the recently announced acquisition of the Main Battle Tanks, and $44M that will be funded out of the current departmental program to assist in closing the Systems Requirements Document (SRD) affordability gap.

Light Utility Vehicle Wheeled (LUVW)

1. Description: Light utility vehicles are highly mobile and essential to facilitating the tactical command of combat, combat support and combat service support units, to assist in the gathering and dissemination of information and to liaise within and between field formations.

The LUVW Project mandate is to replace Canadian Iltis vehicles with two separate vehicle acquisitions: 1,159 Standard Military Pattern (SMP) vehicles (Mercedes Benz G Wagon) with integrated logistic support and 170 Armour Protection Systems ($241.4M), for use by field force units; and 1,061 Militarized Commercial Off-The-Shelf (Mil COTS) vehicles (GM Silverado) ($65.4M) for use primarily by the Reserve Force for a total project cost of $306.8M.

2. Project Phase: Implementation

3. Leading and Participating Departments and Agencies

Lead Department	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Department	Industry Canada and its regional agencies

4. Prime and Major Sub-Contractors

Prime Contractor (Phase 1) SMP	Mercedes Benz Canada, Toronto ON
Prime Contractor (Phase 2) Mil-COTS	General Motors Defense Military Trucks, Troy, Michigan, USA

5. Major Milestones

Major Milestones	Date
Major Milestone (Phase 1) SMP
Award of Contract	October 28, 2003
First Full Production Delivery	February 2004
Final Production Delivery	November 2006
Effective Project Completion	December 2008

Major Milestone (Phase 2) Mil COTS
Award of Contract	October 2002
First Full Production Delivery	October 2003
Final Production Delivery	December 2004
Effective Project Completion	December 2008

6. Progress Report and Explanation of Variances:Project is in full implementation. The LUVW SMP (G-Wagon) contract was awarded to Mercedes Benz Canada (MBC) on October 28, 2003. Fielding of the G Wagon started in February 2004, five months ahead of schedule. A total of 60 basic and 24 C&R/MP (20 Command & Reconnaissance and 4 Military Police) LUVW G-Wagons were delivered directly from the manufacturer’s plant in Graz, Austria to Kabul. In 2005 and early 2006, an additional 86 G-Wagons were delivered to Kandahar. Delivery of all armour kits was completed in December 2005 and delivery of the total quantity of 1,159 vehicles was completed in November 2006.

The LUVW Mil COTS contract was awarded to General Motors in October 2002 with the first vehicle delivery received in October 2003. All 1,061 vehicles have been delivered as of December 2004.

There were options on both the LUVW SMP and Mil COTS contracts; however, they have both been exercised and the option quantities are already reflected in the quantities detailed above.

The level of confidence in the G-Wagon is generally high. User feedback from Op ATHENA/Op ARCHER on the G-Wagon has been positive. That said, there have been problems of body cracks in the fleet, particularly those vehicles operating in harsher environments such as Afghanistan. The Project Management Office (PMO) has been working with Mercedes-Benz Canada to resolve these issues.

All 170 vehicles sent to Afghanistan have been returned to Canada except for 38 which remain in Afghanistan. The vehicles returned to Canada are awaiting repair at MBC facilities in both Toronto and Montr�al. To date, MBC has repaired only 14 of these vehicles, and the PMO is working with MBC to increase output. There are also 40 domestic damaged vehicles in Montr�al awaiting line repair.

The project was reduced to a staff of three in July 2007. This drawdown in staff was found to be too severe given the challenges of fielding the fleet directly to Afghanistan and the optional purchase of 357 additional G-Wagons. Consequently, there have been delays to the contracting and delivery of the special tools and test equipment and the project has been extended to December 2008. Full Operational Capability will be declared after delivery of the Special Tools and Test Equipment (STTE). This is estimated to take place between June and September 2009, followed by effective project close-out in December 2009.

The remaining high cost items include the delivery of Integrated Logistics Support manuals and STTE. The PMO will also work with PWGSC to migrate the Interim Support Contract (ISC) into a Long Term Support Contract (LTSC). The Procurement Plan for the LTSC has been approved and the draft Request for Proposal (RFP) for the LTSC is being staffed though PWGSC approval process. It is expected that that the LTSC will be awarded in November 2008.

7. Industrial Benefits: The industrial benefits are required for Phase 1 for a value 100% of the contract value. Latest report from Industry Canada indicates that Mercedes Benz Canada has exceeded the industrial regional benefit goals by $300M. There are no mandated industrial benefits for the Mil COTS contract. Industry Canada is working with MBC to identify regional components of the Industrial and Regional Benefits (IRBs) program under the Initial Support Contract (ISC). There will be an IRB requirement in the LTSC in the amount of 100% of the contract value.

Main Battle Tank

1. Description: The purpose of the Tank Replacement Project is to replace Canada's aging Leopard C2 tank fleet with a modern, heavily protected, mobile, direct fire support capability. The Tank Replacement Project is broken into two phases. Phase 1 consists of the loan of 20 Leopard 2 A6M Main Battle Tanks (MBT), two Armoured Recovery Vehicles (ARV) and logistics support from the German Government for immediate deployment to Afghanistan, as well as the purchase of up to 100 surplus Leopard 2 MBT from the Netherlands Government. Phase 2 will upgrade and introduce up to 100 Leopard 2 tanks and variants into service with the CF.

The project received Treasury Board (TB) approval for Phase 1 March 29, 2007 and will return to TB to seek Effective Project Approval (EPA) for Phase 2. The project is capped at $650M.

2. Project Phase: Implementation

3. Leading and Participating Departments and Agencies:

Lead Department or Agency	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Departments and Agencies	Industry Canada and its regional agencies

4. Prime and Major Sub-Contractors:

Prime Contractor for ARV upgrades Phase 1	Rheinmetall Land Systeme (RLS), Germany
Prime Contractor for MBT upgradesPhase 1	Krauss Maffei Wegmann (KMW), Germany
Prime Contractor for loaned tanks	German Government
Prime Contractor for tank purchase	Netherlands Government

5. Major Milestones:

Major Milestones	Date
Senior Project Advisory Committee – Procurement Strategy Endorsed	March 15, 2007
Memorandum to Cabinet	March 26, 2007
Treasury Board - Preliminary Project Approval (PPA)	March 29, 2007
Phase 1 – Memorandum of Understanding with German MoD Signed for Loan	May 16, 2007
Phase 1 - Contract to KMW for upgrades to Loaned tanks	May 30, 2007
Phase 1 - Contract to RLS for upgrades to Loaned tanks	May 30, 2007
Initial Operational Capability – (Phase 1)	August 28, 2007
Phase 1 - Acquisition of tanks from Dutch Government	December 14, 2007
Senior Project Advisory Committee – Phase 2 Procurement Strategy Endorsed	Fall 2008
Statement of Operational Requirements Approval	To be determined
Treasury Board - Effective Project Approval (EPA)	Mid 2009
Full Operational Capability – (Phase 2)	2013+
Project Closed-Out	2013+

6. Progress Report and Explanations of Variances: The imperative to get the loaned tanks upgraded and sent into Afghanistan to meet the July 2007 Initial Operational Capability (IOC) date required some trade-offs. The additional time to develop and implement a new passive armour solution was unacceptable, and as a result, the Leopard 2 A6M tank squadron deployed with new slat armour.

Mine ploughs/mine rollers and dozers will not be available on the loaned tanks. Therefore some Leopard 1 C2 will remain in theatre.

The work in support of the EPA submission has been initiated. A Letter of Interest has been sent to industry to announce the broad objectives of the Project. Industry has responded with interest. The six-month DND in-house technical study is complete. The Leopard 2 tank capability and gaps in the required performance have been identified. The team is working on the Statement of Work (SOW) that will identify the core and optional deliverables. The SOW will be sent to industry in the form of a Price and Availability request that will be used to develop the substantive costs and schedule information.

7. Industrial and Regional Benefits (IRB): No IRBs are required for Phase 1. The industrial benefits for Phase 2 will be determined as part of the EPA process. The procurement strategy will be determined following clarification of Intellectual Property (IP) rights issues and the resultant risks and restrictions for Canadian industry.

Maritime Helicopter Project (MHP)

1. Description: The purpose of this project is to replace the CH124 Sea King with a fleet of 28 new fully equipped Maritime Helicopters bundled with a long-term In-Service Support contract and the modification of the HALIFAX class ships to accommodate the new Maritime Helicopters. This replacement will address the operational deficiencies of the current CH124, eliminate the supportability difficulties of the older helicopter, and provide a sufficient fleet size of multi-purpose shipborne Maritime Helicopters for operations well into the 21st century.

2. Project Phase: Implementation

3. Leading and Participating Departments and Agencies:

Lead Department or Agency	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Departments and Agencies	Industry Canada and its regional agencies

4. Prime and Major Sub-Contractors:

Prime Contractor	Sikorsky International Operations Incorporated,Stratford, Connecticut, USA
Sub-Contractors	General Dynamics Canada, Ottawa, OntarioL-3 MAS Canada, Mirabel, Qu�bec

5. Major Milestones:

Major Milestones	Date
Preliminary Project Approval (PPA)	June 18, 2003
Invitations for Bids Posted on MERX	December 16, 2003
Synopsis Sheet (Effective Project Approval) SS (EPA)	November 22, 2004
Contract Award	November 23, 2004
First Delivery	January 2009 (under discussion)
Initial Operational Capability (IOC)	January 2010 (under discussion)
Full Operational Capability (FOC)	February 2011 (under discussion)
Project Close-out	2013

6. Progress Report and Explanations of Variances: In November 2007, the project marked the three-year milestone in the implementation phase. The project focus is now shifting from design and engineering to aircraft manufacturing and assembly followed by flight tests and delivery of the aircrafts. In November 2007, the prime contractor notified the government of a delay in the planned delivery date for the integrated Maritime Helicopter. Government representatives are currently conducting a detailed review of all aspects of the contractor's schedule to determine how to minimize the impact of these delays and to ensure that they will not affect the key performance and airworthiness requirements of the Canadian Forces. Other components of the project such as construction of the Training Centre building in Shearwater, NS, and ship modification work on HMCS Montr�al have progressed well and are on schedule. The project is currently running within its authorized budget.

7. Industrial Benefits: The Industrial Regional Benefits is equivalent to 100% of the contract value for the capital acquisition and more than 80% of the contract value for the In-Service Support.

Region	Capital Acquisition	In-Service Support
Atlantic Canada	$239.1M	$825.9M
Qu�bec	$555.8M	$399.2M
Northern Ontario	$3.2M	$7.6M
Ontario (excluding Northern Ontario)	$924.3M	$1,073.2M
Western Canada	$210.6M	$181.4M
Unallocated	$10.0M	$105.7M
Total	$1,943.0M	$2,593.0M

Material Acquisition and Support Information System (MASIS)

1. Description: The mission of the Material Acquisition and Support Information System (MASIS) project is to provide a Department of National Defence (DND) integrated materiel acquisition and support information system that enables the cost-effective optimization of weapon/equipment system availability throughout the life cycle. The scope of MASIS includes all end-to-end information requirements within DND/CF related to the materiel acquisition and support functions which are comprised of systems engineering, integrated logistics support (ILS), equipment configuration, technical data management, asset management, maintenance management, project management, performance management, operational support, business management, decision support analysis and contract management.

2. Project Phase: Implementation – Phase 5

3. Leading and Participating Departments and Agencies

Lead Department or Agency	National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Departments and Agencies	N/A

4. Prime and Major Sub-Contractors

Prime Contractor	IBM Canada, Ottawa, Ontario
Major Sub-Contractors	SAP Canada, Ottawa, Ontario Pennant Ottawa, Ontario, Canada

5. Major Milestones

The project follows the standard departmental project management framework, with a phased approach implemented by a fully Integrated Project Team consisting of personnel from the Contractor, DND and PWGSC.

Major Milestones	Date
Definition Phase
Preliminary Project Approval - Expenditure Authority for Phase 1	June 10, 1998
Contract Awarded for Prime Systems Integrator	December 14, 1998
MASIS system - Go Live Phase 1 (202 Work Depot Montr�al)	September 1, 1999
Implementation Phase
Expenditure Authority (EPA) for Phases 2 and 3:a. Implementation of Complex Contracts;b. Implementation of the MASIS solution to the Navy;c. Operations Support & Maintenance for MASIS;d. Planning and scoping for requirements scheduled to be implemented for the Army.	June 15, 2000
Amended Expenditure Authority (EPA) for Phase 4:a. Investigation of opportunities to progress the implementation of MASIS to the maximum extent possible within the future available Phase 5 funding;b. Management of Operations Support & Maintenance for MASIS (outside MASIS project Expenditure Authority);c. Project was deemed as a Major Crown Project with this approval.	December 2003
Amended Expenditure Authority (EPA) for Phase 5 to cover rollout of additional functionality to wider user base including Air Force and Army.	June 13, 2007
Project Close-out	2012

6. Progress Report and Explanations of Variances: Following Definition phase approval, EPA for MASIS was granted to DND in June 2000 in the amount of $147.8M. This authority provided the project the means to cover the work under Phases 1 to 3, which have been completed.

The project follows a cyclical approval and delivery methodology. In December 2003, an additional $34.4M was approved to fund Phase 4 of the project, which has been completed. On June 13, 2007, the MASIS project received Treasury Board approval in the amount of $170M for Phase 5. Planned completion of project is within the 2012 timeframe.

7. Industrial Benefits: All industrial benefits are attributed to Ontario since all project expenditures occur in Ontario.

Medium To Heavy Lift Helicopter (MHLH)

1. Description: Over the last decade, the ability to move personnel and equipment by air has become a vital and growing capability requirement for the Canadian Forces in fulfilling a wide range of roles. Canadian Forces operational experience, particularly in current operational theatres, has highlighted the urgent need for medium to heavy lift helicopters to support land, amphibious and special operations forces in a threat environment by quickly, efficiently and safely moving large numbers of personnel and heavy equipment from forward deployed bases, thus reducing their vulnerability to attack. Both at home and overseas, medium to heavy lift helicopters will provide the Government with a wider range of military options for addressing threats and emergencies than the Canadian Forces’ current helicopter fleets.

The Medium to Heavy Lift Helicopter project will deliver the medium to heavy lift helicopter capability to support land-based domestic and international operations and support Army Training on the road to high readiness. The project will acquire a minimum of 16 helicopters, integrated logistic support and other related support elements.

2. Project Phase: Definition

3. Leading and Participating Departments and Agencies:

Lead Department or Agency	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Departments and Agencies	Industry Canada and its regional agencies

4. Prime and Major Sub-Contractors:

Prime Contractor

The Boeing Company, Philadelphia, Pennsylvania, USA

5. Major Milestones:

Major Milestones	Date
Memorandum to Cabinet	June 2006
Synopsis Sheet Preliminary Project Approval (PPA)	June 22, 2006
Advanced Contract Award Notice Posted on MERX	July 5, 2006
Synopsis Sheet Effective Project Approval and Contract Award	Fall 2008
First ACAN Compliant Aircraft	Fall 2011
First MHLH	Fall 2012
Initial Operational Capability (IOC)	Fall 2013
Full Operational Capability (FOC)	Fall 2015
Project Close-out	Winter 2015/2016

6. Progress Report and Explanation of Variances: The phased contracting approach that was previously considered was deemed unnecessary owing to technical risk mitigation activities that occurred throughout the Fall of 2007.

On March 11, 2008, a Request for Proposal was released to the Boeing Company. A proposal was received on July 21, 2008.

7. Industrial Benefits: This procurement will provide Industrial Regional Benefits equivalent to 100% of the contracted value for both the capital acquisition and integrated in-service support. For the integrated in-service support portion, 75% of the contract value will be direct work performed by a Canadian company. The selected contractor will be required to identify, as specific work packages, 60% of the total acquisition commitment. These industrial and regional benefits requirements will be negotiated and accepted by Industry Canada prior to contract signing.

Medium Support Vehicle System Project (MSVS)

1. Description:The Medium Support Vehicle System Project is a capability replacement project for the existing Medium Logistics Vehicle Wheeled (MLVW) fleet that has reached the end of its service life due to age, heavy usage and corrosion. The MSVS project will cost approximately $1.1B (net of GST) and will deliver the following mix of vehicles:

medium-sized Standard Military Pattern (SMP) trucks: - Up to 1,500 trucks, with options for an additional 650; - Up to 150 integrated armour protection systems, with options for an additional 150, and - Up to 300 companion military pattern trailers, with options for an additional 240.
medium-sized Militarized Commercial Off-the-Shelf (MiLCOTS) vehicles: - Up to 800 commercial trucks with militarized components, with options for an additional 500.
specially Equipped Vehicles (SEV) Kits: - Up to 1,000 special equipment vehicle kits, with options for an additional 150.

2. Project Phase: Definition

3. Leading and Participating Departments and Agencies:

Lead Department or Agency	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Departments and Agencies	Industry Canada and its regional agencies

4. Prime and Major Sub-Contractors: One prime contractor will be selected for each project component. Final selection of the prime contractors will occur through Effective Project Approvals (EPAs) in two phases: Phase 1 for MilCOTS and SEV Baseline Shelter; and Phase 2 for SMP and SEV Kitting.

5. Major Milestones:

Major Milestones	Date
Memorandum to Cabinet	June 22, 2006
Preliminary Project Approval (PPA)	June 22, 2006
Invitation for Bids Posted on MERX - Militarized Commercial Pattern Vehicles	November 15, 2007
Invitation for Bids Posted on MERX - Standard Military Pattern Vehicles	Fall 2008
Invitation for Bids Posted on MERX - Family of Baseline Shelter	Spring 2008
Invitation for Bids Posted on MERX - Special Equipment Vehicle Kits	To be determined
Effective Project Approval - EPA for MilCOTS and SEV Baseline Shelter	Fall 2008
Effective Project Approval - EPA for SMP and SEV Kitting	Fall 2009
Contract Award - Militarized Commercial Pattern Vehicles	Fall 2008
Contract Award - Standard Military Pattern	Fall 2009
Contract Award – Family of Baseline Shelter	Fall 2008
Contract Award - Special Equipment Vehicle Kits	To be determined
First Delivery - Militarized Commercial Pattern Vehicles	Fall 2009
First Delivery - Standard Military Pattern	Winter 2010
First Delivery - Family of Baseline Shelter	Fall 2010
First Delivery - Special Equipment Vehicle (SEV) Kits	To be determined
Delivery Complete - Militarized Commercial Pattern Vehicle	Fall 2010
Delivery Complete – Standard Military Pattern (SMP)	Winter 2012
Delivery Complete – Family of Baseline Shelter	Summer 2012
Delivery Complete - Special Equipment Vehicle Kits	To be determined
Project Close Out	Spring 2013

6. Progress Report and Explanations of Variances: Treasury Board provided the MSVS project $25.8M ($BY) Expenditure Authority for the Definition phase on June 22, 2006. Design and definition work is progressing well incorporating consultation with industry whenever possible. The status of each MSVS component is outlined below:

MilCOTS - The MilCOTS RFP was released to industry November 15, 2007. Bid evaluation was completed in Summer 2008 and EPA is anticipated in Fall 2008.
SEV Baseline Shelter – RFP development is progressing well. Draft technical specifications were posted in October 2007 for industry review. Remaining documentation was developed and the final RFP was released in Spring 2008. EPA for this component of the project will be sought in Fall 2008.
SMP - In response to current worldwide threats, the department has determined that an increased level of protection is necessary for SMP vehicles. Therefore, the project office has conducted analyses of industry capability, feasibility studies and validation of the current procurement strategy. A draft vehicle technical specification was posted in October 2007 for industry comment. The complete RFP is planned for release in Fall 2008.
SEV Kitting - The project office, in concert with the user community, has been able to reduce the number of existing variants (such as types of kitchens, repair shops, workshops, field offices, etc.) from more than 130 to approximately 30. The development of the SEV Kitting RFP although progressing, is highly dependent on the Baseline Shelter Contract Award. To reduce complexity and risk, the SEV Kitting procurement strategy was revised from a Request for Supply Arrangement (RFSA) with possibly 8 Call-ups to a single Request for Proposal (RFP) for the procurement of all kitting requirements.

The key variance within MSVS is schedule. Definition Phase was extended by two years. Delays have been encountered and the single EPA scheduled for Fall 2007 has now been split into two phases: Phase 1 for MILCOTS and SEV Baseline Shelter in Fall 2008 and Phase 2 for SMP and SEV Kitting in Fall 2009. The delays are attributed to the following key factors:

Increased protection levels of the SMP vehicles in response to the increased threat environment – The inclusion of higher protection levels required the project to validate current industry capability within a competitive procurement environment. Additionally, it has been determined that industry must obtain secret classification levels in order to view the full SMP specifications all leading to delays in the original schedule.
Inclusion of Human Factors testing and Vehicle Performance demonstrations – In order to allow manufacturers to demonstrate the functionality and capability of their vehicles as part of the bid evaluation process, additional time has been allocated in the bid response period. This will allow the CF to have a more direct hands-on approach in the selection of equipment but has impacted both the MilCOTS and SMP schedules.
Overall manning shortages – Human Resource efforts to fully staff the project have been underway since PPA. The project is currently manned at 85% and striving to attain full capacity.

At this time, Project Close-out is anticipated for Spring 2013. A continuous risk management program has been implemented and costing efforts for the implementation phase are progressing.

7. Industrial & Regional Benefits: The target Industrial Regional Benefits (IRBs) is equivalent to 100% of the contract value for the capital acquisition.

Military Automated Air Traffic System (MAATS) Project

1. Description: A national air traffic system project to automate air traffic services has been initiated by Transport Canada (now NAV CANADA). To ensure that military air operations continue to function effectively, remain compatible with the national system, and keep pace with these enhancements, the Department of National Defence and the Canadian Forces established the Military Automated Air Traffic System (MAATS) Project. The project directly supports the defence objective of conducting air traffic control operations.

The MAATS project will provide the essential equipment and system interfaces necessary to automate data interchange between applications. The project will deliver a stable, sustainable, and operational Air Traffic Management System (ATMS) while providing as much integration as possible with NAV Canada’s Canadian Automated Air Traffic System (CAATS). Where equipment or system interfaces are not currently available, new equipment will be installed. All existing Defence radar systems will be retained and interfaced to the MAATS as appropriate.

2. Project Phase: Implementation

3. Leading and Participating Departments and Agencies

Lead Department	Department of National Defence
Contracting Authority	Public Works Government Services Canada
Participating Department	Industry Canada and its regional agencies

4. Prime and Major Sub-Contractors

Prime Contractor	Raytheon Canada Limited, Richmond, BC NavCanada, Ottawa, ON
Major Sub-Contractors	Hewlett Packard Canada Ltd, Ottawa ON CVDS, Montr�al PQ Frequentis Canada Ltd, Ottawa ON

5. Major Milestones

Major Milestones	Date
Treasury Board Effective Project Approval	July 20, 1993
Contract Award	January 20, 1994
Preliminary Design Review	September 1, 1997 – May 31, 2000
Critical Design Review	February 2, 2001
Factory Acceptance Test (Closure)	January 8, 2002
Initial Delivery (Montr�al)	December 11, 2003
Contract Complete (Last payment)	December 6, 2004
Approval received to disengage concurrent development with NAV CANADA project and pursue sustainable minimum military requirement (PMB Approval)	September 15, 2006
Begin Software Development on Phoenix Systems	October 26, 2006
Complete Phoenix NAMS II Development	October 12, 2007
Initial Operational Capability – First Wing Operational with NAMS II Equipment	October 31, 2007
Full Operational Capability (FOC) – All Wings with delivered Equipment	June 2009
Begin project Close-out	July 2009
Project complete	April 2010

6. Progress Report and Explanation of Variances: Treasury Board initially approved the project with an estimated cost of $179.2M. The project funding was reduced by $15M following departmental review. Partial return of funding was approved at the December 2003 Senior Review Board (SRB). Current departmental funding is $169.2M.

As briefed at SRB on June 30, 2006, the MAATS project objectives were declared unachievable within the existing funding envelope. Given a number of alternative options, MAATS’ Project Management Office (PMO) recommended to cease MAATS development, and continue the project with the implementation of an “in-house” solution coined Phoenix. With the support of the Chief of the Air Staff and ADM(Mat), the Project Management Board (PMB) concurred with the PMO’s recommendation on March 15, 2007. MAATS’ PMO was directed to de-link the project from NAVCanada’s Civilian Automated Air Traffic System (CAATS); concentrate on the re-vitalization and integration of Air Traffic Controller (ATC) information sources at each of the seven wings (Comox, Cold Lake, Moose Jaw, Bagotville, Trenton, Greenwood and Goose Bay); keep military Instrument Flight Rules (IFR) operations at the Wings vice at two Military Terminal Control Centres; and pursue the development and fielding of the Phoenix solution.

Since the approvals were received in July 2007, the Phoenix solution is well on its way upgrading the current Air Traffic Management System capability inclusive of the following sub-systems: the Radar Processor, the Navigational Aids and Meteorological Sub-System (NAMS), the Air Movement Statistics Package and the Flight Data System. Phoenix is based on the proven Radar Processing Display System II (RPDS II), which was certified for Operational Airworthiness and built on standard commercial off-the shelf (COTS) hardware and open source software, thus keeping technical risk LOW. Installation of Phoenix equipment (NAMS II) at 8 Wing Trenton was completed and Provisional Operational Airworthiness Clearance (POAC) was granted in October 2007, ahead of schedule. Actual close out activities, including a project completion report to Treasury Board will be completed in fiscal 2009–2010.

7. Industrial Benefits. Canadian industry in the following regions of Canada will benefit from the MAATS project.

Region	Cash Benefits
Atlantic Canada	$1.6M
Qu�bec	$1.0M
Ontario	$1.8M
Western Canada	$50.2M
Unallocated	To be determined
Total	$54.6M

Protected Military Satellite Communications (PMSC)

1. Description. The Department of National Defence and the Canadian Forces require global communications that are secure, guaranteed and directly interoperable with our allies. The aim of the Protected Military Satellite Communications Project (PMSC) is to overcome current Canadian Forces interoperability and global command and control limitations. Upon completion, this project will enable long-range communications to deployed forces and facilitate their interoperability with allies.

2. Project Phase: Implementation

3. Leading and Participating Departments and Agencies

Lead Department	Department of National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Department	Industry Canada and its regional agencies

4. Prime Contractor and Major Sub-Contractors

Prime Contractor	United States Department of Defense
Major Sub-Contractors	To be determined

5. Major Milestones

Major Milestones	Date
Preliminary Project Approval	August 25, 1999
Effective Project Approval	November 18, 2003
Initial Terminal Delivery	Summer 2009
Initial Satellite Delivery	Spring 2010
Terminal Delivery Completed	Summer 2013
Project Complete	Winter 2014

6. Progress Report and Explanations of Variances: The PMSC project will be implemented in two phases. Under Phase 1, a Memorandum of Understanding (MOU) with the United States Department of Defense (DOD) will guarantee Canadian participation in their Advanced Extremely High Frequency (AEHF) system. Definition studies for the terminal segment were completed in Phase 1. Under Phase 2, the terminal segment will be procured, installed and tested.

On August 25, 1999, Treasury Board granted Preliminary Project Approval to the PMSC Project, with expenditure authority for the implementation of Phase 1 at an estimated cost of $252M and granted approval for the Department of National Defence to enter into a Military Satellite Communication (MILSATCOM) MOU with the US Department of Defense. The MOU was signed November 16, 1999.

On November 18, 2003, Treasury Board granted Effective Project Approval to the PMSC Project, with expenditure authority for the Implementation of Phase 2 at an estimated cost of $300M. The total cost is now estimated at $552M.

7. Industrial Benefits: Under Phase 1, the US Department of Defense has committed to a work share with Canadian industry proportional to our contribution. Suppliers from both nations will be permitted to bid on project work. In Phase 2, the Senior Procurement Advisory Committee (SPAC) endorsed that Terminal acquisition and support will be procured through Foreign Military Sales with installation done through DND managed contracts. Industrial and regional benefits will be sought by Industry Canada at 100% of contract value.

Submarine Capability Life Extension

1. Description: The Submarine Capability Life Extension (SCLE) project replaced the Oberon class submarine fleet with four existing British Upholder class (renamed Canadian Victoria class) submarines. The project will ensure that Canada preserves its submarine capability within the existing capital budget. The project supports Canada’s ability to conduct surveillance and control of its territory, airspace and maritime areas of jurisdiction, as well as Canada’s ability to participate in bilateral and multilateral operations.

The project delivered four functional Victoria class submarines with up-to-date, safe-to-dive certificates, four crew trainers (including a combat systems trainer, a ship control trainer, a machinery control trainer, and a torpedo handling and discharge trainer), and four trained crews.

2. Project Phase: Implementation

3. Leading and Participating Departments and Agencies

Lead Department	Department of National Defence
Contracting Authority	Public Works & Government Services Canada
Participating Department	Industry Canada and its regional agencies

4. Prime and Major Sub-Contractors

Prime Contractor	The Government of the United Kingdom (UK) of Great Britain and Northern Ireland, Ministry of Defence, UK
Major Sub-Contractor	British Aerospace Engineering (BAE) Marine Systems (formerly Vickers Shipbuilding and Engineering Limited (VSEL)/Marconi Marine) Cumbria, UK

5. Major Milestones

Major Milestones	Date
Treasury Board Approval	June 2, 1998
Main Contract Award	July 2, 1998
Initial Support Contract Award	July 2, 1998
Initial Operational Capability	April 26, 2006
Final Operational Capability	July 2010
Project Close-out	March 2013

6. Progress Report and Explanation of Variances: Canada has accepted all four Upholder submarines from the United Kingdom.

Her Majesty’s Canadian Ship (HMCS) Victoria finalized her Canadianization in early 2003 and completed her transit to the west coast of Canada in August 2003. She completed a Repair Work Period in May 2004. Due to the incident onboard HMCS Chicoutimi, the operational pause prevented HMCS Victoria from going to sea. Once lifted, HMCS Victoria continued operations by progressing her Operational Trials and Evaluation (OT & E) work in defining the vessels weapons envelope. In June 2005 HMCS Victoria entered her Extended Docking Work Period (EDWP), currently being conducted in Fleet Maintenance Facility (FMF) Cape Breton, which is scheduled to complete in July 2009.
HMCS Windsor completed her Canadianization in December 2003. She had begun participating in east coast exercises and patrols during the summer of 2004. Due to the incident onboard HMCS Chicoutimi, the operational pause prevented HMCS Windsor from going to sea. Once lifted, she continued with operations on the East Coast. HMCS Windsor entered her EDWP in FMF Cape Scott in January 2007, which is scheduled to complete in August 2009.
HMCS Corner Brook started her Canadianization work in Halifax on January 5, 2004. The modifications required from the HMCS Chicoutimi incident were completed as part of her Canadianization work in summer 2006. HMCS Corner Brook is operational and is participating in various exercises and patrols. As the only running submarine a further extension to her materiel certificate is being executed to ensure one submarine continues to operate through this transition period up to 2011.
HMCS Chicoutimi was handed over to Canada October 2, 2004. On October 5, 2004, while en-route to Canada, she had an electrical incident at sea and was returned to Canada via sealift. She was in the Halifax Shipyard Limited (HSL) undergoing damage repairs and Canadianization work, which was expected to be complete in winter 2007. This Extended Docking Repair Work Period (EDRWP) has been cancelled and the submarine commenced an Extended Limited Maintenance Period (ELMP). Some Canadianization Work Period (CWP) Engineering Changes (ECs) are to be implemented during the ELMP. It is anticipatedthat she will enter an EDWP scheduled to commence in 2010.

Effective Project approval was granted to the SCLE project on June 2, 1998 at an estimated total cost of $812.0M (BY) net of GST. The expenditure ceiling was increased $84.8M by Treasury Board in June 2003 to accommodate increased scope to include 17 submarine related projects and initiatives that were progressing outside the bounds of SCLE. SCLE project is currently expending to budget.

7. Industrial Benefits: This project will provide an estimated $200M in direct and indirect industrial benefits. This includes Canadian modifications to the submarines and the relocation of the simulators and trainers to Canada. A further $100M in industrial benefits has taken the form of waivers to provide industrial offsets in the United Kingdom for Canadian companies bidding on defence contracts.

Table 6a: Summary of Transfer Payments Programs by Program Activity

			2007-2008
($ thousands)	Actual 2005-2006	Actual 2006-2007	Main Estimates	Planned Spending	Total Authorities	Actual 2007-2008
GRANTS
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces	152	130	152	152	142	124
Conduct Operations	-	-	-	-	-	-
Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values	4,815	5,171	5,360	5,360	5,360	5,213
Total Grants	4,967	5,301	5,512	5,512	5,502	5,337
CONTRIBUTIONS ¹
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces	11,505	11,110	20,627	20,627	16,057	10,449
Conduct Operations	-	-	-	-	-	-
Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values	180,985	179,308	192,972	192,972	201,005	160,485
Total Contributions	192,490	190,418	213,599	213,599	217,063	170,934
Total Transfer Payments	197,457	195,719	219,111	219,111	222,565	176,271

Source: Assistant Deputy Minister (Finance and Corporate Services) Group

Notes:

Actual Spending 2005-2006 has been restated by $3,463K since figure published in Departmental Performance Report 2005-2006 to reallocate "Contribution Program in support of the Search and Rescue New Initiatives Fund" from "Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces" to "Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values".
Due to rounding, figures may not add up to totals shown.

Table 6b: Details of Transfer Payment Programs Over
$5 Million

Description ($ thousands)	Type	Actual Spending 2005-2006	Actual Spending 2006-2007	Planned Spending 2007–2008	Total Authorities 2007-2008	Actual Spending 2007-2008	Variance(s) Between Planned and Actual Spending 2007-2008
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces
Payments under the Supplementary Retirement Benefits Act	S	7,392	6,796	7,020	6,079	6,079	941
Contributions in Support of the Capital Assistance Program	C	-	355	5,450	6,053	450	5,000
Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interest and Values
Contribution Program for the Promotion of the Defence Diplomacy Objectives Implemented by the Military Training Assistance Programme	C	9,305	10,017	10,000	10,000	8,923	1,077
NATO Airborne Early Warning and Control Program	C	68,893	68,366	55,030	55,030	42,903	12,127
NATO Military Budget	C	47,296	56,789	63,333	63,333	59,889	3,444
NATO Security Investment Program	C	43,166	35,773	55,647	55,647	38,920	16,727
Subtotal Transfer Payments over $5 million		176,052	178,096	196,480	196,142	157,164	39,316
Total Transfer Payments		197,458	195,719	219,111	222,565	176,271	42,840
Percentage of Transfer Payments over $5 million		89.2%	91.0%	89.7%	88.1%	89.2%
Total spending per PAA		Actual Spending 2005-2006 ¹	Actual Spending 2006-2007	Planned Spending 2007-2008	Total Authorities 2007-2008	Actual Spending 2007-2008
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces		11,658	11,240	20,779	16,199	10,573
Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interest and Values		185,800	184,479	198,332	206,365	165,698
		197,458	195,719	219,111	222,565	176,271

Source: Assistant Deputy Minister (Finance and Corporate Services) Group

Legend: S = Statutory C = Contribution

Note: Actual Spending 2005-2006 has been restated by $3,463K since figure published in Departmental Performance Report 2005-2006 to reallocate "Contribution Program in support of the Search and Rescue New Initiatives Fund" from "Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces" to "Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values.”

Table 6c:
Details of Transfer Payment Programs
Over $5 Million
for the Department of National Defence
for the period ending March 31, 2008

Table of Contents

Contributions in Support of the Capital Assistance Program (CAP)

Contribution Program for the Promotion of the Defence Diplomacy Objectives Implemented by the Military Assistance Training Programme (MTAP)

NATO Military Budget

NATO Security Investment Program

NATO Airborne Early Warning and Control Program

Supplementary Retirement Benefits Act (SRBA)

Contributions in Support of the Capital Assistance Program (CAP)

1. Name of Transfer Payment Program: Contributions in Support of the Capital Assistance Program (CAP) – [Voted payments]
2. Start Date: 1983–1984			3. End Date:2010–2011 (Terms and Conditions of the program up for renewal starting 2011–2012)
4. Description: DND uses Capital Assistance Program to fund capital projects undertaken with provinces, territories and municipalities and/or their agencies related to the operations of military bases and wings located within Canada. Projects include the construction of community-oriented facilities (such as arenas, gymnasiums, swimming pools, water treatment plants, water distribution systems) where the forces and/or military staff and their dependents are significant users, and where provinces or municipalities are in a better position to deliver services. Contributions are also made to support the transfer to municipalities of common infrastructure related to Residential Accommodation (formerly entitled Permanent Married Quarters) such as roads, sidewalks, sewers, storm pipes, etc.
5. Strategic Outcomes: Canadians’ confidence that DND and the CF have relevant and credible capacity to meet defence and security commitments.
6. Results Achieved: The only approved project – Belmont Park (CRD) met the following objectives: Entered into collaborative arrangements with Provinces, Territories and Municipalities and/or their agencies (through contribution agreements); Maintained/improved infrastructure while correcting identified deficiencies; Reduced operating and capital costs; Improved cost-effective provision of infrastructure and community-based services; and, Enhanced quality of life for military personnel and dependants.
($ Thousands)	7. Actual Spending 2005–2006	8. Actual Spending 2006–2007		9. Planned Spending 2007–2008	10. Total Authorities 2007 – 2008	11. Actual Spending 2007 – 2008	12. Variance Between 9 and 11
13. Program Activity	Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces
14. Total Grants	0	0		0	0	0	0
14. Total Contributions	$0	$355		$5,450	$6,053	$450	$5,000
14. Total Other Types of Transfer Payments	0	0		0	0	0	0
15. Total Program Activity	$11,658	$11,240		$20,779	$16,199	$10,573	$10,206
16. Comment(s) on Variance(s) Variance of $5,000K is due to the fact that a major project was put on hold.
17. Significant Audit and Evaluation Findings and URL(s) to Last Audit and /or Evaluation: No official audit was performed due to the small dollar value of the project. However, monthly internal reviews confirmed projects met existing policies and procedures.

Sources: Assistant Deputy Minister – Finance and Corporate Services Group and Assistant Deputy Minister – Infrastructure and Environment Group

Contribution Program for the Promotion of the Defence Diplomacy Objectives Implemented by the Military Assistance Training Programme (MTAP)

1. Name of Transfer Payment Program: Contribution Program for the Promotion of the Defence Diplomacy Objectives Implemented by the Military Assistance Training Programme – [Voted payments]
2. Start Date: 1992–1993				3. End Date: 2009–2010 (Terms and conditions of the program up for renewal starting 2010–2011)
4. Description: This contribution program provides the necessary funding for the promotion of the defence diplomacy objectives implemented by the Military Training Assistance Programme. This funding allows the Government of Canada, through the Department of National Defence (DND), to provide military training and education to selected countries and organizations, and in doing so, to contribute to international security and stability.
5. Strategic Outcomes: Good governance, Canadian identity and influence in a global community.
6. Results Achieved: The Military Training Assistance Programme (MTAP) continued to support and promote Canadian interests and values through the provision of military training assistance to developing, non-NATO countries and organizations. Indeed, MTAP’s various courses contribute to the promotion of democratic principles, the rule of law, human rights, and international stability in the program’s many member countries. The program also allows the Department of National Defence (DND) to promote and raise Canada’s independent national profile in partner countries through training delivered at Canadian and foreign institutions. As such, MTAP constitutes Canada’s main vector of bilateral defence relations with a large number of countries. Training over 1,000 foreign officers from 73 states, MTAP successfully supported DND’s defence diplomacy agenda for the fiscal 2007-2008. MTAP remains committed to further developing language and staff training programmes in Canada, and continues to successfully develop peace support capacity among partner countries by expanding its in-theatre initiatives. In Jamaica, MTAP coordinated and assisted in the establishment of the Jamaican Military Aviation School (JMAS) and in improving the foundation and capabilities of the Caribbean Junior Command and Staff School located in Jamaica. Both these facilities are being developed as Regional facilities. In cooperation with the African Union (AU) and other international players, MTAP also provided staff officer and Peace Support Operations (PSO) training in Africa to train AU officers for deployment to the African Union Mission in Sudan (AMIS).
($ Thousands)	7. Actual Spending 2005-2006	8. Actual Spending 2006-2007		9. Planned Spending 2007-2008	10. Total Authorities 2007-2008	11. Actual Spending 2007-2008	12. Variance Between 9 and 11
13. Program Activity	Contribute to the Canadian Government, Society and the International Community in Accordance with Canadian Interests and Values
14. Total Grants	0	0	0		0	0	0
14. Total Contributions	$9,305	$10,017	$10,000		$10,000	$8,923	$1,077
14. Total Other Types of Transfer Payments	0	0	0		0	0	0
15. Total Program Activity	$185,800	$184,479	$198,332		$206,365	$165,698	$32,634
16. Comment(s) on Variance(s): Variance of $1,077K is mainly due to contracting difficulties that did not allow for a third United Nation Military Staff Officer course (approximately $800K). In addition there were less participants and some courses were less expensive than planned.
17. Significant Audit and Evaluation Findings and URL (s) to Last Audit and /or Evaluation: CRS conducted an evaluation of MTAP that was completed in May 2008. The overall assessment confirmed that MTAP enhances interoperability among Canada’s partners and promotes Canadian interest among developing non-NATO countries.

Sources: Assistant Deputy Minister – Finance Group and Corporate Services and Vice-Chief of the Defence Staff Group

NATO Military Budget

1. Name of Transfer Payment Program: NATO Military Budget – [Voted Payments]
2. Start Date: 1949			3. End Date: 2009–2010 (Terms and Conditions of the program up for renewal starting 2010–2011)
4. Description: To contribute the Canadian share of the NATO Military Budget—a common-funded program to finance the operating and maintenance costs of the NATO military structure and activities.
5. Strategic Outcomes: Good governance, Canadian identity and influence in a global community.
6. Results Achieved:Canada’s financial contributions to the Alliance helps to ensure Canadian security, provide leverage and influence within the multi-national body and provides access to military capabilities which Canada, itself, does not possess.
($ Thousands)	7. Actual Spending 2005-2006	8. Actual Spending 2006-2007		9. Planned Spending 2007-2008	10. Total Authorities 2007-2008	11. Actual Spending 2007-2008	12. Variance Between 9 and 11
13. Program Activity	Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values.
14. Total Grants	0	0		0	0	0	0
14. Total Contributions	$47,296	$56,789		$63,333	$63,333	$59,889	$3,444
14. Total Other Types of Transfer Payments	0	0		0	0	0	0
15. Total Program Activity	$185,800	$184,479		$198,332	$206,365	$165,698	$32,634
16. Comment(s) on Variance(s): Some infrastructure projects were delayed which resulted in less contribution paid for Operating and Maintenance.
17. Significant Audit and Evaluation Findings and URL (s) to Last Audit and /or Evaluation: Every year, the International Board of Auditors for NATO (IBAN) - which is a NATO independant office subordinate to the North Atlantic Council (NAC) and supported by national audit institutions - conducts audits of all the accounts commonly-funded by NATO members. Designated finance committees in NATO, where Canada is well represented, analyze these IBAN reports and make recommendations to the relevant NATO entities to comply with IBAN findings.

Sources: Assistant Deputy Minister – Finance and Corporate Services Group and Vice-Chief of the Defence Staff Group

NATO Security Investment Program

1. Name of Transfer Payment Program: NATO Security Investment Program – [Voted Payments]
2. Start Date: 1949			3. End Date: 2009–2010 (Terms and Conditions of the Program up for renewal starting 2010–2011)
4. Description: The NATO Security Investment Program (NSIP) finances installations and facilities needed to support the roles of the NATO Strategic Commands recognized as exceeding the National Defence requirements of individual member countries. The investments cover communications and information systems, radar, military headquarters, airfields, fuel pipelines and storage, harbours and navigational aids. As is the case for the Military Budget (Operations and Maintenance), NSIP also covers the eligible requirements for infrastructure support to deployed operations and missions including communication, information systems, local headquarters, power systems and repairs to airfields, rail and roads.
5. Strategic Outcomes: Good governance, Canadian identity and influence in a global community.
6. Results Achieved: Canada’s financial contributions to the Alliance helps to ensure Canadian security, provide leverage and influence within the multi-national body and provides access to military capabilities which Canada, itself, does not possess. NATO transformation has broadened the eligibility criteria for NSIP which is a positive development for Canada in terms of the additional support to the NATO Mission in Afghanistan, a primary area of activity for Canada’s foreign policy effort.
($ Thousands)	7. Actual Spending 2005-2006	8. Actual Spending 2006-2007		9. Planned Spending 2007-2008	10. Total Authorities 2007-2008	11. Actual Spending 2007-2008	12. Variance Between 9 and 11
13. Program Activity	Contribute to the Canadian Government, Society and the International Community in Accordance with Canadian Interests and Values
14. Total Grants	0	0		0	0	0	0
14. Total Contributions	$43,166	$35,773		$55,647	$55,647	$38,920	$16,727
14. Total Other Types of Transfer Payments	0	0		0	0	0	0
15. Total Program Activity	$185,800	$ 184,479		$198,332	$ 206,365	$165,698	$32,634
16. Comment(s) on Variance(s): NATO member nations implemented authorized projects at a slower than anticipated rate resulting in a reduced call for contributions from NATO.
17. Significant Audit and Evaluation Findings and URL (s) to Last Audit and /or Evaluation: NSIP activities are regularly audited by the NATO International Board of Auditors (IBAN) on which Canada participates, and by audit boards of the respective governments who are supported. With regard to the NSIP, the IBAN progressed toward the targets as set out in the 2007 Annual IBAN Performance Plan i.e. reducing the number of active audited projects; reduce the percentage of the uncertified portion for nations; and auditing an amount of EUR 650 million in value. The IBAN continues to work with the Infrastructure Committee to enhance the accelerated closure procedure.

Sources: Assistant Deputy Minister – Finance and Corporate Services Group and Chief Military Personnel Group

NATO Airborne Early Warning and Control Program

1. Name of Transfer Payment Program: NATO Airborne Early Warning and Control Program – [Voted Payments]
2. Start Date: 1979			3. End Date: 2009–2010 (Terms and Conditions of the program up for renewal starting 2010–2011)
4. Description: The NATO Airborne Early Warning and Control Force (NAEWF) is based on a Boeing 707 modified for military use that provides NATO with early warning and control capability - allowing NATO to detect and track enemy aircraft operating at low altitudes over all terrain. The surveillance capability of the Airborne Early Warning and Control System (AWACS) allows NATO forces to transmit data directly from the aircraft to command and control centres on land, sea or in the air. The mobility of the AWACS aircraft also allows it to be deployed rapidly and makes it far less vulnerable to attack than ground-based radar.
5. Strategic Outcomes: Good governance, Canadian identity and influence in a global community.
6. Results Achieved: Canada's contribution to the NAEWCP provides us with access to a shared resource that few countries could independently afford. It provides Canada with access to information that would not otherwise be made available. NAEWCP is part of an operational surveillance system that provides information to NATO troops, such as our forces in Afghanistan and as such is a force protection asset.
($ Thousands)	7. Actual Spending 2005-2006	8. Actual Spending 2006-2007		9. Planned Spending 2007-2008	10. Total Authorities 2007-2008	11. Actual Spending 2007-2008	12. Variance Between 9 and 11
13. Program Activity	Contribute to the Canadian Government, Society and the International Community in Accordance with Canadian Interests and Values.
14. Total Grants	0	0		0	0	0	0
14. Total Contributions	$68,893	$68,366		$55,030	$55,030	$42,903	$12,127
14. Total Other Types of Transfer Payments	0	0		0	0	0	0
15. Total Program Activity	$185,800	$184,479		$198,332	$206,365	$165,698	$32,634
16. Comment(s) on Variance(s): Lapse is due to the delay in the implementation of the Infrared Countermeasure for $5.6M and the remaining lapse of $6.5M is explained by the phasing out of the Modernization Program.
17. Significant Audit and Evaluation Findings and URL (s) to Last Audit and /or Evaluation: Every year, the International Board of Auditors for NATO (IBAN), which is a NATO independent office subordinate to the North Atlantic Council (NAC) and supported by national audit institutions, conducts audits of all the accounts commonly-funded by NATO members. Designated finance committees in NATO, where Canada is well represented, analyze the IBAN reports and make recommendations to the relevant NATO entities to comply with IBAN findings.

Sources: Assistant Deputy Minister – Finance and Corporate Services Group and Assistant Deputy Minister – Infrastructure and Environment Group

Supplementary Retirement Benefits Act (SRBA)

1. Name of Transfer Payment Program: Supplementary Retirement Benefits Act (SRBA) – [Statutory Payments]
2. Start Date: 1970				3. End Date: on-going
4. Description: The SRBA represents statutory payments to Defence Services Pension Continuation Act (DSPCA) pension recipients for inflation adjustment to their pensions
5. Strategic Outcomes: Canadians’ confidence that DND and the CF have relevant and credible capacity to meet defence and security commitments
6. Results Achieved: In compliance with the legislative provisions of SRBA,provide supplementary retirement benefits payments for certain persons in receipt of a pension pursuant to the Defence Services Pension Continuation Act chapter D-3 of the Revised Statutes of Canada 1970, as a result of having been compulsorily retired from the regular force of the Force by reason of any mental or physical condition rendering the person unfit to perform duties as a member of the regular force of the Force, as the case may be.
($ Thousands)	7. Actual Spending 2005-2006	8. Actual Spending 2006-2007	9. Planned Spending 2007-2008		10. Total Authorities 2007-2008	11. Actual Spending 2007-2008	12. Variance Between 9 and 11
13. Program Activity	Generate and Sustain Relevant, Responsive, and Effective Combat-capable Integrated Forces
14. Total Grants	0	0	0		0	0	0
14. Total Contributions	$7,392	$6,796	$7,020		$6,079	$6,079	$941
14. Total Other Types of Transfer Payments	0	0	0		0	0	0
15. Total Program Activity	$11,658	$11,240	$20,779		$16,199	$10,573	$10,206
16. Comment(s) on Variance(s): As the DSPCA/SRBA population ages and becomes smaller, the funding requirement for indexation decreases on an unpredictable basis.
17. Significant Audit and Evaluation Findings and URL (s) to Last Audit and /or Evaluation: The Canadian Forces Pension Plan Comptroller managed the SRBA payments. While no specific audits or evaluations were planned, expenditures were subject to monitoring and fell into the financial control framework of the Canadian Forces Pension Plan.

Sources: Assistant Deputy Minister – Finance and Corporate Services Group and Chief Military Personnel Group

Table 7: Sustainable Development Strategies

The following table includes a number of commitments made by National Defence to green its operations. At the government-wide level, these departmental commitments are co-ordinated by the Office of Greening Government Operations (OGGO) at PWGSC, which includes work toward common governance, measurement, and reporting methods across departments. In summary, the four overarching Strategic Commitments aim to protect the health of ecosystems; protect human health and the environment through the responsible management; protect the atmosphere through reduction in emissions; and integrate environmental considerations fully into Defence management processes, systems and activities. Of the total number of supporting strategic commitments, none were exceeded, 1 was met, 11 are on track, and 4 were not satisfactory. The three Sustainable Development Strategies (SDS) 2000/2003 Legacy Targets were not met.

Points to Address	Departmental Input
1. What are the key goals, objectives, and/or long-term targets of the SDS?	The key goals and overarching Strategic Commitments of Defence’s SDS 2006 are to: protect the health of ecosystems through the sustainable use of training areas; protect human health and the environment through the responsible management of hazardous materials and addressing departmental contaminated sites; protect the atmosphere through reduction in the Ozone Depleting Potential of in-service systems and equipment using halocarbons and reduce Green House Gas emissions; and integrate environmental considerations fully into Defence management processes, systems and activities through integration of sustainable buildings concepts into the design process, and promulgate a Defence Green Procurement policy.
2. How do your key goals, objectives, and/or long-term targets help achieve your department’s strategic outcomes?	Defence SDS 2006 looks further out than the 3-year cycle of the strategy itself. The Strategic Commitment on sustainable military training areas for instance spans the period 2003 to 2010, continuing its support of resource conservation, sound environmental stewardship and good governance. Defence is the government’s largest employer and consumer of goods and services and is one of the largest landholders. As such, the Department acts in compliance with the Government of Canada’s administrative and governance policies, legislation and regulations, and contributes to broader government priorities through responsible stewardship of the assets with which it has been entrusted. Furthermore, in addition to the traditional Strategic Commitments contained in the Defence strategy, SDS 2006 also contains four Monitoring Commitments (commitments to report on government priorities, such as water consumption) and three Legacy Targets (targets that were not met in SDS 2000 or SDS 2003, but on which the Department will continue to report until the targets are fully achieved).
3. What were your targets for the reporting period?	Sixteen Strategic Commitments are set out in Table 1 of the Defence SDS 2006supporting the key goals listed above.
4. What is your progress to date?	For the first year of reporting on SDS 2006: 1 Strategic Commitment has been met: SC.3.1. (Supporting the federal Green Procurement agenda); 11 Strategic Commitments are on track: SC.1.2. (Developing urban forest policies, and implementing Urban Forest plans at all affected bases); SC.2.2. (Improving the Department’s understanding of the feasibility of “bundled” Energy Performance Contracts and sharing the lessons learned with federal colleagues); SC.3.2. (Developing and integrating where appropriate Green Procurement modules and messages into all existing training); SC.3.3. (Eliminate or reduce 30% of specified nationally procured high-risk hazardous materials (HRHM) from use by 31 March 2010 from a baseline of 31 March 2007); SC.3.4. (Acquiring, using and maintaining greener vehicles); SC.3.5. (Reducing vehicle GHG emissions by 15% within the commercial pattern on road vehicle departmental fleet by 31 March 2010); SC.3.7. (Minimizing the environmental liability associated with bulk petroleum fuel storage infrastructure and distribution assets); SC.4.1. (Reducing disposal of waste fuel by 31 March 2010); SC.4.3. (Reduce the contaminated sites liability by 7% per year from a baseline of 31 March 2006); SC.4.4. (Reducing the weight of halocarbons by 5% in in-service systems and equipment as expressed by their Ozone Depletion Potential per year by 31 March 2010 from a baseline of 31 March 2004); and, SC.4.5. (Reducing Greenhouse Gas (GHG) emissions by 134.9 kilotonne carbon dioxide equivalent by 2010 from 1998 baseline); and, 4 Strategic Commitment are not satisfactory: SC.1.1 (Measuring the sustainability of military training areas and managing them accordingly); SC.2.1. (Expanding the integration of the Green Building concept into the total design process); SC.3.6. (Piloting a managed print solution); and, SC.4.2. (Reducing the long-term impact of releases to the environment by: Increasing the recovery of lead by 5% from 2003/2004). Measuring the sustainability of military training areas and managing them accordingly. None of the three SDS 2000 Legacy targets, also pursued during SDS 2003, were met: SDS 2000 target A.3. (Develop and implement Integrated Pest Management (IPM) Plans at all Bases /Wings); SDS 2000 target B.1. (Develop and implement Hazardous Material Management Plans at all Bases/Wings/Organizations); and, SDS 2000 target D.1. (Implement Environmental Management Systems). While there has been some progress on each of the Legacy targets during this reporting year, 100% completion has yet to be achieved.
5. What adjustments have you made, if any? (To better set the context for this information, discuss how lessons learned have influenced your adjustments.)	With the first year of the three-year reporting cycle for SDS 2006 completed, the Department continues to refine the content of business planning and functional guidance tools to promote innovative activities, including sustainable building, and cost-saving and environmentally sound activities, such as energy performance contracting. National Defence is concerned with the continuing failure to address problematic areas, for instance the rationalization and upgrading of fuel storage tanks. Many of the lessons learned from these initiatives have been formalised within the new (SDS 2006) iteration of the Defence SDS. In fact, lessons learned during the process of SDS 2003 have led the Department to include the three targets that were not reached in FY 06/07 as commitments in SDS 2006 to further improve the Department’s understanding of and performance on these issues. The failure to “close the book” on the SDS 2000 Legacy Targets during this SDS cycle is a cause for increasing concern.

Source: Assistant Deputy Minister(Infrastructure and Environment) Group

Status of Fuel Storage Tanks on DND Land

As required under the Canadian Environmental Protection Act (CEPA), Part IV, Registration of Storage Tank Systems for Petroleum Products and Allied Petroleum Products on Federal Lands Regulations, this report provides the information set out in Schedule II of the aforementioned regulation, updated to December 16, 2006.

The following number of aboveground storage tanks systems:

Are registered with DND: 931 (DND owned 901, non-DND 30).

DND owned systems that comply with the Federal Aboveground Storage Tank Technical Guidelines: 158

DND owned systems that do not comply with the Federal Aboveground Storage Tank Technical Guidelines: 222

The following number of underground storage tank systems:

Are registered with DND: 951 (DND owned 201, non-DND 750).

DND owned systems that comply with the Federal Underground Storage Tank Technical Guidelines: 78

DND owned systems that do not comply with the Federal Underground Storage Tank Technical Guidelines: 25

Explanatory Note: DND maintains a consolidated record of all registered storage tanks in a national database. Due to data gaps in this consolidated record, it was not possible to determine compliance with the applicable Technical Guidelines for 521 aboveground tanks and 98 underground tanks (DND owned).

Table 8a: Response to Parliamentary Committees and External Audits

Response to Parliamentary Committees
In May 2007, the Standing Committee on Public Accounts tabled its 15th Report on the subject of Chapter Five of the Auditor General of Canada’s November 2006 Report (Relocating Members of the Canadian Forces, RCMP and Federal Public Service). The text of the report is available at: http://www2.parl.gc.ca/HousePublications/Publication.aspx?DocId=2955368&Mode=1&Parl=39&Ses=1&Language=E. The Department contributed to the Government Response to the Committee report that was tabled in Parliament on 17 October 2007.
Response to the Auditor General (including to the Commissioner of the Environment and Sustainable Development)
Office of the Auditor General (OAG) During the reporting period, the Auditor General tabled four Chapters in Parliament that included recommendations directed at the Department of National Defence and the Canadian Forces. In May 2007, she tabled both “Use of Acquisition and Travel Cards” and “Modernizing the NORAD System in Canada”. In October 2007, the Auditor General tabled “Military Health Care” and “Safeguarding Government Information and Assets in Contracting”. In the government-wide Chapter entitled “Use of Acquisition and Travel Cards”, the Auditor General concluded that departmental controls over acquisition cards were not being applied in a rigorous manner. Of particular concern was the inconsistent application of verification and certification controls required under the Financial Administration Act. Of the nine audit recommendations contained in this Chapter, one was directed at DND alone and three others were directed at all three participating departments. All four recommendations were accepted by the Department. In the Chapter “Modernizing the NORAD System in Canada”, the Auditor General reported that NORAD Modernization cost significantly more than originally planned, it took considerably longer than anticipated to be completed, and projected savings have yet to materialize. The Department accepted the three audit recommendations presented by the Auditor General in this Chapter. In the Chapter “Military Health Care”, the Auditor General reported that, although CF members are satisfied with the health care they receive, the DND/CF has little information available to demonstrate how well the system is performing or the quality of care being provided. The military health system costs almost twice as much to operate as provincial health care systems and the Department is unable to show that the cost of maintaining current service levels is operationally necessary. The Auditor General also reported that the DND/CF is unable to demonstrate that its military health care professionals are licenced/certified or that they have maintained their qualifications to practice. The Department agreed with all eight of the Auditor General’s audit recommendations. When the Auditor General tabled her government-wide Chapter on “Safeguarding Government Information and Assets in Contracting” in October 2007, she concluded that DND willingly circumvented key security-related procedures in order to reduce costs and avoid project delays during the construction of the Above Ground Complex in North Bay. As a result of failing to identify security requirements prior to initiating the contract, contractors without security clearances had access to both the building plans and the worksite during building construction. The Auditor General also stated that, of the 8,500 DND construction and maintenance contracts awarded by Defence Construction Canada since April 2002, approximately 99% were let without verifying the contractors’ security clearances. Of the ten audit recommendations included in this Chapter, only two involved the DND/CF and both were accepted. These four Chapters, including departmental responses to the Auditor General’s recommendations, can be accessed on the Auditor General’s website at the following link: http://www.oag-bvg.gc.ca/internet/English/parl_lpf_e_1193.html Commissioner Of The Environment And Sustainable Development In March 2008, the Commissioner of the Environment and Sustainable Development tabled a Report in Parliament that contained two government-wide Chapters that made reference to the Department of National Defence. Both of these audits followed-up on significant observations and key recommendations that were previously reported to Parliament in 2002. The two Chapters were entitled: “Federal Contaminated Sites” and “Environmental Petitions: Military Dumpsites”. The Commissioner reported that the federal government has made satisfactory progress in addressing the issue of contaminated sites. He also concluded that National Defence has made satisfactory progress in responding to the Military Dumpsites Petition. Only the Petitions Chapter contained a recommendation directed at the DND/CF and it was accepted. These two Chapters can be found on the Commissioner’s website at the following link: http://www.oag-bvg.gc.ca/internet/English/parl_cesd_200803_e_30125.html
External Audits (Note: These refer to other external audits conducted by the Public Service Commission of Canada or the Office of the Commissioner of Official Languages)
No non-OAG external audits specific to the DND/CF were reported on during 2007/08.

Source: Assistant Deputy Minister(Policy) Group

Table 8b: Response To Parliamentary Committees, And Audits And Evaluations

Recommendation	Government Response/Commitment	Status
1^st Report of the Standing Committee on National Defence (NDDN), 39^th Parliament, 1^st Session, "Canadian Forces in Afghanistan" Original report: http://www2.parl.gc.ca/HousePublications/Publication.aspx?DocId=2560007&Language=E&Mode=1&Parl=39&Ses=1 Government response: http://www2.parl.gc.ca/HousePublications/Publication.aspx?DocId=2830673&Language=E&Mode=1&Parl=39&Ses=1
5. DND should review the need for some sort of flexible decompression programme for soldiers going home on mid-tour leave.	National Defence currently runs an end of tour Third Location Decompression program and soldiers on a six month tour receive 18 days of mid-tour leave, where the day before the leave begins is spent at an intermediate staging base. However, there is no evidence to suggest that either a mid-tour or end-tour decompression program significantly impacts a soldier's chance of developing, or recovering from, an operational stress injury. Also, instituting a mid-tour decompression program would create logistical and operational concerns. National Defence is continuing to evaluate the benefits of the end of tour Third Location Decompression program.	While there remains no empirical evidence to suggest that either a mid-tour or end-tour decompression program significantly impacts a soldier's chance of developing or recovering from an operational stress injury, the vast majority of those who have experienced the program believe that it eased the re-integration process both for themselves and their families. Exposure to the mental health program has also led the majority to express a realization that there is nothing wrong with seeking help. A review of the decompression program has been established to evaluate its benefits with a view to updating the re-integration policy and potentially the structure and scope of the program itself.
6. The government should recognize the critical and growing work done by the Operational Stress Injury Social Support Network and support it with appropriate funding and other resources, so that it can keep up with the growing need of caring for returning Afghanistan Veterans and their families.	The Government recognizes the critical work being done by the Operational Stress Injury Social Support (OSISS) network.	Since the launch of the OSISS network in February 2002, National Defence funding for OSISS initiatives has increased every year. In fiscal year 2007-2008, the Government approved a 25% increase in Department's funding for OSISS, bringing the total to $2.6 billion.
12. The Minister of National Defence should appear at least four times a year before the Standing Committee on National Defence, to provide a televised situation report, outlining the status, activity and effect of all Canadian Forces operational missions being conducted at the time.	The Government recognizes and supports the principles of ministerial accountability and responsibility to Parliament, including responding to parliamentary committee questions on the Government's policies, programs and activities. The Minister of National Defence has always worked to accommodate committee requests for appearances and will continue to do so in the future. However, designating a specific number of appearances in advance would be arbitrary and, depending on the tempo of CF operations and developments in Afghanistan, may not be the most effective way to provide information to the Committee.	The Minister of National Defence appeared twice during the reporting period to discuss Canadian Forces operational missions, including Afghanistan.
13. In the months during which the Committee is not traveling and in which the Minister does not appear, a Canadian Forces senior officer should continue to appear before the Committee to present a briefing on the mission status, activity and effect of all ongoing Canadian Forces operational missions since the last report and provide a view of what can be expected in the next month.	National Defence will continue to provide CF operational briefings to the committee.	Senior DND/CF officials provided four briefings to NDDN over the reporting period. Timing between each briefing varied due to parliamentary breaks, Committee travel, etc.
16. The Standing Committee on National Defence should visit the Canadian Forces in Afghanistan at lease once annually, at an appropriate time, in order to review the status of the mission at that time and any progress being made.	The Government supports the idea of annual visits in principle. However, operational and security considerations may affect the timing of any visit, and approval for travel must be sought by the House of Commons.	The Committee visited Afghanistan in 2007 and 2008. Both visits; however, fell outside of the reporting period of this DPR.
19. The government should increase the Canadian Forces contributions to Afghan National Army training so that, as the Afghan National Army grows and matures, higher level collective training of new Kandaks can be conducted prior to real operations.	The Government recognizes the importance of increasing its contribution to Afghan National Army (ANA) training and the conditions are right for Canada to redouble its training and mentoring initiatives, and to focus that effort on achieving results in Kandahar Province to reinforce our security, development and reconstruction achievements. However, decisions regarding future levels of Canadian contributions to ANA training will be determined by the ANA's progress and capacity, CF operational requirements, and assistance being provided by allies.	DND has since been designated as the lead department for ANA capacity building in accordance with the Government of Canada Six Priorities in Afghanistan. Capacity building has increased considerably with an additional ANA battalion (Kandak) assigned for mentoring in Kandahar. As well, Canada increased its mentoring role by assuming responsibility for two additional Kandaks that had been mentored by US Forces. Through these mentoring efforts, one Kandak has reached its full capability milestone, meaning it can plan and conduct operations with limited International Security Assistance Force (ISAF) support. This is a first in Regional Command South. An additional Kandak and the brigade headquarters have both reached capability milestone two, which means they still require some ISAF support. DND continues its work mentoring the Kandaks and the brigade headquarters of the 1st Brigade of 205 Corps to improve their capabilities in planning, training and operations. This will build long-term and enduring capacity in the ANA to provide security for the Afghan population and to enable the Afghan National Government to expand its governance and services.

Recommendation

Government Response/Commitment

Status

11^th Report of SCOPA, 39^th Parliament, 1^st Session, “Chapter 2, National Defence—Military Recruiting and Retention of the May 2006 Report of the Auditor General of Canada”

Original report: http://www2.parl.gc.ca/HousePublications/Publication.aspx?DocId=2560007&Language=E&Mode=1&Parl=39&Ses=1

Government response: http://www2.parl.gc.ca/HousePublications/Publication.aspx?DocId=2830673&Language=E&Mode=1&Parl=39&Ses=1

2. That the Department of National Defence report progress in the implementation of its action plan to strengthen the recruitment and retention of military personnel in its annual Departmental Performance Report, beginning with the Report for the period ending 31 March 2007. The Department should also report progress in implementing its national recruiting attractions plan as well as its strategic guidance on national recruiting. In making this information available to Parliament, the Department must make clear reference to the outcomes that are being achieved.

The Department of National Defence will ensure that the information identified in this recommendation is included in its annual Departmental Performance Report beginning with the report for the period ending 31 March 2007.

The National Attractions Plan is embedded in the CF Recruiting Group's Annual Operations Plan, which has been published for the past three years. Recruiting targets for fiscal years 2006-07 and 2007-08 were achieved and the Strategic Guidance on National Recruiting was published in Feb 2007.

3. That the Department of National Defence establish a formal commitment to process applications for membership in the Canadian Armed Forces within thirty days, ensure that all applicants are made aware of that commitment and report its progress in meeting those goals in its annual Departmental Performance Report.

The Government will continue to explore additional opportunities to streamline applicant processing and is progressing with the development of a robust performance measurement system based on the Treasury Board framework for service standards. Progress in meeting the goals identified above will be included in the annual Departmental Performance Report for the Department of National Defence, beginning with the report for the period ending 31 March 2007.

Attainment of the goal for applicant processing of 30% completed in 5 days and 70% in 30 days continues to be a significant challenge. Improvements were made in applicant service, eliminating waiting time and in the prioritization of processing. Applicant processing was previously a rigid process where an applicant had to succeed at one step before proceeding to the next step or in other words, the processing was done sequentially. The Commanding Officers of Recruiting Centres have been given the authority to conduct parallel processing in order to maximize the use of their resources at any given time and ensure concurrent activity. For example, the credit check and criminal records name check as part of the Enhanced Reliability sub-process were generally done at the end of the process. Due to improvements from the service provider, CO's now conduct this activity at the outset of the process, thus ensuring concurrent activity.

5. That the Department of National Defence record and evaluate the results of its advertising activities, report the results in its annual Departmental Performance Reports beginning with the Report for the period ending 31 March 2007, and make the appropriate changes to its advertising campaign and related expenditures.

The Government is committed to evaluating the results of its new television advertising campaign dedicated to recruiting, and will institute appropriate changes as required. The Government also agrees to report the results of its current advertising campaign in the Department of National Defence annual Departmental Performance Report, beginning with the Report for the period ending 31 March 2007.

As part of its evaluation, the Government will identify and analyze all factors related to recruiting in order to leverage them for future success. The Government will utilize the remaining time in the current fiscal year to assess the true impact that the new advertising campaign is having on attracting more Canadians to join the Canadian Forces.

In accordance with the Government of Canada Communications Policy, under Section 23, all major advertising campaigns are evaluated to assess their effectiveness in achieving the stated objectives. In fiscal 2007-2008, two evaluation studies were completed (Fall 2007 and Winter 2008) to assess the performance of the fall and winter recruitment advertising campaigns. The studies provide "recall" statistics, a common measurement for television advertising.

Unaided recall was in the order of the industry standard of 20%.
Aided recall was 44% and 48% with the general population and 53% and 55% with our primary audience of 17-24 year olds.

In addition to these evaluation studies, traffic through the various recruitment points of contact was also used to assess the effectiveness of recruitment advertising. This measure includes recruitment website visits, visits to recruitment centres, phone calls to the 1-800 line and e-mail. An additional metric introduced this year was the online "chat with a recruiter". Fiscal 2007-2008 saw 6,522,514 unique visitors to the recruitment website. CF recruiters responded to over 25,000 e-mails, participated in 12,000 chat sessions and received almost 15,000 online applications, all initiated through the website.

8. The Department of National Defence determine the rate of attrition for female members of the Canadian Forces and, in its exit surveys, seek to establish which factors prompt female members to leave the Forces before full service is completed. The results, along with corrective measures taken to encourage women to complete their full service should be reported in the Department's annual Performance Reports, beginning with the Report for the period ending 31 March 2008.

A comprehensive survey analysis that will be conducted in the fall of 2007 will allow the Government to better understand the reasons female members of the Canadian Forces decide to leave the military. Should trends be identified that indicate a need for change, the Government will initiate appropriate corrective measures. The results of this survey analysis, together with any corrective measures undertaken, will be reported in the Departmental Performance Reports, beginning with the report for the period ending 31 March 2008.

Female Attrition Rate from the CF

Fiscal Year	Officers	Non-Commissioned Members
2001-2002	4.7%	6.9%
2002-2003	6.5%	6.7%
2003-2004	6.6%	6.5%
2004-2005	5.4%	6.3%
2005-2006	6%	6.2%
2006-2007	5%	8.1%
2007-2008	6.7%	9.8%

The rates are still similar between men and women. The male officer rate was 6.8% and the male NCM rate was 9.6% for fiscal year 2007/2008.

9. The Department of National Defence begin to report the results of the exit surveys it conducts among members of the Canadian Forces in its Departmental Performance Reports beginning with the Report for the period ending 31 March 2007. References to the methodology and scope of the surveys should be included.

The Department of National Defence will ensure that the information identified in this recommendation is included in its annual Departmental Performance Report. However, since the comprehensive analysis of survey results will not commence until the fall of 2007, the reporting of these results can only begin with the report for the period ending 31 March 2008.

Data collection began in late 2007 and will continue into summer 2008 in order to provide a large enough sample size for valid analyses.

10. That the Department of National Defence establish a target for the maximum acceptable rate of attrition of its trained effective strength and monitor the performance of the package of measures it has instituted to meet that target. The Department should begin to report its progress in its annual Departmental Performance Report beginning with the report ending 31 March 2007.

The Government will include data regarding attrition rates in the Department of National Defence annual Departmental Performance Report beginning with the report ending 31 March 2007. However, the data will be based on trend analysis as opposed to pre-determined targets.

Although external recruiting targets for fiscal years 2005-2006 and 2006-2007 were slightly exceeded, attrition exceeded its projections, which in turn resulted in a growth of 628, falling slightly below the forecasted 800-1,000 forecasted for fiscal year 2007-2008. The Regular Force attrition rate was 9.0% - still within the margins of healthy attrition for force renewal (6.5-10%). The intake and training plans were adjusted to account for a higher forecasted attrition rate. Attrition is higher at the normal gates of 20-25 years of service because more people as a percentage of the force are reaching this gate. This is a combined result of the downsizing years when recruiting was stopped, the fact that many 'baby boomers' are at retirement age and the hot economy. Of note, the Afghanistan operations have had no impact on attrition and may indeed be contributing to retention for those in the 5-20 years of service cohort. Attraction and recruiting campaigns were adjusted to focus on stressed occupations and recruiters and the Army, Navy and Air Forces leadership continued to work to implement targets recruiting plans for occupation based 'get well' action. The authorized Total paid strength target of 68,000 will be achieved in fiscal year 2010-2011.

Recommendation

Government Response/Commitment

Status

15^th Report of SCOPA, 39^th Parliament, 1^st session, “Chapter 5 of the November 2006 Report of the Auditor General of Canada (Relocating Members of the Canadian Forces, RCMP, and Federal Public Service)”

Original report: http://www2.parl.gc.ca/HousePublications/Publication.aspx?DocId=2955368&Language=E&Mode=1&Parl=39&Ses=1

Government response: http://www2.parl.gc.ca/HousePublications/Publication.aspx?DocId=3077631&Language=E&Mode=1&Parl=39&Ses=1

5. That the Department of National Defence, the Royal Canadian Mounted Police, and Treasury Board Secretariat include, in their annual Departmental Performance Reports, references to the Integrated Relocation-Program as it relates to their employees. Information on the numbers of employees using the Program, the costs, and the extent to which the purposes of the Program are being achieved must be included. This performance information must be included in DPRs beginning with Reports for the period ending 31 March 2008.

The Government accepts this recommendation.

The purpose of the Integrated Relocation Program (IRP) is to relocate CF personnel and their families in the most efficient fashion and at the most reasonable cost to the public while having a minimum detrimental effect on the employee and family, and on departmental operations.

The CF authorized the service provider, Royal Lepage Relocation Services (RLRS), to effect relocations for 15,700 personnel during fiscal year 2007-08. Records indicate that the administration fees paid to RLRS for providing relocation services totalled just under $28.5 million, including GST. The summation of the flow through costs for reimbursements made to CF personnel for relocation benefits were slightly greater than $225 million.

The CF IRP policy manual was completely re-written in fiscal year 2007-08 with the aim of making it shorter, less complex and easier to read and understand. In partnership with other client departments, work has begun in the process of re-tendering the relocation contract through PWGSC to be effective November 2009.

Sources: Assistant Deputy Minister(Policy) Group and Chief Military Personnel

Table 9: Internal Audits and Evaluations

Internal Audits (current reporting period)

Name of Internal Audit	Audit Type	Status (see note 1)	Completion Date (see note 2)
Airbus Maintenance Contract	Asset Management	Complete	April 2007
CP140 Aurora Maintenance Contracts	Asset Management	Complete	April 2007
Military Moves	People Management	Complete	April 2007
Information Technology Security: Certification and Accreditation	Security	Complete	April 2007
Risk Analysis of Good Contracts	Asset Management	Complete	April 2007
Risk Analysis of Operations and Maintenance Contracts	Asset Management	Complete	April 2007
Risk Analysis of Capital Projects	Capital Aquisition	Complete	April 2007
CF188 Hornet System Engineering Support Contract	Asset Management	Complete	September 2007
Inventory Pricing	Financial Management	Complete	September 2007
CP140 Aurora Data Management System Contract	Asset Management	Complete	September 2007
Canadian Search and Rescue Helicopter Acquisition (Cormorant)	Capital Acquisition	Complete	September 2007
202 Workshop Depot as a Most Efficient Organization	Corporate Governance	Complete	September 2007
Foreign Military Training (FMT)	Financial Management	Complete	December 2007
CF Reserve Pay	People Management	Complete	February 2008
Accounting for Capital Assets - Repairable Items	Financial Management	Complete	February 2008
DEW Line Clean-Up Project -Financial, Contract and Project Management	Financial Management	Complete	February 2008
CC130 Hercules Repair and Overhaul Quality Assurance Review	Asset Management	Complete	February 2008
Local Construction Engineering	Financial Management	Complete	February 2008
Chemical, Biological, Radiological, Nuclear (CBRN) Defence Omnibus Project	Capital Acquisition	Active	Expected 1^st Quarter 2008/09
Land Command Systems Support (LCSS) Contract	Asset Management	Active	Expected 1^st Quarter 2008/09
Year-End Expenditures	Financial Management	Active	Expected 1^st Quarter 2008/09
Contractor-Held Inventory	Asset Management	Active	Expected 1^st Quarter 2008/09
Inventory Management: Stocktaking, Adjustments and Write-Offs	Asset Management	Active	Expected 3^rd Quarter 2008/09
Human Resources Service Delivery	People Management	Active	Expected 3^rd Quarter 2008/09
Navy Weapon System Support Contract	Asset Management	Active	Expected 3^rd Quarter 2008/09
M113 Armoured Personnel Carrier (APC) Intellectual Property	Asset Management	Active	Expected 3^rd Quarter 2008/09
CF Housing Agency	Agency Operations	Active	Expected 3^rd Quarter 2008/09
Contaminated Sites Liability	Environmental Management	Active	Expected 3^rd Quarter 2008/09
Contract Management Audit Follow-Up: LAV Life Cycle Support Contracts, Combat System Engineer Support Contract	Asset Management	Active	Expected 3^rd Quarter 2008/09
Revenue Management	Financial Management	Active	Expected 3^rd Quarter 2008/09
Security Incident Management	Security	Active	Expected 3^rd Quarter 2008/09
Capital Asset Valuation	Financial Management	Active	Expected 4^th Quarter 2008/09
Fixed-Wing Search and Rescue Acquisition	Capital Acquistion	Active	Expected 4^th Quarter 2008/09

Source: Chief Review Services Group

Notes:

This table lists the audits completed in 2007/08, as well as the audits active in 2007/08 that have carried forward into 2008/09.
The completion date is the date the audit was approved, or is expected to be approved, by the DND/CF Audit and Evaluation Committee (AEC). *Certain audit work (e.g audits of Foreign Military Training) do not require AEC approval.
Completed audit reports, which include management action plans developed in response to audit recommendations, can be found at the following link: http://www.crs-csex.forces.gc.ca/reports-rapports/index-eng.asp

Evaluations (current reporting period)

Name of Evaluation	Program Activity	Evaluation Type	Status (see note 1)	Completion Date (see note 2)
Ammunition Acquisition Program	Generate and sustain integrated Forces	Summative	Complete	April 2007
Maintenance and Currency of CF Doctrine	Generate and sustain integrated Forces	Formative	Complete	April 2007
National Search and Rescue Program and Governance of the Secretariat	Conduct Operations; Contribute to Canada and the international community	Summative	Complete	September 2007
CF/DND Participation in the Kandahar Provincial Reconstruction Team	Conduct Operations; Contribute to Canada and the international community	Formative	Complete	February 2007
Munitions Supply Program	Generate and sustain integrated Forces	Summative	Complete	February 2007
Construction Acquisition	Generate and sustain integrated Forces	Evaluation Assessment	Complete	April 2007
Airworthiness Risk Assessment	Generate and sustain integrated Forces; Conduct operations	Other	Complete	April 2008
CRTI (contribution)	Contribute to Canada and the international community	Summative	Active	Expected 1^st Quarter 2008/09
National Office of the Cadet League (Contribution program)	Contribute to Canada and the international community	Summative	Active	Expected 2^nd Quarter 2008/09
Military Training Assistance Program (MTAP) (Contribution)	Contribute to Canada and the international community	Formative	Active	Expected 1^st Quarter 2008/09
Care of the Injured and their Families	Generate and sustain integrated Forces	Summative	Active	Expected 3^rd Quarter 2008/09
CF Recruiting, Absorption and Retention	Generate and sustain integrated Forces	Summative	Active	Expected 3^rd Quarter 2008/09
Defence Ethics Program	Contribute to Canada and the international community	Summative	Active	Expected 3^rd Quarter 2008/09
Alternate Dispute Resolution	Generate and sustain integrated forces	Summative	Active	Expected 3^rd Quarter 2008/09

Source: Chief Review Services Group

Notes:

This table lists the evaluations completed in 2007/08, as well as the evaluations active in 2007/08 that have carried forward into 2008/09.
The completion date is the date the evaluation was approved, or is expected to be approved, by the DND/CF Audit and Evaluation Committee (AEC).
Completed evaluation reports, which include management action plans developed in response to evaluation recommendations, can be found at the following link: http://www.crs-csex.forces.gc.ca/reports-rapports/index-eng.asp

Table 10: Cost of CF International Operations

($ thousands)		Actual spending FY 2006-2007		Planned spending FY 2007-2008		Actual spending FY 2007-2008
OPERATIONS		Estimated Full DND Cost¹	Incremental DND Cost²	Full DND Cost¹	Incremental DND Cost²	Estimated Full DND Cost¹	Incremental DND Cost²	Est UN Revenue to CRF³	Est UN/MFO Revenue to DND³
AFRIQUE
OP SCULPTURE IMATT (Sierra Leone)	1,833		457	1,900	500	2,362	673
OP CROCODILE MONUC (DRC)	1,643		289	1,700	300	2,566	540
OP SAFARI UNMIS (Khartoum, Sudan)	5,201		1,126	5,600	1,500	7,133	1,769	(45)
OP AUGURAL AMIS (Addis Ababa, Ethiopia)	3,583		1,965	34,100	32,500	16,375	14,705
Sub-Total	12,260		3,837	43,300	34,800	28,436	17,687	(45)	0
ARABIAN GULF AND SOUTHWEST ASIA
OP ALTAIR (South-west Asia)⁴	24,439		10,939	0	0	22,682	10,152
OP ARGUS (Afghanistan)	3,469		1,330	3,100	1,000	5,588	2,742
OP ATHENA (Kandahar, Afghanistan) (NATO) ⁵	824,085		535,635	1,591,000	846,000	1,444,624	945,059
OP ARCHER (Kabul, Afghanistan) (OEF)⁵	412,043		267,818	5,000	1,500	27,964	18,943
OP IOLAUS - UNAMI - (Iraq)	234		73	200	100	6	6
Sub-Total	1,264,270		815,795	1,599,300	848,600	1,500,858	976,902	0	0
CENTRAL AMERICA AND THE CARIBBEAN
OP FOUNDATION (USCENTCOM) (Tampa)		1,692	626	1,600	500	1,642	425
OP HAMLET MINUSTAH (Haiti)		767	134	700	100	864	112	(54)	(36)
Sub-Total		2,459	760	2,300	600	2,506	537	(54)	(36)
EUROPE
OP BRONZE (Bosnia) (NATO)	1,398		332	1,100	100	1,672	410
OP BOREAS (Bosnia) (EUFOR)	2,192		997	1,300	100	63	63
OP SEXTANT (HMCS ATHABASKAN & HMCS IROQUOIS) (NATO)	26,917		12,742	26,400	12,500	16,196	7,667
Sub-Total	30,507		14,071	28,800	12,700	17,931	8,139	0	0
MIDDLE EAST
OP GLADIUS UNDOF (Syria)		517	79	500	100	359	12	(13)
OP CALUMET MFO (Multinational Force & Observers) (Sinai) non-UN		3,946	712	3,700	500	4,836	837		(736)
OP PROTEUS (Jerusalem)		937	503	700	300	1,956	1,077
OP JADE UNTSO (Middle East)		1,445	307	1,200	100	1,379	19
OP SNOWGOOSE UNFICYP (Cyprus)		186	60	200	0	178	32	(6)
Sub-Total		7,031	1,661	6,300	1,000	8,708	1,977	(19)	(736)
OTHER MISSIONS
Others Missions (Expenses related to more than one mission)	925		925	19,000	19,000	978	978
Sub-Total	925		925	19,000	19,000	978	978	0	0
CLOSED MISSIONS
OP PLATEAU (Pakistan)		796	796
OP DANACA - UNDOF (Golan Heights)		222	222			19	19		(623)
OP Lion (Lebanon)		4,930	3,480			2	2
OP Horus (Haiti)		617	476
Sub-Total		6,565	4,974	0	0	21	21	0	(623)
Total Operations		1,324,017	842,023	1,699,000	916,700	1,559,438	1,006,241	(118)	(1,395)

Source: Canadian Expeditionary Force Command (CEFCOM) and Assistant Deputy Minister Finance and Corporate Service (ADM Fin CS) Group

Notes:

"Full DND Cost" is an indicative estimate of the cost to DND for the operation. It includes incremental costs as well as costs associated with normal military activities (primarily related to salary and wages and depreciation and attrition of equipment). The full cost methodology has been reviewed to ensure consistency with the evolving nature of the mission, resulting in a restatement of FY 2005-2006 and FY 2006-2007 amounts for Operations ATHENA and ARCHER. The FY 2005-2006 full cost amounts are amended to $143,041K for OP ATHENA and $513,642K for OP ARCHER.
"Incremental DND Cost" includes only those additional costs to deploy troops and equipment and to provide ongoing maintenance and support during the operation, e.g. costs to airlift troops and equipment into theatre, accommodation, food and supplies, ammunition repairs and spare parts for equipment and special allowances and pay. These costs are in addition to what DND was already planning to spend on exercises as part of normal activities.
Reimbursement for personnel costs accrues to the Consolidated Revenue Fund (CRF), and reimbursement for Operations and maintenance costs accrues to DND.
OP ALTAIR (Persian Gulf) Unforecast ship deployment.
OP ATHENA and OP ARCHER (Afghanistan): The variance between the planned incremental spending and the actual incremental spending is explained by the Government's decision to extend the enhanced force protection assets from October 2007 to 31 March 2008 and the increased sustainment costs directly attributable to the ongoing tempo of operations in a very remote and undeveloped region.

Table 11:
National Defence
Departmental Financial Statements

ADM (PA) DMCS CS07-0622

Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2008 and all information contained in these statements rests with the management of National Defence. These financial statements have been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management’s best estimates and judgment and gives due consideration to materiality. To fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Department’s financial transactions. Financial information submitted to the Public Accounts of Canada and included in the Department’s Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, assets are safeguarded, transactions are in accordance with the Financial Administration Act and are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout National Defence.

The financial statements of the Department have not been audited. There is no current requirement for National Defence to have these statements audited.

Robert Fonberg
Deputy Minister
Ottawa, Canada

RAdm Bryn Weadon, CMA
Senior Financial Officer

Date: August 25, 2008

Statement of Operations (Unaudited)

For the year ended March 31

(in thousands of dollars)	2008	2007
Expenses (Note 4)
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces	12,422,278	12,552,623
Conduct Operations	2,828,663	2,313,180
Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values	1,568,938	1,106,068
	16,819,879	15,971,871
Revenues (Note 5)
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces	227,415	208,187
Conduct Operations	30,788	24,784
Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values	246,281	215,376
	504,484	448,347
Net Cost of Operations	16,315,395	15,523,524

The accompanying notes form an integral part of these financial statements.

Statement of Financial Position (Unaudited)

As at March 31

(in thousands of dollars)	2008	2007
Assets
*Financial Assets*
Receivables (Note 6)	120,465	168,000
Loans and Advances (Note 7)	40,569	30,752
	161,034	198,752

*Non-Financial Assets*
Prepaid Expenses (Note 8)	749,706	863,604
Inventories (Note 9)	5,442,504	5,192,436
Tangible Capital Assets (Note 10)	27,951,656	26,137,296
	34,143,866	32,193,336

	34,304,900	32,392,088

Liabilities
Accounts Payable and Accrued Liabilities	2,043,866	1,820,680
Vacation Pay and Compensatory Leave	221,266	221,449
Deposits and Trust Accounts (Note 11)	3,535	1,868
Deferred Revenue (Note 12)	61,690	67,597
Canadian Forces Pension and Insurance Accounts (Note 13)	44,613,299	43,700,028
Lease Obligations for Tangible Capital Assets (Note 14)	691,444	759,903
Severance Benefits (Note 15)	1,413,549	1,350,019
Environmental Liabilities (Note 16)	759,272	497,416
	49,807,921	48,418,960

Equity of Canada	(15,503,021)	(16,026,872)
	34,304,900	32,392,088

Contingent Liabilities (Note 16)
Contingent Gain (Note 17)
Contractual Obligations (Note 18)

The accompanying notes form an integral part of these financial statements.

Statement of Equity of Canada (Unaudited)

For the year ended March 31

(in thousands of dollars)	2008	2007
Equity of Canada, beginning of year	(16,026,872)	(15,173,977)

Net Cost of Operations	(16,315,395)	(15,523,524)
Current Year Appropriations Used (Note 3)	17,524,048	15,682,630
Revenue Not Available for Spending	(130,384)	(97,949)
Change in Net Position in the Consolidated Revenue Fund (Note 3)	(1,127,487)	(1,525,402)
Services Provided Without Charge by Other Government Departments (Note 19)	573,069	611,350

Equity of Canada, end of year	(15,503,021)	(16,026,872)

The accompanying notes form an integral part of these financial statements.

Statement of Cash Flow (Unaudited)

For the year ended March 31

(in thousands of dollars)	2008	2007
Operating Activities
*Net Cost of Operations*	16,315,395	15,523,524
*Non-Cash Items Included in Net Cost of Operations:*
Amortization of Tangible Capital Assets	(1,877,822)	(1,783,758)
Gain or Loss on Disposals/Adjustments of Tangible Capital Assets	380,425	(221,636)
Services Provided Without Charge by Other Government Departments	(573,069)	(611,350)
*Variations in Statement of Financial Position*
Decrease in Receivables and Advances	(37,718)	(465,376)
Increase (decrease) in Prepaid Expenses	(113,897)	346,092
Increase in Inventories	250,069	236,754
Increase in Liabilities, net of Capital Lease Obligations	(1,457,420)	(1,258,691)
Cash Used by Operating Activities	12,885,963	11,765,559

Capital Investment Activities
Acquisitions of Tangible Capital Assets (excluding Leased Tangible Capital Assets) (Note 10)	3,326,384	2,235,599
Proceeds on Disposal of Surplus Assets	(17,401)	(20,471)
Payments against / Adjustments to Capital Lease Obligations	71,231	78,592
Cash Used by Capital Investment Activities	3,380,214	2,293,720

Financing Activities
Net Cash Provided by Government of Canada	(16,266,177)	(14,059,279)

The accompanying notes form an integral part of these financial statements.

Notes to the Financial Statements (Unaudited)

1. Authorities and Objectives

Authorities

The Department of National Defence (DND) was established by the National Defence Act (NDA). Under section 3 of the Act, the Minister of National Defence presides over the Department. Under section 4 of the NDA, the Minister has the management and direction of the Canadian Forces (CF) and of all matters relating to National Defence.

Objectives

The Defence mission is to defend Canada and Canadian interests and values while contributing to international peace and security. Under Canadian defence policy, the CF is called upon to fill three major roles: protecting Canada, defending North America in co-operation with the United States, and contributing to international peace and security. The Defence mission is delivered through three Program Activities, which are as follows:

(a) Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces:

This Program Activity consists of all the activities necessary to design and develop force structure, create the capability components, generate the forces, and sustain and maintain the forces over time at the appropriate readiness levels. It is designed to generate and sustain forces capable of: Maritime Effects; Land Effects; Aerospace Effects; and Joint, National, Unified and Special Operations Forces. This activity is required to:

Maintain operational units;
Maintain deployable support;
Recruit and train personnel;
Provide nationally based fixed support including infrastructure, supply, fixed command, force development, and research and development; and
Acquire Capital Equipment.

(b) Conduct operations:

This Program Activity represents the main use of the program output from generate and sustain forces, that is the employment of forces in operations, whether on a constant basis, selectively ongoing operations, or as required for named domestic or international operations. It consists of all the activities necessary to conduct: Constant Situational Awareness; Domestic and Continental Operations; and International Operations. This activity is required to:

Maintain and conduct Intelligence, Surveillance and Reconnaissance (ISR) operations;
Maintain ISR support;
Employ forces to conduct contingency operations in response to domestic or continental requirements;
Employ High–Readiness forces to conduct operations in response to domestic and continental requirements;
Provide ongoing specified services in accordance with Government of Canada and other government department agreements and demand from other levels of government;
Employ forces to conduct contingency operations in response to international requirements; and
Employ High–Readiness forces to conduct operations in response to international requirements.

(c) Contribute to Canadian government, society and international community in accordance with Canadian interests and values:

This Program Activity consists of Defence advice to the Government of Canada, contributions to Canadian Government; and contributions to the International Community, all in accordance with Canadian interests and values. This activity is required to:

Provide defence and security policy advice to the Government of Canada;
Provide military advice to the Government of Canada;
Provide support to Government of Canada programs;
Contribute to Canadian economy and innovation;
Contribute to Canadian identity;
Contribute to youth and education;
Meet commitments to international organizations and exchange programs; and
Provide advisory and training support to other nations.

2. Summary of Significant Accounting Policies

The financial statements have been prepared in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector.

(a) Parliamentary Appropriations

The Department is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the Department do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between the bases of reporting.

(b) Reporting Entity

The reporting entity hereafter referred to, as the Department, is comprised of DND, the CF and several related organizations and agencies in the Defence Portfolio, which carry out the Defence mission and are part of the Defence Services Program. The Canadian Forces Grievance Board and the Military Police Complaints Commission are excluded from the reporting entity because these organizations are not part of the Defence Services Program, although they fall under the responsibility of the Minister of National Defence.

Non-Public Property (NPP) as defined in section 2 of the NDA, and administered by the Canadian Forces Personnel Support Agency is also excluded from the reporting entity. NPP includes all money and property contributed to or by CF members for their collective benefit and welfare. NPP is not subject to the Financial Administration Act, and is administered outside the framework of public funds. NPP is not part of the Defence Services Program. For 2007-2008, NPP had estimated annual revenues of $305 million ($330 million in 2006-2007), estimated annual expenses of $300 million ($295 million in 2006-2007) and as of March 31, 2008 had an estimated net equity (assets minus liabilities) of $560 million ($540 million in 2006-2007).

Organizations and agencies that are part of the reporting entity include the following:

Canadian Cadet Program and the Junior Canadian Rangers;
Communications Security Establishment;
Canadian Forces Housing Agency;
Defence Research and Development Canada;
Office of the Communications Security Establishment Commissioner;
Office of the Department of National Defence and Canadian Forces Ombudsman;
Office of the Judge Advocate General; and
National Search and Rescue Secretariat.

All revenue and expense transactions and any related asset and liability accounts between organizations within the Defence Services Program have been eliminated.

(c) Net Cash Provided by the Government of Canada

The Department operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash receipts are deposited to the CRF and all cash disbursements made by the Department are paid from the CRF. Net cash provided by the Government is the difference between all cash receipts and cash disbursements including transactions between departments of the federal government.

(d) Change in Net Position in the Consolidated Revenue Fund

Change in net position in the CRF is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non-respendable revenue recorded by the Department. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

(e) Revenues

Revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues;
Funds received from external parties for specified purposes are recorded upon receipt as deferred revenues. These revenues are recognized in the period in which the related expenses are incurred; and
Revenues that have been received but not yet earned are recorded as deferred revenues.

(f) Expenses

Expenses are recorded on an accrual basis:

Grants are recognized in the year in which the conditions for payment are met. For grants, which do not form part of an existing program, the expense is recognized when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements;
Contributions are recognized in the year in which the recipient has met the eligibility criteria and fulfilled the terms and conditions of the funding agreement;
Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment; and
Services provided without charge by other government departments for accommodation, the employer’s contribution to the health and dental insurance plans, Worker’s Compensation coverage and legal services are recorded as operating expenses at their estimated cost.

(g) Employee Future Benefits

(i) Pension Benefits

Eligible civilian employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada. Contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require the Department to make contributions for any actuarial deficiencies of the Plan.

The Government of Canada sponsors a variety of employee future benefits such as pension plans and disability benefits, which cover members of the Canadian Forces. National Defence administers the pension benefits for members of the Canadian Forces. The actuarial liability and related disclosures for these future benefits are presented in the financial statements of the Government of Canada. This differs from the accounting and disclosures of future benefits for military members presented in these financial statements whereby pension expense corresponds to the Department’s annual contributions toward the cost of current service. In addition to its regular contributions, current legislation also requires the Department to make contributions for actuarial deficiencies in the Canadian Forces Pension Plan and in the Reserve Force Pension Plan, which came into force on March 1, 2007. These contributions are expensed in the year they are credited to the Plans. This accounting treatment corresponds to the funding provided to departments through Parliamentary appropriations.

(ii) Severance Benefits

Employees and military members are entitled to severance benefits, under labour contracts or conditions of employment. These benefits are accrued as employees and military members render the services necessary to earn them. The obligation relating to the benefits earned by civilian employees and Canadian Forces members is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

(h) Receivables

Receivables are stated at amounts expected to be ultimately realized. An allowance for doubtful accounts is made for external receivables where recovery is considered uncertain.

(i) Loans and Advances

Loans and advances are initially recorded at cost, but are stated at amounts expected to be ultimately realized; a provision is made where recovery is considered uncertain.

(j) Inventories

Inventory consists of consumables (such as non-repairable spares, uniforms and clothing, medical and other equipment and machine tools) and ammunition (including bombs and missiles). Consumable inventories are valued using a moving weighted average price methodology. Some items classified as repairable ammunition (e.g. missiles and torpedoes) are valued using a standard price. Inventory managed by contractors and not held in the Canadian Forces Supply System is valued based on contractor-supplied records. DND reviews its inventory on a periodic basis. Items identified for disposal are excluded from the value of inventory.

(k) Tangible Capital Assets

All tangible capital assets, having an initial cost of $30,000 or more, including capital leases, betterments and leasehold improvements, are recorded at their acquisition cost. Capitalization threshold values lower than $30,000 may apply to certain assets such as vehicles and repairable spares.

Capital assets do not include intangible assets, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on First Nations Reserves and in museum collections.

The Department is presently reviewing its process for recording and valuation of tangible capital assets. This work will be conducted over a number of years. In 2007-2008, DND identified and recorded $45 million ($146 million in 2006-2007) in post-capitalization of tangible capital assets as current year transactions.

In anticipation of revised policies regarding the recording of repairable assets in fiscal year 2008-2009, an estimated adjustment of $687M to the net book value of repairable assets has been made this fiscal year resulting in a total net book value of $750M. A thorough valuation of repairable assets will follow the issuance of the revised policies and further adjustments may be required.

(l) Amortization of Tangible Capital Assets

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the capital asset as follows:

Asset Class	Amortization Period
Buildings	10-40 years
Works	5-40 years
Machinery and Equipment	3-30 years
Informatics Hardware	3-30 years
Informatics Software	2-12 years
Arms and Weapons	3-30 years
Other Equipment	5-30 years
Ships and Boats	10-30 years
Aircraft	20-40 years
Non-military Motor Vehicles	2-30 years
Military Vehicles	3-25 years
Other Vehicles	4-25 years
Leasehold Improvements	Lesser of useful life of the improvement or term of lease
Leased Tangible Capital Assets	Economic life or term of lease
Repairable spares are amortized in accordance with the sum of the accumulated amortization of the equipment platform that they support.

(m) Contingent Liabilities – Claims and Litigations

Contingent liabilities are potential liabilities, which may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements. (refer to Note 16(a) of these financial statements)

(n) Environmental Liabilities

Environmental liabilities reflect the estimated costs related to the management and remediation of environmentally contaminated sites and unexploded explosive ordnance (UXO) affected sites. Based on management’s best estimates, a liability is accrued and an expense recorded associated with the site assessment activity, when a site becomes contaminated or affected or when the Department becomes aware that the site has become contaminated or affected and is obligated, or is likely to be obligated, to incur such costs. If the likelihood of the Department’s obligation to incur these costs is not determinable, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in the notes to the financial statements. (refer to Note 16(b) of these financial statements)

(o) Foreign Currency Transactions

Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars using the rate of exchange in effect on March 31, 2008. Gains resulting from foreign currency transactions are included as revenues in Interest and Gains on Foreign Exchange in Note 5 and losses from foreign currency transactions are included in Other Expenses in Note 4.

(p) Measurement Uncertainty

The preparation of these financial statements, in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are contingent liabilities, environmental liabilities, the liability for employee severance benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimates. Management’s estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary Appropriations

National Defence receives most of its funding through annual Parliamentary appropriations. Items recognized in the Statement of Operations and the Statement of Financial Position in one year may be funded through Parliamentary appropriations in prior, current and future years. Accordingly, the Department has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

(a) Reconciliation of Net Cost of Operations to Current Year Appropriations Used

(in thousands of dollars)	2008	2007
*Net Cost of Operations*	16,315,395	15,523,524
*Adjustments for items affecting Net Cost of Operations but not affecting Appropriations*
Amortization of Tangible Capital Assets	(1,877,822)	(1,783,758)
Services Provided Without Charge by Other Government Departments	(573,069)	(611,350)
Severance Benefits	(63,531)	(78,251)
Refund of Previous Year’s Expenses	63,965	77,786
Vacation Pay and Compensatory Leave	161	(53,377)
Gain or Loss on Disposals and Adjustments of Capital Assets	380,425	(221,636)
Return on Investments	4,786	9,400
Other Revenues	37,736	7,966
Justice Canada Fees	0	(6,110)
Environmental Liabilities and Other Allowances	(262,922)	(55,833)
Allowance for Bad Debts	(37,635)	(8,532)
Sale of Real Property through Canada Lands Company	258	2,930
Miscellaneous	17	12
	(2,327,631)	(2,720,753)

*Adjustments for items not affecting Net Cost of Operations but affecting Appropriations*
Tangible Capital Assets Acquisitions (excluding capital leases)	3,326,384	2,235,599
Payments Against Capital Lease Obligations	71,768	79,100
Inventory Purchases Net of Usage and Adjustments	250,067	236,754
Net Variation Prepaid Expenses	(113,898)	346,092
Revenues Collected from Prior Year Receivables	1,963	(17,686)
	3,536,284	2,879,859

Current Year Appropriations Used	17,524,048	15,682,630

(b) Appropriations Provided and Used

	Appropriations Provided
(in thousands of dollars)	2008	2007
*Operating Expenditures – Vote 1*	13,234,229	12,014,954
*Capital Expenditures – Vote 5*	3,964,010	2,513,788
*Grants & Contributions – Vote 10*	215,086	191,985
*Forgiveness of Debt – Vote 11a*	0	2
	17,413,325	14,720,729

*Statutory Amounts:*
Contributions to Employee Benefit Plan – Members of the Military	1,056,614	905,145
Contributions to Employee Benefit Plan – Civilians	269,730	254,004
Spending of Proceeds from the Disposal of Surplus Crown Assets	9,242	20,591
Payments under the Supplementary Retirement Benefits Act	6,079	6,796
Payments under Parts I-IV of the Defence Services Pension Continuation Act	1,319	1,493
Pensions and Annuities Paid to Civilians	80	80
Minister’s Salary and Motor Car Allowance	74	73
Collection Agency Fees	44	39
	1,343,182	1,188,221

*Less:*
Lapsed Appropriations*
Operating Expenditures – Vote 1	(421,915)	(89,719)
Capital Expenditures – Vote 5	(764,250)	(131,964)
Grants & Contributions – Vote 10	(46,294)	(4,635)
Forgiveness of Debt – Vote 11a	0	(2)
	(1,232,459)	(226,320)

Current Year Appropriations Used	17,524,048	15,682,630

* 2007-2008 Lapsed Appropriations include a $200 million Operating Budget Carry Forward and approximately $730 million of frozen allotments.

(c) Reconciliation of Net Cash Provided by Government to Current Year Appropriations Used

(in thousands of dollars)	2008	2007
Net Cash Provided by Government	16,266,177	14,059,279
Revenue Not Available for Spending	130,384	97,949
Change in Net Position in the Consolidated Revenue Fund
Variations in Canadian Forces Pension and Insurance Accounts	913,271	979,481
Variations in Accounts Payable and Accrued Liabilities	223,186	87,779
Variations in Accounts Receivable, Loans and Advances	37,718	465,376
Other Adjustments	(46,688)	(7,234)
	1,127,487	1,525,402
Current Year Appropriations Used	17,524,048	15,682,630

4. Expenses

The following table presents details of expenses by category:

(in thousands of dollars)	2008	2007
*Operating*
Salary and Employee Benefits	8,759,150	8,323,894
Amortization	1,877,822	1,783,758
Professional and Special Services	1,496,578	1,442,056
Repair and Maintenance	1,086,192	971,476
Transportation and Communication	899,387	746,402
Materials and Supplies	839,272	616,254
Expenses Related to Tangible Assets*	(162,471)	250,426
Loss on Disposals and Write-offs and Write-downs of Tangible Capital Assets	454,310	467,310
Other Services	357,548	391,557
Equipment and Other Rentals	229,464	266,966
Utilities	158,574	150,864
Accommodation	144,357	137,255
Interest on Capital Lease Payments	39,125	45,911
Bad Debts**	37,635	8,532
Advertising, Printing and Related Services	33,552	35,353
Other Expenses***	393,517	138,199
	16,644,012	15,776,213
*Transfers*
Transfers to Other Countries and International Organizations	154,680	174,876
Transfers to Non-Profit Organizations	10,180	10,293
Transfers to Individuals	7,495	8,386
Transfers to Other Levels of Government	3,512	2,103
	175,867	195,658
	16,819,879	15,971,871

* The Expenses Related to Tangible Assets include those assets (machinery, equipment, buildings and works) that were not capitalized because they were lower than the capitalization threshold established by the Department. The decrease in Expenses Related to Tangible Assets is the result of an estimated adjustment to the reporting of repairable assets. (refer to note 2(k) of these financial statements).

** The increase in Bad Debts is due to an increase in allowance for doubtful accounts.

*** The increase in Other Expenses is mainly due to an increase of $195 million in estimated costs related to unexploded explosive ordnance (UXO) affected sites.

5. Revenues

The following table presents details of revenues by category:

(in thousands of dollars)	2008	2007
Sale of Goods and Services	425,504	396,336
Gains on Disposals of Assets	12,574	9,590
Interest and Gains on Foreign Exchange	7,957	12,591
Other	58,449	29,830
	504,484	448,347

6. Receivables

The following table presents details of accounts receivable:

(in thousands of dollars)	2008	2007
External Clients	189,222	217,924
Other Government Departments	63,334	72,689
Gross Receivables	252,556	290,613
Less: Allowance for Doubtful Accounts on External Receivables	132,091	122,613
Net Receivables	120,465	168,000

7. Loans and Advances

(in thousands of dollars)	2008	2007
Imprest Accounts, Standing Advances and Authorized Loans to CF Members	40,388	30,658
Advances to NATO Personnel for Recoverable Damage Claims	181	94
	40,569	30,752

8. Prepaid Expenses

The following is a breakdown of prepaid expenses recorded by National Defence as of March 31, 2008:

(in thousands of dollars)	2008	2007
Foreign Military Purchases	301,219	406,085
Sea Sparrow Missiles	260,140	271,328
Joint Strike Fighter Development	66,201	78,237
NATO Flying Training Canada (NFTC)*	48,469	52,882
Building Rentals	12,125	0
Military Salaries	8,349	8,213
Cooperative Logistics Arrangements	4,001	7,664
Other Purchases*	49,202	39,195
	749,706	863,604

* Comparative figures have been reclassified due to misclassification in 2006-2007.

9. Inventories

(in thousands of dollars)	2008	2007
Ammunition, Bombs and Missiles	2,869,702	2,883,766
Contractor Held Inventory	304,491	249,911
Uniforms and Clothing	304,484	373,247
Land Equipment Spares	301,319	256,370
Engineering, Test and Technical Equipment and Machine Tools	272,108	238,639
Communication, Electrical Parts/Accessories and Informatics Equipment*	265,913	225,940
Aircraft Spares	215,094	193,242
Sonobuoys, Parts and Accessories	159,681	142,987
Ship Spares	153,555	139,487
Medical Equipment	74,276	58,177
Miscellaneous	521,881	430,670
	5,442,504	5,192,436

* Category renamed for the year ended March 31, 2008. Previously reported as “Communication and Informatics Equipment”.

10. Tangible Capital Assets and Accumulated Amortization

Tangible Capital Assets

(in thousands of dollars)	Balance Beginning of Year	Current Year Adjustments	Acquisitions	Disposals	Balance End of Year
*Land, Buildings & Works*
Land	75,053	(461)	3,467	(37)	78,022
Buildings	5,652,205	507,047	22,035	(157,323)	6,023,964
Works	1,604,447	150,286	50,245	(71,058)	1,733,920
	7,331,705	656,872	75,747	(228,418)	7,835,906
*Machinery & Equipment*
Machinery and Equipment	2,012,089	207,241	84,425	(1,041)	2,302,714
Informatics Hardware	3,688,709	305,362	136,182	(575)	4,129,678
Informatics Software	276,741	1,088	6,257	0	284,086
Arms and Weapons	4,907,326	675,438	82,508	(77,031)	5,588,241
Other Equipment	48,514	9,186	3,030	(323)	60,407
	10,933,379	1,198,315	312,402	(78,970)	12,365,126
*Ships, Aircraft & Vehicles*
Ships and Boats	12,743,879	603,596	67,048	(466,727)	12,947,796
Aircraft	12,296,194	1,165,068	201,454	(80,362)	13,582,354
Non-military Motor Vehicles	555,285	(4,380)	92,943	(39,279)	604,569
Military Vehicles	1,333,978	99,732	6,354	(11,177)	1,428,887
Other Vehicles	160,151	4,776	6,760	(7,388)	164,299
	27,089,487	1,868,792	374,559	(604,933)	28,727,905
*Leasehold Improvements*
Leasehold Improvements	14,541	6,622	0	(855)	20,308
*Leased Tangible Capital Assets*
Buildings	87,819	0	0	0	87,819
Informatics Hardware	8,793	6,086	2,772	0	17,651
Other Equipment	0	48	0	0	48
Ships and Boats	379,681	(151,490)	0	0	228,191
Aircraft	788,458	0	0	0	788,458
	1,264,751	(145,356)	2,772	0	1,122,167
*Work in Progress*
Buildings	784,306	(365,489)	287,745	(272)	706,290
Engineering Works	102,805	(99,977)	132,025	(33)	134,820
Informatics Software	514,405	(6,529)	100,038	(167)	607,747
Equipment	2,971,843	(1,160,825)	2,043,868	(36,210)	3,818,676
	4,373,359	(1,632,820)	2,563,676	(36,682)	5,267,533
Gross Tangible Capital Assets	51,007,222	1,952,425	3,329,156	(949,858)	55,338,945

Accumulated Amortization

(in thousands of dollars)	Balance Beginning of Year	Current Year Adjustments	Current Year Amortization	Disposals	Balance End of Year	Net Book Value 2008	Net Book Value 2007
*Land, Buildings & Works*
Land						78,022	75,053
Buildings	2,455,813	92,429	172,399	(137,906)	2,582,735	3,441,229	3,196,392
Works	1,001,541	8,774	65,133	(46,811)	1,028,637	705,283	602,906
	3,457,354	101,203	237,532	(184,717)	3,611,372	4,224,534	3,874,351
*Machinery & Equipment*
Machinery and Equipment	1,471,446	202,015	74,209	(870)	1,746,800	555,914	540,643
Informatics Hardware	2,003,192	181,955	259,871	(575)	2,444,443	1,685,235	1,685,517
Informatics Software	108,232	175	31,521	0	139,928	144,158	168,509
Arms and Weapons	2,171,452	282,401	232,957	(60,826)	2,625,984	2,962,257	2,735,874
Other Equipment	29,227	7,097	3,805	(323)	39,806	20,601	19,287
	5,783,549	673,643	602,363	(62,594)	6,996,961	5,368,165	5,149,830
*Ships, Aircraft & Vehicles*
Ships and Boats	5,955,765	226,020	460,441	(466,727)	6,175,499	6,772,297	6,788,114
Aircraft	8,020,585	474,017	414,071	(76,229)	8,832,444	4,749,910	4,275,609
Non-military Motor Vehicles	340,263	(5,360)	44,394	(37,247)	342,050	262,519	215,022
Military Vehicles	921,155	19,667	55,772	(10,200)	986,394	442,493	412,823
Other Vehicles	83,115	7	9,954	(7,355)	85,721	78,578	77,036
	15,320,883	714,351	984,632	(597,758)	16,422,108	12,305,797	11,768,604
*Leasehold Improvements*
Leasehold Improve-ments	3,682	1,022	4,305	(1,078)	7,931	12,377	10,859
*Leased Tangible Capital Assets*
Buildings	28,217	0	3,311	0	31,528	56,291	59,602
Informatics Hardware	3,401	507	2,029	0	5,937	11,714	5,392
Other Equipment	0	12	5	0	17	31	0
Ships and Boats	8,407	(5,050)	5,482	0	8,839	219,352	371,274
Aircraft	264,433	0	38,163	0	302,596	485,862	524,025
	304,458	(4,531)	48,990	0	348,917	773,250	960,293
*Work in Progress*
Buildings						706,290	784,306
Engineering Works						134,820	102,805
Informatics Software						607,747	514,405
Equipment						3,818,676	2,971,843
						5,267,533	4,373,359
Total	24,869,926	1,485,688	1,877,822	(846,147)	27,387,289	27,951,656	26,137,296

Amortization expense for the year ended March 31, 2008 is $1,878 million (2007 – $1,784 million).

11. Deposits and Trust Accounts

The following table presents details of deposits and trust accounts:

(in thousands of dollars)	2008	2007
*Contractor Security Deposits*
Deposits, beginning of year	1,624	2,001
Deposits received	5,925	3,566
Refunds	(4,388)	(3,943)
Contractor Security Deposits, end of year	3,161	1,624
Trust Account, Estates – Armed Services*
Trust Account, beginning of year	244	214
Funds received	2,147	1,848
Payments	(2,017)	(1,818)
Trust Account, Estates – Armed Services, end of year	374	244
	3,535	1,868

* The Trust Account, Estates – Armed Services was established to record the service estates of deceased members of the Canadian Forces pursuant to section 42 of the National Defence Act. Net assets of estates are distributed to legal heirs under the administration of the Judge Advocate General, in his capacity as Director of Estates.

12. Deferred Revenue

Deferred revenue represents the balance at year-end of unearned revenue stemming from funds received from foreign governments, to cover expenditures to be made on their behalf in accordance with agreements with the Government of Canada, and from funds received for other specified purposes. Details of the transactions related to this account are as follows:

(in thousands of dollars)	2008	2007
*Foreign Governments*
Beginning of Year	45,015	44,426
Funds Received	101,509	78,446
Revenue Earned	(103,530)	(77,857)
Foreign Governments, end of year	42,994	45,015
*Other Specified Purposes*
Beginning of Year	22,582	17,460
Funds Received	3,165	14,121
Revenue Earned	(7,051)	(8,999)
Other Specified Purposes, end of year	18,696	22,582
	61,690	67,597

13. Canadian Forces Pension and Insurance Accounts

Modernization of the Canadian Forces Superannuation Act came into force on March 1, 2007, providing pension entitlements for eligible reserve members of the Canadian Forces as part of the new Reserve Force Pension Plan and modernizing existing pension entitlements that are part of the Canadian Forces Pension Plan. The two plans together are referred to as the Canadian Forces Pension Plans.

The Department maintains accounts to record the transactions pertaining to the Canadian Forces Pension Plans, which comprise the Canadian Forces Superannuation Account, the Canadian Forces Pension Fund Account, the Retirement Compensation Arrangement Account, and, commencing March 1, 2007, the Reserve Force Pension Fund Account. These accounts record transactions such as contributions, benefit payments, interest credits, refundable taxes and actuarial debit and credit funding adjustments resulting from triennial reviews and transfers to the Public Sector Pension Investment Board (PSP Investments).

The value of the liabilities reported in these financial statements for the Canadian Forces Pension Plans do not reflect the actuarial value of these liabilities determined by the Chief Actuary of the Office of the Superintendent of Financial Institutions nor the investments that are held by PSP Investments. Additional information on the Canadian Forces Pension Plans, including audited financial statements, is published in the Annual Report of the Canadian Forces Pension Plans, which is available through the Department of National Defence Website.

The Department also maintains the Regular Forces Death Benefit Account, which provides life insurance to contributing members and former members of the Canadian Forces. This account records contributions, premiums, interest, and benefit payments.

The following table provides details of the Canadian Forces Pension and Insurance Accounts:

(in thousands of dollars)	2008	2007
*Canadian Forces Superannuation Account*
Beginning of Year	43,287,166	42,362,772
Funds Received and other credits	3,095,377	3,136,297
Payments and other charges	(2,229,889)	(2,211,903)
Canadian Forces Superannuation Account, end of year	44,152,654	43,287,166
*Canadian Forces Pension Fund Account*
Beginning of Year	63,594	30,873
Funds Received and other credits	968,293	855,559
Payments and other charges	(108,583)	(84,292)
Transfers to the Public Sector Pension Investment Board	(851,611)	(738,546)
Canadian Forces Pension Fund Account, end of year	71,693	63,594
*Reserve Force Pension Fund Account*
Beginning of Year	3,276	0
Funds Received and other credits	66,257	4,856
Payments and other charges	(4,591)	(1,580)
Transfers to the Public Sector Pension Investment Board	(55,723)	0
Reserve Force Pension Fund Account, end of year	9,219	3,276
Retirement Compensation Arrangements Account*
Beginning of Year	149,350	129,670
Funds Received and other credits	63,192	52,123
Payments and other charges	(29,521)	(32,443)
Retirement Compensation Arrangements Account, end of year	183,021	149,350
*Regular Force Death Benefit Account*
Beginning of Year	196,642	197,232
Funds Received and other credits	31,381	31,490
Payments and other charges	(31,311)	(32,080)
Regular Force Death Benefit Account, end of year	196,712	196,642
	44,613,299	43,700,028

* The Retirement Compensation Arrangements (RCA) account records transactions for pension benefits that are provided in excess of those permitted under the Income Tax Act. The RCA is registered with Canada Revenue Agency (CRA) and a transfer is made annually between the RCA Account and CRA to either remit a 50-percent refundable tax in respect of the net contributions and interest credits or to be credited a reimbursement based on the net benefit payments. As at March 31, 2008, the total refundable tax transferred amounts to $163 million ($136 million in 2007).

14. Lease Obligations for Tangible Capital Assets

The Department has entered into agreements for buildings, aircraft, ships and boats and informatics hardware under capital lease (refer to Note 10 of these financial statements). The obligations for the upcoming years include the following:

(in thousands of dollars)	Total Future Minimum Lease Payments	Imputed Interest (5.29% to 8.05%)	Balance of Obligations 2008	Balance of Obligations 2007
Buildings	111,707	(39,940)	71,767	74,196
Aircraft	813,410	(227,010)	586,400	621,062
Ships and Boats	27,000	0	27,000	59,144
Informatics Hardware	7,240	(963)	6,277	5,501
	959,357	(267,913)	691,444	759,903

Future Minimum Lease Payments

(in thousands of dollars)	2008-2009	2009-2010	2010-2011	2011-2012	2012-2013	2013-2014 and Thereafter
Buildings	6,487	6,487	6,491	6,900	6,935	78,407
Aircraft	70,106	70,106	70,106	70,106	70,106	462,880
Ships and Boats	15,428	11,572	0	0	0	0
Informatics Hardware	2,758	3,222	759	501	0	0
	94,779	91,387	77,356	77,507	77,041	541,287

15. Employee Benefits

(a) Pension Benefits:

i) The Department’s Public Service employees participate in the Public Service Pension Plan, which is sponsored by the Government of Canada. Pension benefits accrue up to a maximum of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Qu�bec Pension Plan benefits and they are indexed to inflation.

Both the employees and the Department contribute to the cost of the Plan. The 2007-2008 expense amounts to $196.6 million ($187.2 million in 2006-2007), which represents approximately 2.1 times (2.2 times in 2006-2007) the contributions by employees.

The Department’s responsibility with regard to the pension plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor.

ii) The members of the Canadian Forces (Regular Force), and eligible members of the Reserve Force participate in the Canadian Forces Pension Plans, which are sponsored by the Government of Canada and administered by the Department. Pension benefits accrue up to a maximum of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Qu�bec Pension Plan benefits and are indexed to inflation.

Both the members and the Department contribute to the cost of the Plans. The 2007-2008 expense amounts to $831.3 million ($693 million in 2006-2007), which represents approximately 2.99 times (3.1 times in 2006-2007) the contributions by employees.

The Department is responsible for providing program management and the day-to-day administration of the Plans. The actuarial liability and actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plans’ sponsor.

(b) Severance Benefits:

The Department provides severance benefits to its public service employees and Canadian Forces members based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:

(in thousands of dollars)	2008	2007
*Public Service Employees*
Accrued benefit obligation, beginning of year	297,619	264,768
Expenses for the year	39,109	53,771
Benefits paid during the year	(23,579)	(20,920)
Accrued benefit obligation, end of year	313,149	297,619
*Canadian Forces Members*
Accrued benefit obligation, beginning of year	1,052,400	1,007,000
Expenses for the year	153,371	150,864
Benefits paid during the year	(105,371)	(105,464)
Accrued benefit obligation, end of year	1,100,400	1,052,400
	1,413,549	1,350,019

16. Contingent Liabilities

Contingent liabilities arise in the normal course of the operations of the Department and their ultimate disposition is unknown. The Department is involved in two categories of contingent liabilities, claims and litigations, and environmental liabilities.

(a) Claims and Litigations

Claims have been made against the Department in the normal course of operations. Legal proceedings for claims totalling approximately $14,008 million ($12,324 million in 2006-2007) were still pending at March 31, 2008. Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded in the financial statements.

The Public Sector Pension Investment Board Act that received Royal Assent in September 1999 amended the Canadian Forces Superannuation Act to enable the federal government to deal with the excess amounts in the Canadian Forces Superannuation Account and the Canadian Forces Pension Fund. The legal validity of these provisions has been challenged in the courts. The plaintiffs lost at trial, but have appealed.

(b) Environmental Liabilities – Contaminated and UXO Sites

Liabilities are accrued to record the estimated costs related to the management and remediation of environmentally contaminated sites and unexploded explosive ordnance (UXO) affected sites, where the Department is obligated or likely to be obligated to incur such costs. The Department has confirmed approximately 359 sites (270 sites in 2006-2007) where such action is possible and for which a liability of $759 million ($497 million in 2006-2007) has been recorded. A further breakdown of the liability reported in 2007-2008 is as follows (2006-2007 figures in brackets):

• 59 (28) Confirmed UXO Affected Areas $328 ($119) million

• 300 (242) Confirmed Environmentally Contaminated Sites $431 ($378) million

The Department has estimated contingent liabilities of $479 million ($1,616 million in 2006-2007) for mitigation costs that are not accrued, as these are not considered likely to be incurred at this time. The current year decrease of $1,137 million in these estimated potential liabilities is the result of new information and of an improved understanding of accounting policies related to contaminated sites. The details of the estimated contingent liabilities for 2007-2008 are as follows (2006-2007 figures in brackets):

• UXO Affected Areas $114 ($359) million

• Environmentally Contaminated Sites $365 ($1,257) million

The Department’s ongoing effort to assess contaminated and UXO sites may result in additional environmental liabilities related to confirmed sites, newly identified sites, changes in assessments, or changes in intended use of existing sites. These liabilities will be accrued by the Department in the year in which they become known.

17. Contingent Gain

DND entered into a contract to obtain military flying training over a 20-year term as part of the NATO Flying Training in Canada (NFTC) program. Among other services, the prime contractor provides aircraft by leasing them for the life of the program from a non-profit company, which was set up to finance the acquisition of aircraft. Surplus funds remaining in the accounts of the non-profit company will eventually accrue to the Government of Canada, once the asset purchase period has been completed for the acquisition of aircraft and excess funds have been declared surplus. At present, it is estimated that $24.6 million ($23.6 million in 2006-2007) of the excess funds will be eventually declared surplus.

18. Contractual Obligations

The nature of the Department’s activities can result in some large multi-year contracts and obligations whereby the Department will be obligated to make future payments when the services/goods are received. Contractual obligations over $10 million that can be reasonably estimated are as follows:

(in thousands of dollars)	2008-2009	2009-2010	2010-2011	2011-2012	2012-2013 and Thereafter	Total
Fixed Assets	1,587,000	1,147,000	559,000	364,000	3,011,000	6,668,000
Purchases	1,461,000	879,000	651,000	514,000	3,227,000	6,732,000
	3,048,000	2,026,000	1,210,000	878,000	6,238,000	13,400,000

19. Related Party Transactions

The Department is related as a result of common ownership to all Government of Canada departments, agencies and Crown Corporations. The Department enters into transactions with these entities in the normal course of business and on normal trade terms. Also during the year, the Department received services which were obtained without charge from other Government departments as presented in part (a).

(a) Services Provided Without Charge by Other Government Departments

Throughout the year, the Department received without charge from other departments, employer’s contribution to the health and dental plans, accommodations, Worker’s Compensation coverage and legal fees. These services listed below have been recognized in the Department’s Statement of Operations as follows:

(in thousands of dollars)	2008	2007
Employer’s Contributions to the Health and Dental Plans Paid by Treasury Board Secretariat	485,952	524,962
Accommodation Provided by Public Works and Government Services Canada	72,967	70,862
Worker’s Compensation Coverage Provided by Human Resources and Social Development	10,339	11,657
Legal Services Provided by Justice Canada	3,811	3,869
	573,069	611,350

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so one department performs these on behalf of all departments and agencies without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included as expenses in the Department’s Statement of Operations.

(b) Payables Outstanding at Year-End with Related Parties

(in thousands of dollars)	2008	2007
Accounts Payable to Other Government Departments and Agencies	124,349	99,846

Table A: Military (Regular Force) by Program Activity

Program Activity	Actual 2005–2006	Actual 2006–2007	Planned 2007–2008	Actual 2007–2008
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces	N/A	56,484	N/A	51,175
Conduct Operations	N/A	6,300	N/A	10,531
Contribute to Canadian Government, Society and the International Community	N/A	995	N/A	2,697
Total	61,923	63,779	N/A	64,403

Source: Vice-Chief of the Defence Staff Group / Chief Military Personnel

Table B: Civilian Full-Time Equivalents by Program Activity

Program Activity	Actual 2005-2006	Actual 2006-2007	Planned 2007- 2008	Actual 2007-2008
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces	20,951	22,309	22,883	23,455
Conduct Operations	688	609	591	949
Contribute to Canadian Government, Society and the International Community	1,412	1,501	1,525	1,537
TOTAL	23,051	24,419	24,999	25,941

Source: Assistant Deputy Minister (Human Resources-Civilian) Group

Notes:

Canadian Security Establishment Canada (1,578 FTEs) is included in Generate and Sustain
Planned 2006/2007 numbers are from the HR-Civ submission to the RPP (December, 2007).
The actual FTEs by Program Activity from FY 2007-2008 are lower than the total FTEs by capability component (25,966) due to missing cost centres.

Table C: Combined Military and Civilian by Program Activity

Program Activity	Actual 2005-2006	Actual 2006-2007	Planned 2007- 2008	Actual 2007-2008
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces	20,951	78,793	22,883	74,630
Conduct Operations	688	6,909	591	11,480
Contribute to Canadian Government, Society and the International Community	1,412	2,496	1,525	4,234
TOTAL	84,974	88,198	24,999	90,344

Source: Vice-Chief of the Defence Staff Group

Table D: Summary of Military (Regular Force) Strength by Rank

Rank	Actual 2006-2007	Actual 2007–2008*
General/Lieutenant-General; Admiral, Vice-Admiral	12	12
Major-General; Rear-Admiral	20	21
Brigadier-General; Commodore	48	44
Colonel; Captain (Navy)	323	321
Lieutenant-Colonel; Commander	1,133	1,170
Major; Lieutenant-Commander	3,280	3,339
Captain; Lieutenant (Navy)	5,827	5,753
Lieutenant, Second-Lieutenant; Sub-Lieutenant, Acting Sub-Lieutenant	2,312	2,766
Officer Cadet; Naval Cadet	1,902	1,844
Chief Warrant Officer; Chief Petty Officer 1st Class	629	589
Master Warrant Officer; Chief Petty Officer 2nd Class	1,907	1,958
Warrant Officer; Petty Officer 1st Class	3,702	3,679
Sergeant; Petty Officer 2nd Class	6,782	6,884
Master Corporal, Corporal; Master Seaman, Leading Seaman	25,155	24,271
Private, Private (Recruit); Able Seaman, Ordinary Seaman	10,747	11,752
Total	63,779	64,403

Source: Vice-Chief of the Defence Staff Group

Data Source: ADM(IM) DHRIM Strength Report as of 31 March 2008

ARCHIVED - National Defence

Archived Content

2007-08 Departmental Performance Report

National Defence

Table of Contents

Table 1: Loans, Investments and Advances (Non-Budgetary)

Table 2: Sources of Respendable and Non-Respendable Revenue

Table 3: User Fees Act

Table 4a: Details on Project Spending (Capital Equipment Program) Greater than $30M

TABLE 4b: Capital Construction Program (Spending Over $60M)

Table 5: Status Report on Major Crown Projects

Airlift Capability Project – Strategic (ACP-S)

Airlift Capability Project – Tactical (ACP-T)

Arctic/Offshore Patrol Ship (AOPS)

Armoured Heavy Support Vehicle System (AHSVS)

Armoured Personnel Carriers (APC)

Canadian Cryptographic Modernization Program (CCMP) Omnibus Project

CF18 Modernization Project

Canadian Forces Supply System Upgrade (CFSSU)

Canadian Forces Utility Tactical Transport Helicopter (CFUTTH) Project

Canadian Search and Rescue Helicopter Project

HALIFAX Class Modernization/Frigate Equipment Life Extension (HCM/FELEX)

Intelligence Surveillance, Target Acquisition and Reconnaissance (ISTAR)

Joint Support Ship (JSS)

Light Utility Vehicle Wheeled (LUVW)

Main Battle Tank

Maritime Helicopter Project (MHP)

Material Acquisition and Support Information System (MASIS)

Medium To Heavy Lift Helicopter (MHLH)

Medium Support Vehicle System Project (MSVS)

Military Automated Air Traffic System (MAATS) Project

Protected Military Satellite Communications (PMSC)

Submarine Capability Life Extension

Table 6a: Summary of Transfer Payments Programs by Program Activity

Table 6b: Details of Transfer Payment Programs Over $5 Million

Table 6c: Details of Transfer Payment Programs Over $5 Million for the Department of National Defence for the period ending March 31, 2008

Contributions in Support of the Capital Assistance Program (CAP)

Contribution Program for the Promotion of the Defence Diplomacy Objectives Implemented by the Military Assistance Training Programme (MTAP)

NATO Military Budget

NATO Security Investment Program

NATO Airborne Early Warning and Control Program

Supplementary Retirement Benefits Act (SRBA)

Table 7: Sustainable Development Strategies

Status of Fuel Storage Tanks on DND Land

Table 8a: Response to Parliamentary Committees and External Audits

Table 8b: Response To Parliamentary Committees, And Audits And Evaluations

Table 9: Internal Audits and Evaluations

Table 10: Cost of CF International Operations

Table 11: National Defence Departmental Financial Statements

ADM (PA) DMCS CS07-0622

Statement of Management Responsibility

Statement of Operations (Unaudited)

Statement of Financial Position (Unaudited)

Statement of Equity of Canada (Unaudited)

Statement of Cash Flow (Unaudited)

1. Authorities and Objectives

2. Summary of Significant Accounting Policies

3. Parliamentary Appropriations

4. Expenses

5. Revenues

6. Receivables

7. Loans and Advances

8. Prepaid Expenses

9. Inventories

10. Tangible Capital Assets and Accumulated Amortization

11. Deposits and Trust Accounts

12. Deferred Revenue

13. Canadian Forces Pension and Insurance Accounts

14. Lease Obligations for Tangible Capital Assets

Future Minimum Lease Payments

15. Employee Benefits

16. Contingent Liabilities

17. Contingent Gain

18. Contractual Obligations

19. Related Party Transactions

Table A: Military (Regular Force) by Program Activity

Table B: Civilian Full-Time Equivalents by Program Activity

Table C: Combined Military and Civilian by Program Activity

Table D: Summary of Military (Regular Force) Strength by Rank

2007-08
Departmental Performance Report

Table 1: Loans, Investments and Advances
(Non-Budgetary)

Table 6b: Details of Transfer Payment Programs Over
$5 Million

Table 6c:
Details of Transfer Payment Programs
Over $5 Million
for the Department of National Defence
for the period ending March 31, 2008

Table 11:
National Defence
Departmental Financial Statements