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2009-10
Report on Plans and Priorities

National Defence

Supplementary Information (Tables)

Table of Contents

TABLE 1: DETAILS OF TRANSFER PAYMENT PROGRAMS

Table of Contents

Supplementary Retirement Benefits Act (SRBA)
Contributions in Support of the Capital Assistance Program (CAP)
Contribution Program for the Promotion of the Defence Diplomacy Objectives Implemented by the Military Training Assistance Program (MTAP)
Contribution Program in Support of the Remediation of the Former Mid-Canada Line Radar Sites in Ontario
NATO Military Budget
NATO Security Investment Program
NATO Airborne Early Warning and Control Program

Supplementary Retirement Benefits Act (SRBA)

Strategic Outcome:	Canadians’ confidence that DND and the CF have relevant and credible capacity to meet defence and security commitments.
Program Activity:	Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces.
Name of Transfer Payment Program:	Supplementary Retirements Benefits Act (SRBA) [Statutory Payments]
Start date:	1970
End date:	On-going
Description:	The SRBA amount represents statutory payments to Defence Services Pension Continuation Act (DSPCA) pension recipients for inflation adjustments to their pensions.
Expected results:	In compliance with the legislative provisions of SRBA, to 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 by reason of any mental or physical condition rendering the person unfit to perform duties as a member of the Regular Force, as the case may be. Statutory DSPCA and SRBA payments are processed by Public Works and Government Services Canada.

Program Activity: ($ Thousands)	Forecast Spending 2008-2009	Planned Spending 2009-2010	Planned Spending 2010-2011	Planned Spending 2011-2012
Total Grants	0	0	0	0
Total Contributions	$5,510	$6,079	$6,079	6,079
Total Other Types of Transfer Payments	0	0	0	0
Total Program Activity	$31,921	$20,297	$21,378	$7,510

Planned Audits and Evaluations:

The Canadian Forces Pension Plan Comptroller manages the SRBA payments. While no specific audits or evaluations are planned, expenditures are subject to monitoring and fall into the financial control framework of the Canadian Forces Pension Plan.

Source: Assistant Deputy Minister (Finance and Corporate Services) and Chief Military Personnel Groups

Contributions in Support of the Capital Assistance Program (CAP)

Strategic Outcome:	Canadians’ confidence that DND and the CF have relevant and credible capacity to meet defence and security commitments.
Program Activity:	Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces.
Name of Transfer Payment Program:	Contributions in support of the Capital Assistance Program (CAP) [Voted payments]
Start date:	1983-1984
End date:	2010-2011 (up for renewal starting 2011-2012)
Description:	The Department of National Defence uses the 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 dependants 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.
Expected results:	Expected results of this contribution program are: to enter into collaborative arrangements with Provinces, Territories and Municipalities and/or their agencies (through contribution agreements); to maintain/improve infrastructure while correcting identified deficiencies; to reduce operating and capital costs; to improve cost-effective provision of infrastructure and community-based services; and, to enhance quality of life for military personnel and their dependants.

Program Activity: ($ Thousands)	Forecast Spending 2008-2009	Planned Spending 2009-2010	Planned Spending 2010-2011	Planned Spending 2011-2012
Total Grants	0	0	0	0
Total Contributions	$3,900	$10,000	$13,870	0
Total Other Types of Transfer Payments	0	0	0	0
Total Program Activity	$31,921	$20,297	$21,378	$7,510

Planned Audits and Evaluations:

A full evaluation of the CAP is planned for fiscal year 2009-2010. That evaluation will be undertaken to ensurethat monies contributed under the Capital Assistance Program have been made according to the existing policies and procedures, and terms and conditions.

Source: Assistant Deputy Minister (Finance and Corporate Services) and Assistant Deputy Minister (Infrastructure and Environment) Groups

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

Strategic Outcome:	Good governance, Canadian identity and influence in a global community
Program Activity:	Contribute to the Canadian Government, Society and the International Community in Accordance with Canadian Interests and Values
Name of Transfer Payment Program:	Contribution Program for the Promotion of the Defence Diplomacy Objectives Implemented by the Military Training Assistance Programme (MTAP) [Voted Payments]
Start date:	FY 2005-2006
End date:	FY 2009-2010 (up for renewal starting 2010-2011)
Description:	The Military Training Assistance Program builds the capacities of member countries’ militaries through language training, and professional development courses including command and staff instruction, and peace support operations training.
Expected results:	Results expected from this contribution program include the following: promoting Canadian interests and values among developing, non-NATO MTAP member countries; promoting Canada’s independent national profile; enhancing Canada’s bilateral defence relationships; building peace support operations capacity among Canada’s peacekeeping partners; and strengthening democratic principles, the rule of law, the protection of human rights, and international stability.

Program Activity: ($ Thousands)	Forecast Spending 2008-2009	Planned Spending 2009-2010	Planned Spending 2010-2011	Planned Spending 2011-2012
Total Grants	0	0	0	0
Total Contributions	$10,000	$10,000	0	0
Total Other Types of Transfer Payments	0	0	0	0
Total Program Activity	$170,284	$219,683	$12,199	$8,425

Planned Audits and Evaluations:

A summative evaluation of the Program was conducted in 2008-2009 in anticipation of the renewal during fiscal year 2009-2010.

Source: Assistant Deputy Minister (Finance and Corporate Services) and Assistant Deputy Minister (Policy) Groups

Contribution Program in Support of the Remediation of the Former Mid-Canada Line Radar Sites in Ontario

Strategic Outcome:	Good governance, Canadian identity and influence in a global community
Program Activity:	Contribute to the Canadian Government, Society and the International Community in Accordance with Canadian Interests and Values
Name of Transfer Payment Program:	Contribution Program in support of the Remediation of the Former Mid-Canada Line Radar Sites in Ontario [Voted Payments]
Start date:	2008-2009
End date:	2014-2015
Description:	This contribution program is to support the remediation of certain contaminated sites on non-federal lands, to the extent the contamination was a direct result of federal government activities or operations, or where the contamination resulted from the Government of Canada’s national security efforts. To qualify, a site must also pose a human health and/or environmental risk, and be assessed as a National Classification System Class 1 (action required) or Class 2 (action likely required) site. The Government of Canada’s contribution will be used to fund specific eligible activities associated with the remediation of 11 of the 17 former Mid-Canada Line Radar Sites in Ontario.
Expected results:	The result expected from this contribution program is to remediate the contaminated lands to acceptable levels, thereby improving the human health and environment of the local areas affected. Acceptable levels will be determined once the environmental assessment process and consultation with stakeholders have taken place.

Program Activity: ($ Thousands)	Forecast Spending 2008-2009	Planned Spending 2009-2010	Planned Spending 2010-2011	Planned Spending 2011-2012
Total Grants	0	0	0	0
Total Contributions	$317	$8,931	$6,595	$5,571
Total Other Types of Transfer Payments	0	0	0	0
Total Program Activity	$170,284	$219,683	$12,199	$8,425

Planned Audits and Evaluations:

A mid-term review, if required, is expected to be completed during fiscal year 2011-2012

Source: Assistant Deputy Minister (Finance and Corporate Services) and Assistant Deputy Minister (Infrastructure and Environment) Groups

NATO Military Budget

Strategic Outcome:	Good governance, Canadian identity and influence in a global community
Program Activity:	Contribute to the Canadian Government, Society and the International Community in Accordance with Canadian Interests and Values
Name of Transfer Payment Program:	NATO Military Budget [Voted Payments]
Start date:	1949
End date:	2009-2010 (up for renewal starting 2010-2011)
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, including Deployed Operations and missions.
Expected results:	Canada’s financial contributions to the Alliance helps to ensure Canadian security, provide leverage and influence within the multi-national body. It also provides access to military capabilities, which Canada itself, does not possess. The contributions also serve to safeguard the freedom and security of all its members by political and military means in accordance with the North Atlantic Treaty and the principles of the United Nations Charter. The benefits of Canada’s investment in NATO include access to strategic information, exercises with allied forces and an equal voice in high-level decisions affecting Euro-Atlantic security and stability.

Program Activity: ($ Thousands)	Forecast Spending 2008-2009	Planned Spending 2009-2010	Planned Spending 2010-2011	Planned Spending 2011-2012
Total Grants	0	0	0	0
Total Contributions	$53,890	$87,610	0	0
Total Other Types of Transfer Payments	0	0	0	0
Total Program Activity	$170,284	$219,683	$12,199	$8,425

Planned Audits and Evaluations:

At the end of the year, the annual financial statements are presented for verification by the International Board of Auditors for NATO, which is mandated by national audit institutions to conduct not only financial but also performance audits.

Source: Assistant Deputy Minister (Finance and Corporate Services) and Vice-Chief of the Defence Staff Groups

NATO Security Investment Program

Strategic Outcome:	Good governance, Canadian identity and influence in a global community
Program Activity:	Contribute to the Canadian Government, Society and the International Community in Accordance with Canadian Interests and Values
Name of Transfer Payment Program:	NATO Security Investment Program [Voted Payments]
Start date:	1949
End date:	2009-2010 (up for renewal starting 2010-2011)
Description:	To contribute the Canadian share of the NATO Security Investment Program (NSIP)– a common funded program that finances the capital costs for the provision of communication and information systems, installations and facilities such as radar, military headquarters, airfields, fuel pipelines and storage, harbours and navigational aids needed to support the NATO military structure and activities including Deployed Operations and Missions.
Expected results:	NSIP funds projects that meet NATO’s essential purpose, which is to safeguard the freedom and security of all its members by political and military means in accordance with the North Atlantic Treaty and the principles of the United Nations Charter. The benefits of Canada’s investment in NATO include access to strategic information, exercises with allied forces and an equal voice in high-level decisions affecting Euro-Atlantic security and stability.

Program Activity: ($ Thousands)	Forecast Spending 2008-2009	Planned Spending 2009-2010	Planned Spending 2010-2011	Planned Spending 2011-2012
Total Grants	0	0	0	0
Total Contributions	$40,443	$44,158	0	0
Total Other Types of Transfer Payments	0	0	0	0
Total Program Activity	$170,284	$219,683	$12,199	$8,425

Planned Audits and Evaluations:

The NATO International Board of Auditors (IBAN) audits the NSIP account annually. Individual projects are also audited at project completion. The national audit institutions mandate these audits.

Source: Assistant Deputy Minister (Finance and Corporate Services) and Vice-Chief of the Defence Staff Groups

NATO Airborne Early Warning and Control Program

Strategic Outcome:	Good governance, Canadian identity and influence in a global community
Program Activity:	Contribute to the Canadian Government, Society and the International Community in Accordance with Canadian Interests and Values
Name of Transfer Payment Program:	NATO Airborne Early Warning and Control Program [Voted Payments]
Start date:	1979
End date:	2009-2010 (up for renewal starting 2010-2011)
Description:	The 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 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.
Expected results:	To provide a state-of-the-art operating system that will collect and disseminate, in real-time, data received from several on-board sensors.

Program Activity: ($ Thousands)	Forecast Spending 2008-2009	Planned Spending 2009-2010	Planned Spending 2010-2011	Planned Spending 2011-2012
Total Grants	0	0	0	0
Total Contributions	$49,661	$53,952	0	0
Total Other Types of Transfer Payments	0	0	0	0
Total Program Activity	$170,284	$219,683	$12,199	$8,425

Planned Evaluations:

At the end of the year, the annual financial statements are presented for verification by the International Board of Auditors for NATO, which is mandated by national audit institutions to conduct not only financial but also performance audits.

Source: Assistant Deputy Minister (Finance and Corporate Services) and Vice-Chief of the Defence Staff Groups

For additional information regarding Transfer Payments, refer to table 1b: Summary of Transfer Payments Program by PAA and table 1c: Details on Transfer Payments Programs over $5 million available on the National Defence web site at: http://www.vcds.forces.gc.ca/sites/page-eng.asp?page=6035

TABLE 1b: SUMMARY OF TRANSFER PAYMENTS BY PROGRAM ACTIVITY

($ Thousands)	Forecast Spending 2008-2009	Planned Spending 2009-2010	Planned Spending 2010-2011	Planned Spending 2011-2012
Grants
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces	132	133	110	112
Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values	5,360	5,429	5,327	2,854
Sub-total Grants	5,492	5,562	5,437	2,966
Contributions
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces	31,789	20,163	21,268	7,398
Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values	164,924	214,254	6,872	5,571
Sub-total Contributions	196,713	234,417	28,140	12,969
Total Grants and Contributions	202,205	239,980	33,577	15,935

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

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

Note:

The decrease between FY 2009-2010 to 2010-2011 is due to the fact that the approved terms and conditions and the related funding of some grant and contribution programs are ending 31 March 2010.

A summary of the National Defence three-year plan on transfer payment programs will be made available June 30^th, 2009 on the following web site: <http://www.vcds.forces.gc.ca/sites/page-eng.asp?page=5609>

TABLE 1c: DETAILS ON TRANSFER PAYMENT PROGRAMS OVER $5 MILLION

Description ($ Thousands)	Type	Forecast Spending 2008-2009	Planned Spending 2009-2010	Planned Spending 2010-2011	Planned Spending 2011-2012
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces
Supplementary Retirement Benefit Act (SRBA) Payments	S	5,510	6,079	6,079	6,079
Contributions in Support of the Capital Assistance Program (CAP)	C	3,900	10,000	13,870	0
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	10,000	10,000	0	0
Contribution Program in support of the Remediation of the Former Mid-Canada Line Radar Sites in Ontario	C	317	8,931	6,595	5,571
NATO Military Budget	C	53,890	87,610	0	0
NATO Security Investment Program	C	40,443	44,158	0	0
NATO Airborne Early Warning and Control Program	C	49,661	53,952	0	0
Subtotal Transfer Payments over $5 million		163,721	220,730	26,544	11,650
Total Transfer Payment		202,205	239,980	33,577	15,935

Percentage of Transfer Payment over $5 million		81.0%	92.0%	79.1%	73.1%
Total Spending per PAA		Forecast Spending per PAA 2008-2009	Planned Spending per PAA 2009-2010	Planned Spending per PAA 2010-2011	Planned Spending per PAA 2011-2012
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces		31,921	20,297	21,378	7,510
Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interest and Values		170,284	219,683	12,199	8,425
Total		202,205	239,980	33,577	15,935

Source: Assistant Deputy Minister (Finance and Corporate Services) Group
Legend: S = Statutory C = Contribution

TABLE 2: GREEN PROCUREMENT

How is your department planning to meet the objectives of the Policy on Green Procurement?
DND and the CF are committed to applying the principles of green procurement by integrating environmental performance considerations into material acquisition and support (MA&S) policies, decision-making processes and practices in a manner that supports the concept of sustainable development, satisfies legal and policy requirements, reinforces performance management and is relevant to the DND and CF mission.

In support of TBS Contracting Policy Notice 2006-1 – Policy on Green Procurement, DND/CF issued, on December 1^st 2006, DAOD 3015-0 – Green Procurement and on 2 November 2007, DAOD 3015-1 – Management of Green Procurement. These directives apply to employees of the Department of National Defence and are orders that apply to officers and non-commissioned members of the Canadian Forces. DAOD 3015-0 confirms the requirement for the DND and the CF to apply the principles of green procurement by integrating environmental performance considerations into DND and CF material acquisition and support (MA&S) policies, decision-making processes and practices in accordance with the Public Works and Government Services Canada Policy on Green Procurement and the DND/CF DAOD 3000-0, Materiel Acquisition and Support. The supporting DAOD 3015-1 explains how the green procurement policy is to be implemented, and defines the roles and responsibilities in respect of the management of green procurement in the DND and the CF; specific topics include operating principles, costing, integration of environment performance considerations, monitoring and reporting, and responsibilities.
Has your department established green procurement targets?
Yes.
Describe the green procurement targets that have been set by your department and indicate the associated benefits anticipated.
The Defence Sustainable Development Strategy 2006 (SDS) is the DND/CF action plan and is based on the hierarchy of strategic and operational direction through the Defence chain of command. At the highest level, broad strategic commitment to the development and implementation of the SDS is provided through the Report on Plans and Priorities and through the Defence Plan. The Department’s progress on meeting its SDS commitments is reported to Government as an integral part of the annual Departmental Performance Report. The SDS Strategic commitments (land use management, infrastructure and procurement) are the key indicators upon which the Department relies to measure and report its progress in meeting its sustainable development goals and objectives. Strategic commitment 3 addresses the implementation of a proactive and comprehensive Green Procurement programme across Defence and meets the recently promulgated Federal Government Policy on Green Procurement by:

Initiative	Indicator(s)	Supporting Action(s)
Supporting the federal green procurement agenda (SC.3.1.)	Number of Commodity Groups relevant to Defence Number in which Defence participates	ADM(Materiel) to lead Collaborate interdepartmentally Participate in all of the federal interdepartmental commodity group management teams relevant to Defence’s operational requirements
Developing and integrating where appropriate Green Procurement modules and messages into all existing training (SC.3.2.)	A green procurement training module is developed by 30 June 2007 Number of existing and relevant courses in which a Green Procurement Module is integrated by 30 June 2008 Number of eligible participants as of 1 April 2007 Number trained as a percentage of the total by 31 March 2008, 31 March 2009 and 31 March 2010 Deliver a green procurement course to 100% of acquisition cardholders, material managers and procurement personnel by 31 March 2010	ADM(Materiel) to lead in coordination with ADM(HR Civ) and Chief Military Personnel Develop a short green procurement training module that is in line with Defence’s operational requirements Integrate the green procurement training module into all existing and relevant procurement, materiel and project management courses by 31 March 2008
Eliminating or reducing specified nationally procured high-risk hazardous materials (HRHM) from use and examining the feasibility of expanding the scope of this initiative to include locally-procured HRHM (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: Percentage of specified nationally procured high risk hazardous materials reduced or eliminated from use Completion of a feasibility study on inclusion of locally-procured HRHM by 31 March 2010	ADM(Materiel) to lead Identify the highest risk products included in the solvents, and cleaners/degreasers commodity groups Publish the list Undertake the elimination/substitution process Publish the list of eliminated or substituted materials by 31 March annually based on the fiscal year
Acquiring, using and maintaining greener vehicles (SC.3.4.)	Increase vehicle productivity (passenger load, tonnage and freight transported) by 10%, from a baseline of October 2006, by 31 March 2008, 31 March 2009 and 31 March 2010 Decrease vehicle downtime (vehicle on repair (VOR)) by 5%, from a baseline of October 2006, by 31 March 2008, 31 March 2009 and 31 March 2010	ADM (Materiel) to lead Exercise professional fleet management
Acquiring, using and maintaining greener vehicles (SC.3.4.)	Number of “404” licence holders who have taken the defensive driving course (DDC) that includes the green driving module by 31 March 2008, 31 March 2009 and 31 March 2010 Percentage of drivers who had taken the old DDC (not containing the green driving module) and who have since taken the new green driving module by 31 March 2008, 31 March 2009 and 31 March 2010	Provide green defensive driving training to 70% of Defence’s “404” driver’s license holders
	Engage other departments to establish a forum for knowledge and technology transfer to interested parties by 31 March 2008	Share best practices and lessons on “green driving” with interested federal departments and agencies
Reducing vehicle GHG emissions by 15% within the commercial pattern on road vehicle departmental fleet by 31 March 2010 (SC.3.5.)	Reduce GHG emissions per vehicle kilometre by 15% from 2002/2003 within the commercial pattern on road vehicle departmental fleet by 31 March 2010: GHG emissions from vehicles	Affected Commands and Group Principals will develop GHG emission reduction plans Follow the Treasury Board direction from the Directive on Fleet Management: Executive Vehicles (effective 1 Nov 2006) as well as the Alternative Fuels Act and Regulations; and the Federal Vehicles initiative Reduce fuel consumption Follow No Unnecessary Idling Policy Purchase alternative fuel vehicles where it is cost-effective and operationally feasible Optimize intervals between lubricant, oil, and filter changes, air cleaner inspections/cleaning, etc. Promote car-pooling and adopt public transit transportation where practical Rationalize fleet size
Piloting a managed print solution (SC.3.6.)	Engage the services of a consultant to undertake a Pilot Test that includes waste and paper reduction, energy efficiencies, rationalization of equipment and cost savings by 31 March 2008 Pilot test study completed and report prepared by 31 March 2009 Implementation of all acceptable aspects of the study’s recommendations to be under way by 31 March 2010	ADM(Material) and ADM(Information Management) to lead Work with PWGSC to compete the requirement for the pilot Manage execution and transition of pilot Execute the managed print solution if results from the pilot are positive
Minimizing the environmental liability associated with petroleum Fuel Storage infrastructure and distribution assets (SC.3.7)	Optimized DND/CF fuel storage footprint to meet operational requirements for the long term sustainability of DND/CF fuel storage tank systems through: Initiate the Joint Materiel/ Infrastructure and Environment Defence Fuels Storage Tank Review Project Completion of Phase 1 Data Collection and Verification activities by 30 June 2007 Initiate Phase 2 implementation activities (will depend on Phase 1 data collection / data evaluation activities)	ADM(Materiel) and ADM(Infrastructure and Environment) will create policies, standards and procedures to construct, operate, and maintain safe, environmentally responsible, fuel storage systems ADM(Materiel) will lead analyses and forecasting for the future fuel ‘footprint’ in Phase 2 ADM(Infrastructure and Environment) will be responsible for reviewing funding options to complete Phase 2 activities

Source: Assistant Deputy Minister (Infrastructure and Environment) Group

TABLE 3: SUSTAINABLE DEVELOPMENT STRATEGY

1. SDS Departmental Goal:

Historically, Defence has focused on integrating environmental considerations into decision-making at every level of the organization as stated both in the environmental vision in Defence Sustainable Development Strategy 2006 (SDS) and the Defence Administrative Order and Directive 4003-0.

2. Federal SD Goal including Greening of Government Operations (GGO) goals:

Implementation of the fourth iteration of our SDS began on April 1^st 2007. The four strategic commitments are to:

develop a framework of land use management putting our lands on a steady state footing of sustainability;
actively promote the application of innovative Green Building principles and share lessons learned with the broader federal community;
implement a proactive and comprehensive Green Procurement program across the Defence organization; and,
actively and innovatively prevent negative environmental impacts of specific activities over which Defence can exercise a mitigating influence.

Each of these strategic commitments relates to one or more federal Sustainable Development goals (specifically the Greening of Government Operations element of those goals). A detailed crosswalk establishing the linkages is included in the Defence SDS at Table 4, page 33 of the document which is available on the Internet at: <http://www.admie.forces.gc.ca/dge/sds-sdd/index-eng.asp>.

3. Performance Measure from current SDS

Defence strategic commitments are supported by a total of 16 sub-commitments that provide concrete indications of the Department’s progress toward achievement of the strategic commitments. Each of these sub-commitments comprises a concise statement of the desired end state. These sub-commitments or targets are set out in detail in Table 1, page 23 of the Defence SDS document. In addition, Guidance sheets to support each of the sub-commitments have been produced to provide those responsible for implementing the target with the name and coordinates of a subject-specific expert for each target, the definition and scope of the sub-commitment, an action plan for achieving it, and a template to ensure uniform data collection.

4. Department’s Expected Results for fiscal year 2009-2010

Since the Department’s strategic commitments are largely multi-year in nature (i.e., exceeding the three-year reporting cycle of the SDS process), the targets cannot be precisely measured as an annual percentage of completion.

Of the 16 sub-commitments in SDS 06, none were exceeded, one has been met, 13 are on track and progress on two (measuring and managing the sustainability of training areas, and expanding Green Building concepts into the total design process) are not satisfactory. The Department will continue to monitor progress against targets from earlier SDS, particularly in the following areas: integrated pest management, hazardous materials management plans and environmental management systems.

The Department also monitors the performance of an additional four activities that are of continuing interest to the sustainable development community but have no specific targets: liquid effluents, treated water, solid waste and spills.

Source: Assistant Deputy Minister (Infrastructure and Environment) Group

TABLE 4: INTERNAL AUDITS

The following table lists the internal audit work expected to be completed during fiscal year 2009-2010, as well provides an indication of the internal audit work tentatively planned for initiation in fiscal year 2009-2010. Completed audit reports, which include management action plan to address audit recommendations, are posted at the following link: <http://www.crs-csex.forces.gc.ca/reports-rapports/index-eng.asp>.

**Upcoming Internal Audits**
Name of Internal Audit	Internal Audit Type	Status	Expected Completion Date
Inventory Management: Surpluses and Disposal	Assurance	In Progress	1^st Quarter 2009-2010
Canadian Forces Housing Agency	Assurance	In Progress	1^st Quarter 2009-2010
HR Service Delivery	Review	In Progress	1^st Quarter 2009-2010
CP140 Aurora Maintenance Contracts	Management Action Plan Follow-Up	In Progress	1^st Quarter 2009-2010
Revenue Management	Assurance	In Progress	1^st Quarter 2009-2010
Risk Analysis of Contracts	Risk Analysis	In Progress	1^st Quarter 2009-2010
Audit of Security Incident Management	Assurance	In Progress	2^nd Quarter 2009-2010
Minor Warships and Auxiliary Vessel In-Service Support Contract	Assurance	In Progress	2^nd Quarter 2009-2010
Information Management Projects	Risk Analysis	In Progress	2^nd Quarter 2009-2010
CRS Audit Perspective 2008	Assurance	In Progress	2^nd Quarter 2009-2010
Implementation of Modern Management	Assurance	In Progress	3^rd Quarter 2009-2010
Contracting for Professional and Technical Services	Management Action Plan Follow-Up	In Progress	3^rd Quarter 2009-2010
FMF Cape Breton Shop Consolidation Project	Assurance	In Progress	4^th Quarter 2009-2010
Unexploded Ordnance Liability	Assurance	In Progress	4^th Quarter 2009-2010
Leave and Absence Administration	Assurance	In Progress	4^th Quarter 2009-2010
RMC Kingston	Assurance	Planned	2010-2011
IT Asset Management	Management Action Plan Follow-Up	Planned (see note)	2010-2011
Security Program Management	Assurance	Planned (see note)	2010-2011
Joint Support Ship	Assurance	Planned (see note)	2010-2011
Financial Management Practices – Selected Operational Units	Assurance	Planned (see note)	2010-2011
Delegation of Financial Authorities	Assurance	Planned (see note)	2010-2011
Canadian Forces Pension Plan	Assurance	Planned (see note)	2010-2011
Business Continuity Planning	Assurance	Planned (see note)	2010-2011
CRS Audit Perspective 2009	Assurance	Planned	2010-2011
Halifax Class Modernization/Frigate Life Extension (FELEX)	Assurance	Planned (see note)	2011-2012

Source: Chief Review Services Group

Note:

Subject to Departmental Audit Committee approval

TABLE 5: EVALUATIONS

The following table lists the evaluation work expected to be completed during fiscal year 2009-2010, as well as provides an indication of the evaluation work tentatively planned for initiation in fiscal year 2009-2010. Completed evaluation reports, which include management action plan to address evaluation recommendations, are posted at the following link: <http://www.crs-csex.forces.gc.ca/reports-rapports/index-eng.asp>.

**Upcoming Evaluations (Next three fiscal years)**
Name of Evaluation	Program Type	Status	Expected Completion Date
CF Recruitment and Absorption Strategy	Other	In Progress	1^st Quarter 2009-2010
Peace and Security Vancouver 2010 Olympic Games (Interdepartmental)	Formative and Summative	In Progress	2009-2010 (Formative) 2010-2011 (Summative)
Military Training Assistance Program	Summative - Contribution	In Progress	1^st Quarter 2009-2010
Institute of Environment Monitoring & Research	Summative – Grant	In Progress	1^st Quarter 2009-2010
Capital Assistance Program	Summative – Contribution	Planned	1^st Quarter 2009-2010
Security and Defence Forum	Summative – Grant	Planned	1^st Quarter 2009-2010
Canadian Manoeuvre Training Centre	Other	Planned	4^th Quarter 2009-2010
Canada Command	Other	Planned (see note)	2010-2011
Humanitarian Assistance & Disaster Relief	Other	Planned (see note)	2010-2011
Operational Capability/ Effectiveness – Selected Operational Units	Other	Planned (see note)	2010-2011
COSPAS-SARSAT Program Secretariat	Summative – Contribution	Planned	2010-2011

Source: Chief Review Services Group

Note:

Subject to Departmental Evaluation Committee approval.

TABLE 6: LOANS, INVESTMENTS AND ADVANCES (NON-BUDGETARY)

($ thousands)	Forecast Spending 2008-2009	Planned Spending 2009-2010	Planned Spending 2010-2011	Planned Spending 2011-2012
*Defence Services Program*

Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces
Imprest Accounts, Standing Advances and Authorized Loans²	22,080	22,110	22,290	22,290

Conduct Operations
Imprest Accounts, Standing Advances and Authorized Loans²	4,020	4,170	4,230	4,230

Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values
Imprest Accounts, Standing Advances and Authorized Loans²	1,830	1,560	1,290	1,320
NATO Damage Claims¹	15	1	1	1

Internal Services
Imprest Accounts, Standing Advances and Authorized Loans²	2,070	2,160	2,190	2,160
Total	30,015	30,001	30,001	30,001

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

Notes:

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 was 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 which took place in Canada, and is credited with recoveries.
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.

TABLE 7: SOURCES OF RESPENDABLE AND NON-RESPENDABLE REVENUE

Respendable Revenue
($ Thousands)	Forecast Revenue 2008-2009	Planned Revenue 2009-2010	Planned Revenue 2010-2011	Planned Revenue 2011-2012
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces
Recoveries from Members	122,928	91,781	94,291	96,897
Recoveries from OGDs	5,633	4,206	4,321	4,440
Recoveries from Other Governments/UN/NATO	63,210	47,194	48,485	49,825
Other Recoveries	30,984	23,134	23,766	24,423
Subtotal	222,754	166,314	170,863	175,584

Conduct Operations
Recoveries from Members	2,212	1,668	1,688	1,325
Recoveries from OGDs	515	389	393	309
Recoveries from Other Governments/UN/NATO	24,414	18,411	18,626	14,619
Other Recoveries	1,266	955	966	758
Subtotal	28,408	21,423	21,673	17,011

Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values
Recoveries from Members	377	477	439	406
Recoveries from OGDs	7,234	9,150	8,418	7,775
Recoveries from Other Governments/UN/NATO	130,417	164,963	151,762	140,172
Other Recoveries	16,275	20,587	18,939	17,493
Subtotal	154,303	195,177	179,558	165,846

Internal Services
Recoveries from Members	10,289	8,483	8,623	8,766
Recoveries from OGDs	227	187	190	193
Recoveries from Other Governments/UN/NATO	13,705	11,299	11,486	11,677
Other Recoveries	16,036	13,221	13,439	13,662
Subtotal	40,257	33,189	33,738	34,299

Total Respendable Revenue	445,723	416,103	405,833	392,740

Non-Respendable Revenue
($ Thousands)	Forecast Revenue 2008-2009	Planned Revenue 2009-2010	Planned Revenue 2010-2011	Planned Revenue 2011-2012
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces	21,425	15,609	26,623	11,126
Conduct Operations	156	85	85	86
Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values	30	26	27	27
Internal Services	8,980	4,819	4,905	4,992
Total Non-Respendable Revenue	30,591	20,539	31,639	16,231

Total Respendable Revenue and Non-respendable Revenue	476,314	436,642	437,472	408,971

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

*Due to rounding, figures may not add up to total shown.

Notes:

The 2008-2009 estimates include $13.1 million in non-respendable revenue pertaining to the proceed of disposal from the sale of non-residential real property.
The 2010-2011 estimates include $14.3 million in non-respendable revenue pertaining to the proceeds of disposal from the sale of Chilliwack and Griesbach to the Canada Lands Company.

TABLE 8: STATUS REPORT ON MAJOR CROWN PROJECTS

AIRLIFT CAPABILITY PROJECT – STRATEGIC (ACP-S)

AIRLIFT CAPABILITY PROJECT – TACTICAL (ACP-T)

ARCTIC/OFFSHORE PATROL SHIP (AOPS)

ARMOURED PERSONNEL CARRIERS (APC)

CANADIAN CRYPTOGRAPHIC MODERNIZATION PROGRAM (CCMP)

CANADIAN FORCES SUPPLY SYSTEM UPGRADE (CFSSU)

CANADIAN FORCES UTILITY TACTICAL TRANSPORT HELICOPTER (CFUTTH) PROJECT

CANADIAN SEARCH AND RESCUE HELICOPTER (CSH) PROJECT

FIXED-WING SEARCH AND RESCUE (FWSAR)

HALIFAX CLASS MODERNIZATION/FRIGATE LIFE EXTENSION (HCM/FELEX)

INTELLIGENCE SURVEILLANCE, TARGET ACQUISITION AND RECONNAISSANCE (ISTAR)

JOINT SUPPORT SHIP (JSS)

LIGHT UTILITY VEHICLE WHEELED (LUVW)

LIGHTWEIGHT TOWED HOWITZER (LWTH)

MAIN BATTLE TANK (MBT)

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 (SCLE)

WHEELED LIGHT ARMOURED VEHICLE - LIFE EXTENSION (WLAV-LE)

AIRLIFT CAPABILITY PROJECT – STRATEGIC (ACP-S)

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.

Project Phase: Implementation. All four aircrafts have been accepted on schedule and Close-Out is expected for Spring 2010.

**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

**Prime and Major Sub-Contractors**
Prime Contractor	The Boeing Company, St-Louis, Missouri, USA

**Major Milestones**
Major Milestone	Date
Synopsis Sheet (Effective Project Approval)	June 2006
Advanced Contract Award Notice Posted on MERX	July 2006
Contract Award	February 2007
Delivery First Aircraft	August 2007
Delivery Second Aircraft	October 2007
Delivery Third Aircraft	March 2008
Delivery Fourth Aircraft	April 2008
Initial Operational Capability (IOC)	October 2008
Full Operational Capability (FOC)	Summer 2009
Project Close-out	Spring 2010

Progress Report and Explanations of Variances: The project received Effective Project Approval from Treasury Board in June 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 in February 2007. A Foreign Military Sales case for worldwide in-service support was established in January 2007 through the United States Air Force to Boeing. 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.

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. Several IRB announcements have been made and all regions of Canada will benefit from these contracts.

AIRLIFT CAPABILITY PROJECT – TACTICAL (ACP-T)

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.

Project Phase: Implementation. The ACP-T project entered the Implementation Phase with the December 2007 contract award to Lockheed Martin Corporation for 17 C-130J-30 aircraft. Aircraft deliveries will commence no later than December 2010, with the final aircraft delivered no later than December 2012.

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

**Leading and Participating Departments and Agencies**
Prime Contractor	Lockheed Martin Corporation, Marietta, Georgia, USA

**Major Milestones**
Major Milestone	Date
Revised Preliminary Project Approval (PPA)	June 2006
Solicitation of Interest and Qualification (SOIQ)	August 2006
Issue of Request For Proposal (RFP)	August 2007
Effective Project Approval	December 2007
Contract Award	December 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

Progress Report and Explanations of Variances: Under the agreement of the December 2007 contract award, Lockheed Martin Corporation is required to undertake an open and fair competitive solicitation for the provision of in-service support. The outcome of this Contractor-led solicitation would be one of many deliverables from the contract and will form the basis of a negotiation for amendments to the contract to include in-service support provisions. The in-service support effort will include contractor provided support to: logistics, engineering, maintenance, material, publications, maintenance training, test equipment and electronic information environment.

The ACP-T project is currently running on schedule and on budget.

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. Lockheed Martin Corporation 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 the in-service support contract amendment signing.

ARCTIC/OFFSHORE PATROL SHIP (AOPS)

Description: The Arctic/Offshore Patrol Ship (AOPS) project 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 to 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.

Project Phase: Definition/Implementation

**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

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 July 2010.

**Major Milestones**
Major Milestone	Date
Treasury Board Preliminary Project Approval	May 2007
Release of Definition, Engineering, Logistics and Management Support Request for Proposals (DELMS RFP)	December 2007
DELMS RFP Close	February 2008
DELMS Contract Award	May 2008
Effective Project Approval (SS(EPA))	July 2010
Award of Implementation Contract	August 2010
Delivery of First Ship	Fall 2014
Initial Operating Capability (IOC) of First Ship	March 2015
Project Complete	March 2021

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 $3,231.7M ($BY) including GST, for acquisition. So far, no variances in cost estimates have been identified.

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 PERSONNEL CARRIERS (APC)

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.

Project Phase: Implementation. All vehicles were delivered by October 2007 and construction activities for indoor accommodation are well under way. The project is scheduled for completion in March 2011.

**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

**Prime and Major Sub-Contractors**
Prime Contractor	General Dynamics Land Systems - Canada, London, ON

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

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 have been involved in significant operational demands after being fielded and have performed well. They have since undergone a number of modifications to adjust to the modern threat, and will require additional work to optimize performance against these threats. Planning is currently underway to address this issue.

In March 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, Montréal, Valcartier, and Gagetown. Construction activities are wellunder way and are scheduled for completion in early 2011. The project can then close in March 2011.

Industrial Benefits: This project includes the following overall industrial benefits, and regional and small business achievements:

Content	Benefits
Direct	$852.9M
Indirect	$742.9M
Total	$1,595.8M
Regional And Small Business	Benefits
Atlantic Canada	$151.4M
Québec	$150.6M
Western Canada	$155.0M
Small Business	$210.3M

CANADIAN CRYPTOGRAPHIC MODERNIZATION PROGRAM (CCMP)

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:

Secure Voice / Telephone Re-key Infrastructure
Secure Voice / Telephone Family
Classified Security Management Infrastructure (CSMI)
Combat Identification Family
Link Encryption Family
Network Encryption Family
Secure Radio Family
Secure Mobile Environment

Project Phase: Implementation for some sub-projects and Definition for others.

**Leading and Participating Departments and Agencies**
Lead Department	Communications Security Establishment Canada (CSEC)
Contracting Authority	Public Works & Government Services Canada (PWGSC)
Participating Departments & Agencies	Government of Canada departments & agencies using cryptographic equipment to protect classified information

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

**Major Milestones**
Project / Sub-project Major Milestone	Date
a. Preliminary Project Approval for the CCMP Omnibus Project	March 2005
b. Preliminary Project Approval for a CCMP Omnibus Project sub-project: Classified Security Management Infrastructure	November 2006
c. Preliminary Project Approval for Classified Security Management Infrastructure Phase 1B Implementation and Phase 2 Definition	February 2008
d. Secure Voice/Telephone Re-key Infrastructure – Completed	2009
e. Classified Security Management Infrastructure – Phase 1A Completed	2010
f. Classified Security Management Infrastructure – Phase 1B Completed	2011
g. Secure Voice/Telephone Family – Completed	2011
h. Network Encryption Family – Completed	2011
i. Secure Mobile Environment – Completed	2012
j. Link Encryption Family – Completed	2013
k. Classified Security Management Infrastructure – Phase 2 Completed	2014
l. Classified Security Management Infrastructure – Phase 3 Completed	2016
m. Combat Identification Family – Completed	2016
n. Secure Radio Family – Completed	2016
o. CCMP Omnibus Project – Completed	2016

Progress Report and Explanations of Variances: In June 2007, the CCMP Senior Project Advisory Committee (SPAC) approved incorporating the Secure Mobile Environment sub-project into the CCMP Omnibus project. This did not increase the CCMP funding envelope.

The following completion dates have changed from those recorded in the CCMP Omnibus Project PPA approved in March 2005. These changes were approved by the CCMP SPAC.

Secure Voice Re-key Infrastructure project closure was moved from June 2007 to June 2009 when the scope of the project was expanded to include a new capability.
Secure Voice/Telephone Family was completed for the majority of Government of Canada departments and agencies by September 2007; however, the end date has been moved to 2011 to ensure the coordination of additional software upgrades that the new secure phones require for interoperability and improved information protection.
The timeline for the Link Encryption Family, originally planned in two Phases to be completed in 2016, has been compressed into one Phase to be completed in 2013. This will result in equipment replacements being completed ahead of schedule.
The CCMP schedule is dependent on the US Crypto Modernization and Key Management Infrastructure Programs. Completion dates for the Combat Identification Family and Phases 2 & 3 of the Classified Security Management Infrastructure will be reviewed to keep them aligned with the US programs.

The CCMP is executing within its budget.

Industrial Benefits: N/A

CANADIAN FORCES SUPPLY SYSTEM UPGRADE (CFSSU)

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. 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.

Project Phase: Close-Out. CFSS Deployed has been implemented on 17 ships as well as at two sites for CANSOFCOM.

**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

**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

**Major Milestones**
Major Milestone	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 2001
Complete System Pilot	August 2001
Commence System Rollout	September,2001
Complete System Rollout	June 2003 (official acceptance)
project Close-out (E Status)	September 2004
project Close-out (I Status)	Spring 2009

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 prior to Spring 2009.

**Industrial and Regional Benefits**
Region	Benefits
Atlantic Canada	$51M
Québec	$48M
Ontario	$26M
Western Canada	$105M
Unallocated	$10M
Total	$240M

CANADIAN FORCES UTILITY TACTICAL TRANSPORT HELICOPTER (CFUTTH) PROJECT

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, Canadian Expeditionary Force Command (CEFCOM) operations and Civil Emergency Preparedness, as well as a wide range of defence objectives. It has replaced 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 to include the tactical lift of troops, 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.

Project Phase: Implementation. 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. It is scheduled for completion in November 2009.

**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

**Prime and Major Sub-Contractors**
Prime Contractor	Bell Helicopter Textron Canada, Mirabel, QC
Major Sub-Contractors	Pratt & Whitney Canada, Montréal, QC BAE Systems Canada Inc., Montréal, QC CAE Ltd., Montréal, QC

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

Progress Report and Explanation of Variances: This project received Government approval in April 1992 and Treasury Board approval in September 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.

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
Québec	$420.2M
Ontario	$32.1M
West	$12.0M
Unallocated	$32.4M
Total	$506.7M

CANADIAN SEARCH AND RESCUE HELICOPTER (CSH) PROJECT

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 have addressed the operational deficiencies of the CH-113 Labrador fleet and eliminated the supportability difficulties of the older airframes. Given expected aircraft availability rates and a sufficient fleet size, continuous operations are anticipated well into the 21^st century.

Project Phase: Completed. 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. Effective Project Closure was achieved on the September 15, 2004, but some work is still ongoing and full completion is not expected before 2013.

**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

**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

**Major Milestones**
Major Milestone	Date
Treasury Board Effective Project Approval	April 1998
Contract Award	April 1998
First Aircraft Delivery (at plant in Italy)	September 2001
Final Aircraft Delivery (at plant in Italy)	July 2003
Project Completion (Effective Project Completion)	September 2004

Progress Report and Explanation of Variances: 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.

The Cormorant has 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, some work is still ongoing and full completion is not expected before 2013. The milestones still outstanding are tied to a three year Technical Publication Revision Service which is not expected to begin until fiscal year 2012-2013, and a number of milestones related to outstanding aircraft deficiencies which are expected to take at least two years to address.

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
Québec	$317.7M
Ontario	$146.5M
Western Canada	$86.2M
Unallocated	$36.3M
Total	$629.8M

FIXED-WING SEARCH AND RESCUE (FWSAR)

Description: Fixed-wing SAR aircraft are needed to provide immediate assistance to distress cases within the 18 million square kilometre Canadian SAR area of responsibility. Search and rescue activities are extremely demanding on the CF and their equipment. The Canadian Forces currently uses a mixed fleet of Buffalo and Hercules aircraft to provide FWSAR service to Canadians. The purpose of this project is to replace the CC115 Buffalo and CC130 Hercules currently providing the fixed-wing SAR capability from four Main Operating Bases with a fleet of new aircraft.

This replacement project will resolve deteriorating supportability and affordability issues associated with the older airframes, allowing for the continued provision of effective fixed-wing response and immediate assistance to SAR incidents within the Canadian SAR area of responsibility.

Project Phase: Definition.The FWSAR Major Crown Project will enter the project definition phase as soon as Preliminary Project Approval (PPA) is received from Treasury Board.

**Leading and Participating Departments and Agencies**
Lead Department	National Defence
Contracting Authority	Public Works and Government Services Canada
Participating Department	Industry Canada

**Prime and Major Sub-Contractors**
Prime Contractor	TBD

**Major Milestones**
Major Milestone	Date
Preliminary Project Approval (PPA)	Spring/Summer 2009
Effective Project Approval (EPA)	Spring 2010
Contract Award	Spring/ Summer 2010
First aircraft delivery	Spring/ Summer 2013
Last aircraft delivery	Spring/Summer 2015
Project Closure	Spring/Summer 2017

Progress Report and Explanations of Variances:The Definition Phase of the FWSAR project will start as soon as Preliminary Project Approval is received from TB.

Industrial Benefits: Maximum Industrial Regional Benefits (IRB) will be sought for this project and details will soon be determined by the Government stakeholders.

HALIFAX CLASS MODERNIZATION/FRIGATE LIFE EXTENSION (HCM/FELEX)

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.

Project Phase: Implementation. Implementation of the HCM/FELEX project will occur through three principal contracts: two Multi-Ship 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. Project completion is expected by January 2019.

**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

**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
Combat System Integration Contract	Lockheed Martin Canada, Montréal, QC, Canada

**Major Milestones**
Major Milestone	Date
Preliminary Project Approval (PPA) Approval	February 2005 (FELEX) February 2007 (HCM/FELEX)
Refit Procurement Strategy Approval by TB	March 2007
Revised Preliminary Project Approval (Part 1)	June 2007
Multi-Ship Contracts (MSC) Awarded (Docking Work Periods & Refits)	March 2008 (West) March 2008 (East)
Effective Project Approval (EPA) Approval (Part 2)	September 2008
Combat System Integration Contract Award	November 2008
Refits Begin	October 2010
Full Operational Capability	January 2018
Project Closure	January 2019

Progress Report and Explanation of Variances: In September 2008, Treasury Board granted Effective Project Approval and Expenditure Authority for the project. The total full-up project value, including GST, is $2,998M (BY).

Three qualified contractors were selected to receive Request For Proposals through a Solicitation of Interest Qualification process. During the RFP process, two of the potential bidders withdrew from the competition. The sole bid, from Lockheed Martin Canada (LMC), was compliant with all mandatory requirements and a risk assessment of its proposal indicated no unacceptable risks. The CSI contract was awarded to LMC in November 2008.

The HCM/FELEX Project is presently in its implementation phase and 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. Contracts were awarded to the two shipyards on 17 and 31 March 2008.

Industrial and Regional Benefits: Industrial and Regional Benefits (IRBs) for this project are equivalent to 100% of the contracted value.

INTELLIGENCE SURVEILLANCE, TARGET ACQUISITION AND RECONNAISSANCE (ISTAR)

Description: ISTAR is an omnibus project that received Treasury Board approval for definition phase activity in April 2003. 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.

Project Phase: Implementation. Early deliveries of ISTAR capabilities for Op ARCHER will continue during 2009 and the first sub-projects have achieved Full Operational Capability (FOC) in 2008 and are closing in 2009.

**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

**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

**Major Milestones**
Major Milestone	Date
Treasury Board Preliminary Project Approval	April 2003
MND Approval TUAV Unforcasted Operational Requirements (UOR)	July 2003
Treasury Board Project Approval in Arrears UAV UOR Full Operational Capability Close-out	August 2005 April 2008 February 2009
Communications & Data Link Component Treasury Board Effective Project Approval Initial Operational Capability	December 2006 October 2009
Command and Control (C2) Treasury Board Effective Project Approval Initial Operational Capability	February 2008 October 2009
EW Sensors Treasury Board Effective Project Approval Phase 1 Amendment 1 (AL 1) Initial Operational Capability Full Operational Capability	November 2005 February 2008 March 2008 January 2013
In Service Sensors Enhancement Treasury Board Effective Project Approval	October 2009
Medium Range Radar Treasury Board Effective Project Approval	March 2010
WLS Acoustic Sensor Initial Operation Capability (IOC) Full Operational Capability	November 2005 March 2008 March 2009
Family of Mini UAV Treasury Board Effective Project Approval (UOR) Family of Mini UAV Treasury Board Effective Project Approval AL 1	November 2005 October 2009
Light Weight Counter Mortar Radar Effective Project Approval Initial Operation Capability (IOC) Full Operational Capability (FOC)	March 2007 March 2008 December 2009
Deliveries Complete all ISTAR sub-projects	September 2013
Project Completion	March 2014

Progress Report and Explanations of Variances: ISTAR project staff is still managing the UOR procurement for Op ATHENA and Op ARCHER. The approval process is taking longer than forecasted. However, deliveries 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:

UAV UOR Op Athena
BLOS Op Archer
MEWT Op Archer
Mini UAV UOR Op Archer
AWLS Op Archer
LCMR Op ATHENA
Remote Viewing Terminal Op ATHENA

In addition, the Data Link Communications project received TB approval in December 2006 and PWGSC received TB contract approval for radios in February 2007. The FMS cases for 1,300 radios have been accepted and initialdelivery of equipment started in August 2008. In February 2008, TB approved the ISTAR Electronic Warfare and Command and Control sub-projects. Implementation has now started.

Industrial Benefits: Industrial benefits from the ISTAR project to Canadian industry in Canada will be determined during the approval of the implementation procurement strategy for each sub-project.

JOINT SUPPORT SHIP (JSS)

Description: The JSS 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. It will also enhance Canada's capability for joint command and control of forces ashore. The ships will replace the two ageing Protecteur class support ships currently in service on the east and west coast.

Project Phase: Definition/Implementation

**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

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

**Major Milestones**
Major Milestone	Date
Treasury Board Preliminary Project Approval - (PPA)	November 2004
Invitation for Bids Posted on MERX	June 2006
Project Definition – Contract Award	December 2006
Preliminary Options Analysis	Ongoing

Progress Report and Explanations of Variances: On 22 August 2008, the Minister of Public Works and Government Services Canada (PWGSC) announced the termination of the procurement process to acquire three Joint Support Ships.

After receiving and evaluating the mandatory requirements for the Joint Support Ship Project from the bidders, the Crown has determined that both proposals were not compliant with the basic terms of the Request for Proposals (RFP). Among other non-compliances, both bids were significantly over the established budget provisions of $1,575B for the Project Implementation (PI) Contract for the delivery of the JSS capability (3 ships).

The project will not be able to meet the original delivery dates for Initial Operational Capability (IOC) and Full Operational Capability (FOC) as planned (2013 and 2016 respectively).

PMO JSS staff is currently performing preliminary Options Analysis in support of the decision best suited to the procurement of Joint Support Ships. The analysis, of fundamental importance to progressing the project, entails a review of capability requirements, cost, and the resulting impact on technical specifications and schedule.

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.

LIGHT UTILITY VEHICLE WHEELED (LUVW)

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.

Project Phase: Implementation

**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

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

**Major Milestones**
Major Milestone (Phase 1) SMP	Date
Award of Contract	October 2003
First Full Production Delivery	February 2004
Final Production Delivery	November 2006
Effective Project Completion	November 2009

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	November 2009

Progress Report and Explanation of Variances: The project is in full Implementation. Outstanding issues are Amendment 2 to the SMP production contract and delivery of the Mil COTS battery disconnect switch kits. The amendment to the SMP production contract is required to reflect the costs resulting from Design Change Requests (DCRs), as well as additional ILS publication requirements. A contract valued at $1.71M (incl GST) was awarded to Kerr Industries on July 23, 2008 for the delivery of 1,061 battery disconnect switch kits. These kits are required to isolate the electrical system and associated parasitic loads from draining the batteries when the vehicles are not in use. Final delivery is scheduled for March 31, 2009, but it is anticipated that Canadian Forces (CF) Reserve units will not have the last of these kits installed by their local GMC dealership until November 1, 2009.

A contract valued at $1.87M (incl GST) for Special Tools and Test Equipment (STTE) was awarded to MBC on November 19, 2008. Final delivery for STTE is scheduled for March 31, 2009. It is anticipated that FOC will be declared by July 31, 2009, after all the STTE have been delivered to base maintenance facilities. Once FOC has been declared, the project will begin the close-out process with effective project closure scheduled by November 1, 2009 to coincide with the final installation of the Mil COTS battery disconnect switch kits. Even with the above mentioned changes, the project is scheduled to close under the allocated funding of $298.4M.

The vehicle fleet has been affected by body cracks and inferior weapons station design and quality issues. An agreement was reached to address vehicles with body cracks and those potentially at risk of developing future cracks. Mercedes-Benz Canada has initiated a redesign of the weapons station to address these deficiencies, with the first two prototypes completed in January 2009.

It is expected that the Long Term Support Contract (LTSC) will be awarded by June 2009. The anticipated total value of the contract (one five year term, with two optional five years terms) is $99.9M (incl GST).

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.

LIGHTWEIGHT TOWED HOWITZER (LWTH)

Description:The Lightweight Towed Howitzer (LWTH) project is an element of the act domain in the Canadian Forces. This project will bridge a key facet of the Army’s current indirect fire capability deficiency. Specifically, the project will field twenty-five (25) M777 lightweight 155mm towed howitzers, each with a Digital Gun Management System (DGMS), and supported by improved ammunition and a modern truck. These howitzers will augment the 12 M777 howitzers currently in-service. These capability enhancements in terms of lethality, range, precision, mobility and digitization are needed to support future missions and tasks likely to be assigned to the Canadian Forces.

Project Phase: Definition. The LWTH project entered the Definition Phase with the approval of Treasury Board on June 5, 2008. Expenditure and contracting authority were also delegated to DND and PWGSC respectively for the M777 and DGMS acquisitions.

**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

**Prime and Major Subcontractor(s)**
Prime Contractor	BAE Systems, Barrow-in-Furrow, Cumbria, United Kingdom
Major Subcontractor(s)	SELEX Sensor and Airborne Systems Ltd, Edinburgh, United Kingdom

**Major Milestones**
Major Milestone	Date
Identification Phase Approval – Identification Phase	January 2008
Preliminary Project Approval – Definition Phase	June 2008
M777 Foreign Military Sale (FMS) Agreement	November 2008
DGMS Contract Award (Planned)	April 2009
Effective Project Approval – Implementation Phase	June 2009
Initial Operational Capability	April 2011
Final Operation Capability	December 2012
Project Close-Out	June 2013

Progress Report and Explanations of Variances: Treasury Board approved the indicative total project cost of $278.282M (all costs are $BY including GST) in June 2008. At the same time expenditure authority of $3.466M was granted for the Definition Phase, $106.898M to acquire the M777 (including ancillary equipment and services), and $25.302M to acquire the Digital Gun Management System (including support).

The FMS Letter of Offer and Agreement (LOA) to procure 25 M777 howitzers and support equipment was signed in November 2008. Contracting work for the DGMS is ongoing and award is planned for April 2009.

The project intends to return to TB in 2009 for Effective Project Approval, which will include three components: M777 support, truck, and ammunition.

There are no cost variances to report.

Industrial Benefits: This procurement will provide industrial regional benefits for the capital acquisition of the howitzer and DGMS. These Industrial and Regional Benefits requirements will be negotiated and accepted by Industry Canada prior to contract award.

MAIN BATTLE TANK (MBT)

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 divided into two phases. Phase 1 consisted 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 100 surplus Leopard 2 MBT from the Netherlands Government. Phase 2 consists of the repair, overhaul, upgrade and introduction of up to 100 Leopard 2 tanks and armoured recovery vehicles into service with the CF.

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

**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

**Prime and Major Sub-Contractors**
Prime Contractor for ARV upgrades Phase 1	Rheinmetall Landsysteme (RLS), Germany
Prime Contractor for MBT upgrades Phase 1	Krauss-Maffei Wegmann (KMW), Germany
Prime Contractor for loaned tanks	German Government
Prime Contractor for tank purchase	Netherlands Government
Logistic Support Arrangement	German Government
Phase 2 Contract(s) for MBT repair, overhaul, upgrades and ARV conversion.	TBD

**Major Milestones**
Major Milestone	Date
Treasury Board - Preliminary Project Approval (PPA)	March 2007
Phase 1 – Loan Agreement with German MoD	May 2007
Phase 1 - Contract to KMW for upgrades to Loaned tanks	May 2007
Phase 1 - Contract to RLS for upgrades to Loaned tanks	May 2007
Initial Operational Capability – (Phase 1)	August 2007
Phase 1 - Acquisition of tanks from Dutch Government	December 2007
Letter of Interest	April 2008
PPA Amendment approved by TB	June 2008
Price and Availability	February 2009
Treasury Board - Effective Project Approval (EPA)	June-July 2009
Full Operational Capability – (Phase 2)	December 2012
Project Closed-Out	December 2014

Progress Report and Explanations of Variances: The imperative to upgrade and deploy the borrowed tanks into Afghanistan to meet the July 2007 Initial Operational Capability (IOC) date required some performance trade-offs. Time was insufficient to develop, qualify, and implement a new passive armour solution and as a result, the 20 borrowed tanks deployed with new slat armour. Time was also insufficient to install air conditioning therefore a crew cooling vest solution was developed and implemented. Some Leopard 1 C2 tanks for use with implements remain in theatre as the Leopard 2 tanks are not designed to accept mine ploughs, dozer blades or mine rollers.

The work in support of the EPA submission has been initiated. The Letter of Interest announced the broad objectives of the Project and good response was received from Industry. The feasibility study with Industry was cancelled by PWGSC, and the technical study was completed using DND and Allied government resources. The Leopard 2 tank capabilities and the Canadian performance requirements have been identified. The team finalized the Price and Availability identifying the core deliverables. The Price and Availability responses will be used to develop the substantive costs and schedule information required for the Effective Project Approval submission.

Industrial and Regional Benefits (IRB): No IRBs are required for Phase 1. The IRB requirements for Phase 2 will be recommended by Industry Canada, as part of the EPA process.

MARITIME HELICOPTER PROJECT (MHP)

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.

Project Phase: Implementation. In November 2008, the project marked the four-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.

**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

**Prime and Major Sub-Contractors**
Prime Contractor	Sikorsky International Operations Incorporated, Stratford, Connecticut, USA
Sub-Contractors	General Dynamics Canada, Ottawa, Ontario L-3 MAS Canada, Mirabel, Québec

**Major Milestones**
Major Milestone	Date
Preliminary Project Approval (PPA)	June 2003
Invitations for Bids Posted on MERX	December 2003
Synopsis Sheet (Effective Project Approval) SS (EPA)	November 2004
Contract Award	November 2004
First Delivery	November 2010
Final Delivery	2013
Project Close-out	2014

Progress Report and Explanations of Variances: In December 2008, following discussions to minimize delays in the planned delivery of the integrated Maritime Helicopter, the Government and Sikorsky agreed to a new schedule for the delivery of helicopters starting in November 2010, with delivery of enhanced helicopters commencing in July 2012.

Other components of the project such as construction of the Training Centre building in Shearwater, NS, and ship modification work on HMCS Montréal have progressed well and are on schedule. The first test flight of the Maritime Helicopter occurred on November 15, 2008. The project is currently running within its authorized budget.

Industrial Benefits: The Industrial Regional Benefits are 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
Québec	$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)

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.

Project Phase: Implementation. To date the project has completed Phases 1 to 4 and implementation of Phase 5 is currently underway. Project completion is expected for 2012.

**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

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

**Major Milestones**
Major Milestone	Date
Definition Phase
Preliminary Project Approval - Expenditure Authority for Phase 1	June 1998
Contract Awarded for Prime Systems Integrator	December 1998
MASIS system - Go Live Phase 1 (202 Work Depot Montréal)	September 1999
Implementation Phase
Expenditure Authority (EPA) for Phases 2 and 3: Implementation of Complex Contracts; Implementation of the MASIS solution to the Navy; Operations Support & Maintenance for MASIS; Planning and scoping for requirements scheduled to be implemented for the Army.	June 2000
Amended Expenditure Authority (EPA) for Phase 4: Investigation of opportunities to progress the implementation of MASIS to the maximum extent possible within the future available Phase 5 funding; Management of Operations Support & Maintenance for MASIS (outside MASIS project Expenditure Authority); 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 2007
Project Close-out	2012

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. In June 2007, the MASIS project received Treasury Board approval in the amount of $170M for Phase 5. Phase 5 activities include the rollout of MASIS functionality to Army and Air Force. To date, Phase 5 activities are on budget and on time. Planned completion of project is within the 2012 timeframe.

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

MEDIUM TO HEAVY LIFT HELICOPTER (MHLH)

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 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 beyond 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 to 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.

Project Phase: Definition

**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

**Prime and Major Sub-Contractors**
Prime Contractor	The Boeing Company, Philadelphia, Pennsylvania, USA

**Major Milestones**
Major Milestone	Date
Synopsis Sheet Preliminary Project Approval (PPA)	June 2006
Advanced Contract Award Notice Posted on MERX	July 2006
Effective Project Approval and Contract Award	June 2009
First ACAN Compliant Aircraft	March 2012
First MHLH	March 2013
Initial Operational Capability (IOC)	March 2014
Full Operational Capability (FOC)	March 2015
Project Close-out	March 2016

Progress Report and Explanation of Variances: On March 11, 2008, a Request for Proposal was released to the Boeing Company. A proposal was received in July 2008. Reconciliation of work scope and cost, and challenges in arriving at mutually agreeable terms and conditions, have extended contract negotiations thereby pushing contract award to March 2009.

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. The selected contractor will be required to identify, as specific work packages, 60% of the total acquisition commitment. For the integrated in-service support portion, 75% of the contract value will be direct work performed by a Canadian company. These industrial and regional benefits requirements will be negotiated and accepted by Industry Canada prior to contract signing.

MEDIUM SUPPORT VEHICLE SYSTEM PROJECT (MSVS)

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 $1.2 B (net of GST) and will deliver the following mix of vehicles:

medium-sized Standard Military Pattern (SMP) vehicles:
- Up to 1,500 vehicles, 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 vehicles with militarized components, with options for an additional 500.
Special Equipment Vehicle (SEV) Kits:
- Up to 1000 special equipment vehicle kits, with options for an additional 150.

Project Phase: Definition/Implementation

**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

Prime and Major Sub-Contractors: One prime contractor will be selected for each project component. Final selection of the prime contractors will occur through Revised Preliminary Project Approvals (Rev (PPAs)) for MilCOTS Vehicles, SEV Baseline Shelters and SMP Vehicles followed by Effective Project Approval (EPA) for SEV Kits.

Prime Contractor

Navistar Defence LLC, Warrenville, Illinois, USA

**Major Milestones:**
Major Milestones	Date
Preliminary Project Approval (PPA)	June 2006
Invitation for Bids Posted on MERX - MilCOTS Vehicles	November 2007
Invitation for Bids Posted on MERX - SMP Vehicles	Summer 2009
Invitation for Bids Posted on MERX - SEV Baseline Shelters	May 2008
Invitation for Bids Posted on MERX - SEV Kits	Early 2010
Rev PPA for MilCOTS Vehicles	December 2008
Rev PPA for SMP Vehicles	Fall 2010
Rev PPA for SEV Baseline Shelters	Spring 2009
EPA for SEV Kits	Early 2011
Contract Award - MilCOTS Vehicles	January 2009
Contract Award - SMP Vehicles	Fall 2010
Contract Award – SEV Baseline Shelters	Spring 2009
Contract Award - SEV Kits	Early 2011
First Delivery - MilCOTS Vehicles	Summer 2009
First Delivery - SMP Vehicles	Fall 2011
First Delivery - SEV Baseline Shelters	Early 2011
First Delivery - SEV Kits	Spring 2011
Delivery Complete - MilCOTS Vehicles	Fall 2010
Delivery Complete – SMP Vehicles	Summer 2013
Delivery Complete – SEV Baseline Shelters	Fall 2012
Delivery Complete - SEV Kits	Fall 2012
Project Close Out	Fall 2013

Progress Report and Explanations of Variances: In December 2008, PMO MSVS obtained Treasury Board expenditure authority for MilCOTS in the amount of $351.8M ($BY), plus GST and a Rev PPA for an indicative full-up cost estimate of $1.22B ($BY), plus GST for all components of the MSVS project.

MilCOTS - Agreement in Principle was reached in August 2008 with the single responsive bidder. Rev PPA and contract approval received in December 2008. Contract awarded in January 2009.
SEV Baseline Shelter – The SEV Baseline Shelter RFP was released to industry in May 2008 and the bid evaluation was completed in July 2008. Negotiations with the single responsive bidder are planned for completion in Early 2009. Rev PPA and contract award for this component is planned for Spring 2009.
SMP – A revised draft technical specification was posted in November 2008 for industry comment. The complete RFP is planned for release in Summer 2009.
SEV Kits – The SEV Kits RFP is scheduled for release in Early 2010.

Schedule delays have occurred and are attributed to delayed project approval and overall manning shortages. Cost variances have also occurred and are attributed to the receipt of single bids for MilCOTS vehicles and SEV Baseline Shelters with higher than anticipated price proposals, volatile raw material market and fluctuation in foreign exchange rates.

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

Industrial & Regional Benefits: Industrial Regional Benefits (IRBs) equivalent to 100% of the contract value will be required for each project component.

MILITARY AUTOMATED AIR TRAFFIC SYSTEM (MAATS) PROJECT

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.

Project Phase: Implementation

**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

**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, Montréal PQ Frequentis Canada Ltd, Ottawa ON

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

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, the 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 NAV Canada’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 year 2009–2010.

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

Region	Cash Benefits
Atlantic Canada	1.6M
Québec	1.0M
Ontario	1.8M
Western Canada	45.8M
Unallocated	To be determined
Total	$50.2M

PROTECTED MILITARY SATELLITE COMMUNICATIONS (PMSC)

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.

Project Phase: Implementation. The PMSC project is being implemented in two phases with project completion expected for Winter 2017.

**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

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

**Major Milestones**
Major Milestone	Date
Preliminary Project Approval	August 1999
Effective Project Approval	November 2003
Initial Terminal Delivery	Summer 2011
Initial Satellite Delivery	Summer 2012
Terminal Delivery Completed	Summer 2013
Project Complete	Winter 2017

Progress Report and Explanations of Variances: The PMSC project is being implemented in two phases. In Phase 1 the satellites are being procured under the terms of a Memorandum of Understanding (MOU) with the United States Department of Defense (DOD) that guarantees 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 is being procured and will be installed and tested starting in 2011.

In August 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 in November 1999.

In November 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. The project is on budget.

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 (SCLE)

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.

Project Phase: Implementation. The project has 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. Canadianization of three platforms and twelve of seventeen associated projects have been completed. The last platform (HMCS CHICOUTIMI) will complete Canadianization in December 2011 and the remaining five associated projects will be completed by project closure in March 2013.

**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

**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

**Major Milestones**
Major Milestone	Date
Treasury Board Approval	June 1998
Main Contract Award	July 1998
Initial Support Contract Award	July 1998
Initial Operational Capability	April 2006
Full Operational Capability	December 2011
Project Close-out	March 2013

Progress Report and Explanation of Variances: Effective Project approval was granted to the SCLE project in June 1998 at an estimated total cost of $812.0M (BY) net of GST. The expenditure ceiling was increased by $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.

Canada has accepted all four Upholder submarines from the United Kingdom. The operational status of each of these vessels is summarized below:

Her Majesty’s Canadian Ship (HMCS) Victoria is currently undergoing an Extended Docking Work Period (EDWP) at Fleet Maintenance Facility (FMF) Cape Breton. She is scheduled to undock in June 2009 and complete this activity in December 2009.
HMCS Windsor is currently undergoing an Extended Docking Work Period (EDWP) at Fleet Maintenance Facility (FMF) Cape Scott. She is scheduled to undock in late 2009 and complete this activity in 2010.
HMCS Corner Brook is operational and is participating in various exercises and patrols. Barring a six-month docking period in late 2009 she will remain operational until mid 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 that resulted in a fire and was returned to Canada via sealift. Although some of the repairs have been completed, a decision was taken to delay the completion of the repair and Canadianization until EDWP. This work package is scheduled to commence in 2010.

Based on progress to date and current information, all performance objectives of this contract will be met within the allocated budget.

Industrial and Regional 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.

WHEELED LIGHT ARMOURED VEHICLE - LIFE EXTENSION (WLAV-LE)

Description: The Wheeled Light Armoured Vehicle – Life Extension (WLAV- LE) will address deficiencies in command, combat support and combat service support capabilities to ensure that the current fleets of wheeled armoured vehicles are capable of operating in the current and anticipated threat environment. The WLAV - LE will improve the mobility, protection and capability of the in-service Bison fleets (primarily composed of Infantry Section Carriers (ISC)) through a life extension and conversion to command and support variants dedicated to the new LAV III and LAV-Recce (Coyote) fleets. The following capabilities will be provided in the 2004-2011 timeframe:

Conversion of the entire Bison fleet of 199 vehicles to 32 Ambulances, 16 Electronic Warfare, 4 Nuclear Biological and Chemical Defence, 32 Maintenance and Recovery Vehicle, 32 Mobile Repair Team, 83 Command, Control, Communications and Intelligence vehicles;
Provision of updated add-on armour packages for operations stock as a result of changes made to existing vehicles, to provide the crew and mission essential equipment with a basic level of protection; and
Sufficient Integrated Logistics Support to maintain the fleet for the first two years of operations.

Project Phase: Implementation. Just over 50% of the Bison fleet has been converted.

**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 Atlantic Canada Opportunities Agency

Prime and Major Sub-Contractors
Bison Re-Role
Prime Contractor (6 variants)	DEW Engineering and Development ULC (DEW), Ottawa, ON
Prime Contractor (1 variant)	General Dynamics Land Systems – Canada (GDLS-C), London, ON

**Major Milestones**
Major Milestone	Date
Treasury Board Preliminary Project Approval	September 1996
Treasury Board Effective Project Approval	November 1998
Initial Contract Award with DEW	January 2003
Treasury Board Revised Effective Project Approval	September 2006
New Contract Award with DEW	May 2007
Contract Award with GDLS-C	October 2007
Implementation – Initial Operational Capability	March 2009
Implementation – Full Operational Capability	December 2010
Project completed	March 2011

Progress Report and Explanation of Variances: Initially, the Treasury Board approved the WLAV LE with an estimated cost of $230.387 M ($BY). In September 2006, the Treasury Board granted a reduced expenditure authority to WLAV LE due to the cancellation of the Armoured Vehicle General Purpose (AVGP) component of the project. This change resulted from the decision taken by the Department of National Defence in March 2005 to retire the AVGP fleet. The total cost estimate is now $170.3 M ($BY). The planned dates for the Initial Operational Capability (August 2008) and Full Operational Capability (December 2009) have been deferred as a result of delays experienced in getting contract approval, in completing the prototype build and in achieving a successful first article inspection for the Mobile Repair Team variant. The WLAV LE is currently running on budget and is to be completed by March 2011.

Industrial Benefits: There are no Industrial and Regional Benefits strategy associated with the WLAV LE Project.

The WLAV - LE is excluded from the Agreement on Internal Trade under article 508 - Exceptional Circumstances. The exceptional circumstance is related to the economic hardship facing the local economy from the closure of Canadian Forces Base Chatham New Brunswick. Based on Cabinet decision in July 1995, a portion of the work is to be carried out in the Chatham area (now defined as the Miramichi Region). It is a provision of the Contract with DEW Engineering and Development ULC that the work is to be done in the Chatham Area of the province of New Brunswick to the maximum extent possible and where cost effective to the Crown.

TABLE 9: SUMMARY OF CAPITAL SPENDING BY PROGRAM ACTIVITY

($ Thousands)	Forecast Spending 2008-2009	Planned Spending 2009-2010	Planned Spending 2010-2011	Planned Spending 2011-2012
*Defence Services Program*
Generate and Sustain Relevant, Responsive and Effective Combat-Capable Integrated Forces	2,933,445	4,395,690	4,174,067	3,997,298

Conduct Operations	307,660	445,223	467,553	460,431

Contribute to Canadian Government, Society and International Community in Accordance with Canadian Interests and Values	46,286	26,190	31,004	33,564

Internal Services	126,521	103,563	109,287	110,078
Total	3,413,911	4,970,665	4,781,910	4,601,370

Source: Assistant Deputy Minister - Finance and Corporate Services Group

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

Note:

The Total Capital Spending of $4,272,890 thousand reported on Voted and Statutory Items Displayed in the Main Estimates Table equals the capital portion of the Main Estimates for fiscal year 2009-2010. This capital table is showing $4,970,665 thousand for fiscal year 2009-2010. The increase of $697,775 thousand is the adjustments from the Main Estimates to the Planned Spending figure mainly related to funding for Strategic Capital Investments (Budget 2005, 2006, 2007 & 2008 Announcements).