Northeast Alberta Information HUB Aerospace Technology, Defense and Unmanned Systems Status and Future Opportunities

Submitted by:

Denean Tomlin, President 115 1925 18th Ave NE Calgarv, AB T2E 7T8 -a­ Phone: 403.710.0982 LI Ln??!?nd Email: [email protected] Alberta l lUB .... Where ?opportunity comes to life devon

------llPage Western Canadian Defence IndustriesAssociation

The Western Canadian Defence Industries Association (WCDIA) is a notfor-profit organization that advocates, educates and connects. It represents the industry in BC, Alberta, Saskatchewan and Manitoba by promoting activities, connecting individuals and creating networking opportunities and events (including national industry conferences such as WestDej). The role ofWCDIA is tofacilitate the development ofthe Aerospace, Defence and Security industries in Western Canada. WCDJAfocuses on increasing the businessgrowth of its members, supporting the diversified development ofthe region's economy, and enhancing Canada's security through education, networking, and advocacy.

This study was prepared on behalfof WCDIA by:

Steve Banks, Triske/e Logistics Michael Ede, Vectors West Bruce Gilkes, EDGE Strategy & Analytics Penny Leach, HDGE Strategy & Analytics Denean Tomlin, President, WCDIA

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2[Pagc CONTENTS

Executive Summary

Chapter 1- Review mandate and process

Chapter 2- Understanding the Alberta HUB Region

Chapter 3- Understanding the Aerospace Technology, Defence and Unmanned Systems Industries

Chapter 4- Opportunities and Recommendations

Chapter 5- Challenges and Recommendations

Chapter 6- Engagement and Roadmap

Chapter 7: Alberta HUB Value Proposition and Marketing Messages Appendices

3IPage EXECUTIVE SUMMARY

The Alberta HUB Aerospace Technology Defense Project evaluated the assets and capabilities within the Northeast Alberta Information HUB {Alberta HUB) region to determine the potential of attracting and generating new economic activity related to the Aerospace Technology, Defence and Unmanned Systems industries (ATDUS). ln addition, work was undertaken to identify opportunities and challenges to determine how to enable companies and institutions in the HUB region to build commercial relations with players in the ATDUS industries,

Commissioned by the Alberta IIUB to conduct this analysis, the Western Canadian Defence Industry Association first identified the principal assets and capabilities in the region then vetted each through three filters: Opportunities under Canada's new Defence Strategy, which calls for new equipment and an expansion of the Canadian military as well as a reduction in its carbon footprint; Canada's defence procurement strategy-the commitments that are being made to purchase this new equipment and lastly, through Canada's Industrial and Technological Benefits (1TB) framework. The 1TB framework ensures that Canada benefits through military procurement by way of linking procurement to both direct work related to the purchase of the military equipment and/or indirectly, to the growth of Small and Medium Sized Enterprise {SMe) and public institutions such as colleges, universities, and research institutions.

Assets and capabilities within the HUB include the Cold Lake Air Base where extensions of the life-cycle of both the CF-18 Hornet and the CH-146 Griffin aircraft will bring new maintenance activity to the base. New activity will also be generated through Canada's new defence policy which calls for unprecedented private sector involvement with extensive refurbishment and "greening" of the existing Department of National Defence (DND) infrastructure. Longer term, the base will undergo significant infrastructure development in support of Canada's new fighter jet. This study also suggests that local procurement activity in relation to Alberta's four Canadian Forces Bases is over $1DM annually and this requ'res further study to best exploit opportunities within the HUB.

Other assets and capabilities relevant to the study include ln noTech ALBERTA, a scientific, engineering and technological research and testing facility that supports technology advancement. The HUB's colleges arc also particularly relevant to the ATDUS particularly if they cluster to establish an Aircraft Marntenanco éngincer Program (both maintenance and avionics and related technician programs) and a Commercial Pilot Program. Lakeland College, in particular, is offenng programs in piloting drones which yields some areas of opportunity regarding Autonomous Systems, one of the niche areas of Alberta's aerospace and defence sector. It may be feasible to link the use of drones at Lakeland College with the Beyond Visual Line of Sight {BVLOS) initiative. Connecting to over 20 organizations, this initiative will validate BVLOS technology. All post-secondary and research facilities in the HUB have a particular focus on renewable energy-an important area of specialization that is top of mind for many defence contractors.

41Page fhe road ahead Involves creating a value proposition for the region that highlights capabilities in a manner lhat attracts attention from defence contractors, the Government of Alberta, Western Economic Diversification and Industry, Science and Economic Development (ISED). "Deal flow" will only happen with engagement with these parties. Given the location of the Cold Lake Air Base, the region has a distinct driver of economic activity and a "differentiator" relative to other areas of Alberta. Ideally, moving forward would include a unified strategy with all relevant stakeholders in the region including the City of Cold Lake, the Cold Lake Air Base, the surrounding communities, and the Indigenous groups in the area, particularly the Cold Lake First Nations given the impact of the Weapons Range on its traditional territories.

Thus, this document is the sta, t of a project and the start of a process. Given the stakes associated with Investment in defence procurement in Canada and the need to create receptor capacity for offsets associated with some very large military programs that are in the range of billions of dollars; the differentiator created by the Cold Lake Air Base and Weapons Range; the interests of the City of Cold Lake in leveraging the Air Base; and the need to address Canada's Truth and Reconciliation Calls to Action for Indigenous Peoples, all provide multiple compelling reason to plan for building an ATDUS strategy. While the need for diversification of an economy based on the languishing oil and gas sector was posed as an underlying reason for this study, it is more likely that insufficient attention has been brought to bear on the sleeping giant- i.e.: defence procurement.

The decision to undertake a study of this nature will place the Alberta HUB ahead of other regions in exploring how to pivot the economy to high tech and a knowledge-based economy. /Is it appears, lhere Is another sleeping glanl in Canada as Calgary has now taken the lead on innovation. As measured by the number of filed patents, Calgary now surpasses the likes of Ottawa and Waterloo in patents filed per capita. This rise has happened without the fanfare that accompanied the ascent of the country's previous tech HUBs in Ontario. Unlike other tech HUB booms there is no other central character such as Blackberry dominating the science. Rather-it's a multitude of players driving the creation of new technologies both through competition and cooperation. This is the roadmap for Alberta moving forward - the convergence of technologies across sectors within the context of collaboration.

SI Page SUMMARY OF RECOMMENDATIONS

• Opportunities related to Canada's defence policy and procurement strategy-Yearly equipment procurement is rising from $6B to $10B per year, and the Future Fighter Program ($14B) will see significant construction activity in the HUB. There are a number of original equipment manufacturers (OEM's) located on the airbase that will be very significantly impacted by these procurements and it 1s critical that the HUB understand the direct and in direct opportunities associated with new procurements. It is recommended that the HUB create an Engagement Strategy with Peraton, L-3MAS and Raytheon. These OEMs will be involved with the extension of the F 18 through maintenance, activities and potential radar upgrades. • There will be opportunities for Small and Medium Sized Enterprises {SMEs) regarding the infrastructure changes, land remediation practices, conversion to green energy and potentially other defence procurements (such as marine projects) that could provide unique opportunities for small and medium businesses in the HUB. Engaging with them will be a critical step for the HUB. It's recommended that this opportunity could be advanced significantly if the HUB proceeds to develop an inventory of small businesses in the region. This would not only help to engage SM Es with opportunities at the Base it would also allow the HUB to identify capabilities for potential technology development through the development of clusters or consortiums that could be built with the HU B's colleges and research entities. It needs to be noted that 15% of all defence procurements are now required lo target SM Es. • Opportunities related to local Defence Procurement Approximately $10MM per year is spent on local procurement by the four Alberta military bases inclusive of Cold Lake. It is recommended that efforts should be taken to better capture this opportunity. As a first step, it is recommended that the HUB needs to better understand the nature of the procurements and then design a strategy to engage local business for alignment with the opportunity. • Opportunities related to energy efficiency and environment-DND is recapitalizing many buildings to achieve LEED certification (Leadership in Energy and Environmental Design) and there are significant opportunities related to reclamation and remediation efforts on the Base. There are very significant opportunities in the Defence Environmental Strategy (DEES) particularly for small business, Indigenous groups (Cold Lake First Nations in particular) and the HUB's colleges and lnnoTech It's recommended that the HUB conduct further analysis of DEE'S and, with the participation of additional partners including DND and D[ES officials, hold an awareness and strategy session to match opportunity with the HU B's SM E's • Maple Flag - It is important that the HUB conduct a short feasibility assessment to assess the potential of leveraging the Maple Flag Exercise. It has been observed that the event, when robust, brought significant economic benefits to the region. • Opportunities related to training - The activity on the base and future programs that incorporate technology upgrades warrants the exploration of aircraft maintenance, avionics and technician training programs being established in the region. Lakeland College has experience with Unmanned Systems and this experience might be connected to the Beyond Visual Line of Sight (BVLOS) activities being conducted in the province. It's recommended that a feasibility study be conducted to explore establishing these programs. They could be designed to attract the youthful Indigenous population as well as the demographic that has been displaced as a result of the downturn in oil and gas. Creating and retaining talent are critical to the HUB. • Opportunities related to research-The HU B's colleges and InnaTech have strong capabilities and facilities related to the environment and renewable energy. There are many interested Defence primes who would like to partner for energy efficiency research as well as general research opportunities. It is recommended as a first step that these capabilities be profiled (with the participation of the institutions) in marketing documents used with prime contractors • Opportunities related to Canada's Industrial and Technological Benefits Framework-15% of the value of all large procurement projects must be spent on Small and Medium Businesses. Defence primes are actively looking for partnerships with local companies and post secondary institutions for investment to clear billions of dollars of offset obligations. Again, it is recommended that the HUB profile its capabilities-

6IPage research, academic, SM Es (SM Es), the activities and assets on thee Cold Lake Air Base and the Weapons Range for marketing to prime contractors. • Opportunities related to Unmanned Systems- Unmanned systems are used extensively within the region, particularly with agriculture and oil and gas, There are special opportunities for companies willing to work with the Cold Lake First Nations, Lakeland College has experience in unmanned systems, It's recommended that this capability and the desires of the college in the unmanned space be explored, There could potentially be opportunities in training. The recent study conducted by the Unmanned Systems Canada (USC) extrapolated that growth in employment is significant. Canada could be looking to train over 20,000 employees for the burgeoning industry. The need for engineers and pilots will be the greatest. • Opportunities related to demographics-· The region's young population can be tapped to provide a strategic opportunity to develop STEM (science, technology, engineering, and math) programs that can help diversify the IIUB from an industrial and service economy to a knowledge economy. The share of SfEM occupations was three times that of the manufacturing sector. It is recommended that the HUB advocate for STEM in the region's academic community. • Marketing- Prime contractors are not aware of the capabilities in the HUB. Without this knowledge, the region gets frozen out of potential opportunities. It is recommended, that with assistance, a strategy could be developed to help the HUB presents its "Value Proposition" to contractors looking for receptor capacity for opportunities under Canada's Industrial and Technological Benefits framework. • Diversity-The HUB has a significant Indigenous population that generates significant economic activity in the area, (particularly the Cold Lake First Nations). It will be important for the HUB to review the Defence Environmental Strategy to link positive business opportunities that deal with remediation targets for DND lands. This needs to be researched and thought out carefully but with a creative approach this could be folded into a type of Reconciliation process. • Enhanced Value Proposition-Canada has recently (May 30, 2018) modified its Value Proposition regarding defence procurements to include a new pillar related to gender, diversity and socio-economic status, It is recommended, that with guidance, a number of projects (some including the surrounding Indigenous groups), could be designed so as to position the HUB for potential indirect Industrial and Technological Benefit transactions. • Innovation-Economic developers need to embrace and seek to understand "innovation" as part of their mandate. As mentioned in the document, Alberta 1s surpassing other regions of Canada in terms of innovation and the Alberta HUB can be part at a general pivot towards a knowledge-based economy, • Government-The Alberta HUB is advised lo establish a strong working relationship with the Province of Alberta and Western Economic Dlversificalion and make their intentions very clear regarding exploring diversification in the ATDUS industries. • Critical Mass- The HUB may consider nurturing its disruptive thinkers that support diversification of the economy. This could be done through weekly or monthly meetings. An investigation of the conversion of the foundation of an economy to include defence, such as has occurred in the Maritimes, is warranted, • Getting ln the Game- It is also advised that the Alberta HUB is encouraged to participate in as many defence related opportunities and events as possible so as to create new intelligence on the sector and establish new relationships, Examples include events such as WESTDEF, Abbotsford Air Show, DEFSEC. It's also strongly recommended that the HUB join the Western Defence Industries Association (WCDIA), It is feasible a "boot camp" on Canada's defence policy, Canada's procurement strategy and the Industrial and Technological Benefits framework could be organized for the stakeholders in the I IUB.

7[Page Chapter 1- Review Mandate and Process ln early July 2017, the Northeast Alberta Information HUB contracted with the Western Canadian Defence Industries Association (WCIDA) to launch the Alberta HUB Aerospace Technology Defense Project. While the Alberta NE HUB region has a diversified economy founded upon the oil and gas, agriculture, tourism and manufacturing industries, great interest has been expressed in exploring the opportunities associated with the Aerospace Technology, Defense and Unmanned Systems Industries (ATDUS) to both facilitate the economic diversiûcatlon of the Alberta HUB and expand the ATDUS sector. A driving motivation is the location of the Canadian Forces Base Cold Lake 4-Wing.

Located in the center of the HUB region, the Canadian Forces Base (CFB) is the home of the fighter pilot. The CFS not only hosts Canada's world class tactical fighter force training program, it also deploys and supports fighter aircraft to fulfill domestic and international roles of Canada's air force. Cold Lake is one of two Canadian airbases that are home to the CF-18 Hornet and CH-146 Griffon-- both now under review by ONO and the Canadian government. Evaluating the possibility of leveraging this Canadian Forces Base and positioning this and other capabilities within the HUB for opportunities within the aerospace, defence and unmanned systems industries is a key aspect of this study and could be the foundation of the relationship between the Northeast Alberta HUB and the WCOIA. This document presents the fmdlngs regarding this evaluation and it should be viewed as a "process" and potentially be Phase 1 of the Alberta HUB Aerospace Technology Defense and Unmanned Systems Project (ATDUS). ln order to define the current state of the ATDUS industries in the Alberta HUB and make recommendations regarding how to best position the HUB for future opportunities, the WCOIA researchers undertook a review of current demographic data; reviewed recent economic and infrastructure assessments; identified examples of SME capabilities with relevance to defence procurement; reviewed the capabilities of the HUB colleges and research agencies and undertook an extensive review of the operations at the Cold Lake Air Base.

Key informant interviews were held with many stakeholders including officials at the Cold Lake Air Base, community leaders, post-secondary institutions, and Indigenous groups in the region (specifically the Cold Lake First Nations), a community generating high economic activity in the HUB with an interest in balancing the need to address historic grievances and disturbances to the use of their traditional territories within the Cold Lake Air Weapons Range. Attention was also given to the City of Cold Lake, and prime defence contractors such as Peraton and L-3MAS which currently operate on the Cold Lake Base. These companies will have significant outstanding offset arrangements to fulfill with Canada given the extension of the Hornet fighter jet. Interviews were also conducted with officials ln the Department of Economic Development and Trade in the Government of Alberta.

which has Findings have been evaluated through a number of filters - opportunities within Canada's defence policy- added incentives for private sector involvement given the state of ONO facilities, and Canada's Industrial and Technological Benefits framework (which requires winners of military contracts to invest in Canada's economic growth at a level commensurate with the value of the contract).

SI Page The relevance of current and projected defence procurements (l.e. Canada's plans to buy planes, ships and other programs in the billions of dollars), were assessed to determine their alignment with existing capabilities and interests of the HUB region. ln addition, Canada has some specific targets and an evolving agenda that is related to building Canada's defence industry and tackling some Canada-wide industrial capability gaps such as Advanced Manufacturing and cybersecurity. Ultimately, the report generates a list of recommendations and a roadmap to help derive economic gains from this complicated labyrinth of opportunities.

9IPage Chapter 2 - Understanding the Alberta HUB Region

The Alberta HUB has a range of strong capabilities that could be leveraged to advance opportunities within the Aerospace Technology, Defence, Unmanned Systems (ATDUS) industries. The capabilities include the Cold Lake Air Base which will undergo significant development with the extension of the CF-18 Fighter Jet program and the eventual recapitalization which will be required to accommodate the Future Fighter Jet. The Cold Lake Air Base will also be impacted by Canada's decision to refurbish and modernize Ils infrastructure which Includes moving to clean energy as well as exercising remediation efforts on the Cold Lake Weapons Range. Significant local procurement ($10M/annually) occurs amongst the 4 bases which could be better leveraged, as could the impact associated with Maple Flag. There are a range of OEMS that operate on the base that create a significant "differentiator" to other areas of Alberta. These OEMs have, or are projected to have, significant industrial and Technological Benefit obligations. Other capabilities of interest and relevance are the program offerings and interests of Portage College, Lakeland College, and Blue Quills University. These post-secondary institutions have program offerings that are currently relevant to building the ATDUS industries, particularly an aircraft maintenance engineer and commercial pilot training as well as other trades programs. lnnoTech and the Applied Research Unit at Lakeland College and Portage College offer particularly interesting capabilities ln the renewable energy sector that would be of interest to prime contractors seeking to build research consortiums. A youthful population generally and a youthful Indigenous population offer strong elements for future planning.

Located in Northeast Alberta, the Alberta HUB is defined as a partnership of Northeast Alberta communities, post­ secondary institutions, business, and industry committed to "developing a strong competitive diversified economy throughout the entire region". The HUB supports a triangle corridor between the high population center of Edmonton, the Saskatchewan border, and the resource rich areas to the north leading to Fort McMurray. The HUB region includes 8 counties, one city, ten towns, 13 villages, and 55 hamlets. Counties include Athabasca, Lac La Biche, Bonnyville, I.amont, Minburn, Smoky Lake, St. Paul, Thorhild, Two Hills and Vermillion River.

The region's econorruc activity includes agriculture, oil and gas and manufacturing. Given the reliance on what has been historically a very prosperous oil and gas sector - the Cold Lake Oil Sands has accounted for 75% of Alberta's in-situ recovery- the down-tu, n in the sector coupled with lhe fact that in-situ recovery is thought to not have the economic impact of other forms of oil and gas extraction, has prompted a decision on the part of the HUB to explore opportunities to diversify the economy with opportunities associated with the Aerospace Technology, Defence, Unmanned Systems industries (ATDUS). The presence of 4Wing and CLAWR were the catalysts that prompted this investigation. The need to pivot the Alberta economy to other industries beyond oil and gas is aligned with economic diversification initiatives underway across western Canada.

The population of the region, as described in the 2016 Census, is 135,000 individuals. Nearly 20% of the total population is under the age of 15; approximately 15% is in the age group 15-24 years of age; 25% is within the age range of 25-44 years and 22% are of the ages between 45-64 years of age.

10 I Page The greatest amount of variation in the total population across the counties is the cohort of individuals aged 65 and older. As an example, 25% of Lamont's population is over 65 compared with Cold Lake at 6%. {Table 1). The mean age of the region's population is lower than the Alberta average, and the population is growing faster than the provincial average.

Demographics are key drivers of economic growth in that those that lie within the ages of 15-64 represent the current "manpower" of the region. ln the case of the HUB, this constitutes approximately 40% of the entire population. Demographics shape future planning and this is particularly relevant to the HUB given that retaining and creating "talent" is a high priority in any rural jurisdiction.

I ------. ------% Of Population in Age Categories Per Population Centre 40.0% 35.0% 30.0% 25,0% 20.0% 11 15.0% 10.0% S.0% 0.0% Cold Lake St Paul Uoydminster Vegrevllle VennilJon Bonnyvllle Cold Lake Elk Point Two HIiis Lamont 149's 1111%0-14 1111%15-24 /ff/%25-44 ?%45-64 1!1'%65+

Table 1: Population Profile Alberta HUB Census 2017

Education Levels Alberta Hub Counties

35,0% 30.0% 25.0% 20.0% 15.0% I, I. 1. 10.0% I I. 5,0% 0,0% First Athabasca Bonnyville lac la Biche Lamont Mînburn Smoky Lake St Paul Thorhild Two Hilts Vennilion Nations

li Certificates N Bachelor Degrees+

Table 2: Education Levels Alberta HUB Census 2016

The Alberta HUB contains one of Alberta's most multi-cultural landscapes in the province which includes individuals of Lebanese, Ukrainian and Irish descent. The seven First Nations and Métis communities spread across the region are home to over 6,000 people. The groups in the region include Buffalo Lake Métis Settlement; Elizabeth Métis Settlement; Fishing Lake Métis Settlement; Kiki no Métis Settlement; Cold Lake First Nations; Kehewin Cree Nation and Whitefish Lake First Nation.

There are a range of individuals with post-secondary education. Approximately 20-25% of the population across all Counties have a certificate that includes apprenticeship or trades certificates or diplomas {First Nations removed). A

11 I Page much smaller per-centage of the population, approximately 5%, have a Bachelor, Master's or Doctorate degree.

The Alberta HUB infrastructure and communication assets are described and evaluated in various studies including the Alberta Transportation Study (2016) and the Northern Alberta Broadband Preparedness Project. The Transportation Study identified continuous growth in freight volumes combined with increased distances goods were being transported. Important to the HUB is the new economic, land use and travel demand forecasting, which will be completed in 2018. This work will create a new model that integrates economic development and transportation planning.

Meetings conducted with community leader, unveiled issues and concerns with the rnfrastructure. This will be more thoroughly discussed in the Challenges section of the document. Highlights include safety concerns with flighway 28 and the absence of rail lines to St. Paul, Bonnyville and Cold Lake which impacts industrial development and the potential for the transport of commodities such as hemp, should that be produced in volume.

The absence of frequent; regularly scheduled air service to the region has been identified as an issue of concern. The HUB has 8 municipally owned and operated aerodromes. The Bonnyville airport accounts for nearly half of all regional flights. Traffic at this airport has decreased 23% because of the oil and gas downturn. Lloyd minster has two scheduled flights daily to Calgary. ln addition, limited access to affordable high-speed broadband coverage have been identified as impediments to economic growth. /Appendix 1 Detailed Overview Alberta NUB Infrastructure)

The Indigenous communitres generate significant economic activity in the region. They are characterized by a population growth rate that exceeds surrounding communities. Cold Lake First Nations is the largest First Nation community in the HUB. Opportunities for the participation of businesses and individuals in commercial activities related to the ATDUS sectors is an important consideration of this study. Cold Lake First Nations merits specific attention, given its proximity to CFB Cold Lake, their entrepreneurialism and the fact their traditional territories and activities (hunting, fishing, gathering) have been significantly rmpacted by the Cold Lake Air Weapons Range.

The Canadian Forces Base Cold Lake (4-Wing), the largest and busiest Fighter Base in Canada, rs a defining asset in this study as it provides the principal connection to the defence sector. The base, as the home of the fighter pilot supports deployment of fighter aircraft for immediate domestic and international roles combined with /\lert aircraft for NORAD. As an International Center of Excellence, the Base hosts Maple Flag, an international air combat exercise that is held annually.

The base has two operational CF-18 Squadrons and two training squadrons, including Phase IV of NATO Flying Training in Canada (NFTC), and numerous premier support units. The Base also includes the 1.17M hectare air weapons range, a landmass equivalent to the United States Air Force's (USAF) Nellis Air Force Range. The Cold Lake Air Weapons Range {CLAWR) provides a unique training environment with heavy boreal forest and numerous lakes that closely resemble European terrain. The CLAWR hosts over 640 actual targets and 100 realistic target complexes, rncluding 7 simulated aerodromes with runways, tarmac, aircraft, dispersal areas and buildings, and mechanlzed military equipment such as tanks, simulated radar and mrssile launching sites, mock industrial sites, and command and control centres.

The Air Base has a regular force of 2006 Active Duty Military, staff of165 at AETE and approximately 355 civilian employees. With family members, 4 Wing has a community of nearly 5300 people. The infrastructure includes 854 Permanent Married Quarters and 1250 barracks. Cold Lake does operate in a type of "ecosystem" given that CFB Wainwright is just south of the HUB.

Four military bases operate in Alberta including CFB Edmonton (HQ Land Force Western Area and Joint Task Force Lake West); CFB Cold (Premier Fighter Training Facility, home to Aerospace l:ngineering lest Fstablishment - AETE,

I 12 Pa g c CFTC); and the Canadian Flight Test Centre - CFB Wainwright (Canadian i\rmy Training Center of [xcellence); CFS Suffield (largest military training base in the world; home to DRDC Suffield and the British Army Training Unit). Collectively, the bases generate over $10M in local procurement and services annually within the Province of Alberta.

CFS Cold Lake is also home to several defence companies including Peraton, L-3MAS, Raytheon, CAE, Lockheed Martin, and Magellan Aerospace. These companies could be critical in assisting the Alberta HUB to "get in the game" by providing conduits for diversification into aerospace and defence. Civil and military maintenance, repair, and overhaul (MRO) activities have fueled a very robust aerospace MRO sub-sector in western Canada. These support specialists are increasingly being retained by manufacturers in pursuit of superior profit margins in "after sales services". Peraton, Raytheon, and L-3 MAS are important players in this space.

With headquarters in Calgary, Peraton Canada is a leading multi-platform provider of high value logistics and in­ service support for digital command and control, avionics and propulsion systems. Peraton has just won a long-term in-service support contract valued at $300M for the maintenance of the avionics (electronics) systems for the entire fleet of the interim fighter jets.

As a result of a recent trade dispute, Canada has elected to purchase used F-18s from Australia. Peraton's role will be to extend the life of the fleet to 2032 through several upgrades. This requires expanding its scope to include a Second Line Repair Lab for Cold Lake and Bagotville, Quebec (the two Canadian bases that fly CF-18s). This contract alone has linkages with 24 sub-contractors including Boeing, Rockwell Collins, Raytheon etc. plus another 300 vendors and suppliers. More than 30% of Peraton's subcontracted services and procured products go to small and medium sized businesses. Peraton is positioning itself for the Future Fighter Program and the Halifax Class System ln-Service Support contracts.

Other OE Ms on the base include Lockheed Martin which provides technical services for the maintenance of the CF- 18. L-3MAS maintains the weapon systems, pylons and associated electronics for the CF-18s. Magellan Aerospace repairs, refits and refurbishes engines. CAE provides training and simulation support to the Canadian Air Force. Raytheon also supports the flight maintenance of the CF-18s. Like Peraton, parts for the radar systems are exchanged for parts which are then repaired at the Calgary-based depots. It is important to note that all these companies have existing Industrial and Technological Benefit obligations associated with various military programs. They are all also competing on new programs, this will be discussed below.

The City of Cold Lake, the Municipality adjacent to CFB Cold Lake is closely linked to the base and its personnel. A former Air Force officer is on City Council while the 4 Wing Deputy Commander is an ex-officio member of the City Council. Shared infrastructure between the Base and Cold lake includes water, which flows to the base from the City; and the Art Smith Aviation Academy. City road maintenance services are also shared. There b also mutual aid in firefighting, community access to recreation facilities and other valuable services. Residents in the community and personnel on the Base support the development of an upgraded Passenger Air Terminal, which includes the implementation of CATSA-screened passenger air service between Cold Lake and both Calgary and Edmonton.

The HUB houses lnnoTech, a research facility and subsidiary of Alberta Innovates based in Vegreville, ln addition, the HUB is served by three post-secondary institutions, Portage College, Lakeland College, and Blue Quills University. Portage College, with administration offices based in Lac la Biche, has campuses or learning locations in the communities of Boyle, Cold Lake, Frog Lake, Lac La Biche, Saddle Lake, St. Paul, and Whitefish Lake. Portage offers

13 I Page certificate and diploma programs in Power Engineering, Natural Resources Technology, Environmental studies, Apprenticeships studies, food services, academic upgrading and Emergency Medical Responder courses. The College also offers space in business incubators for start-up businesses.

Portage College has just opened its new Environmental Studies facility. Building on its Natural Resources Technology (NRT) program, this energy-efficient facility features increased lab and classroom space, a greenhouse, and a water simulation lab. Portage's NRT program is the only one of its kind in the province with a focus on the boreal forest, reclamation, and wildlife. The Environmental Studies facility will also be home to current and future Water and Wastewater programming. The College has transfer agreements with Lakeland College, Lethbridge College, and the University of Alberta (Bachelor of Science Environmental and Conservation Sciences). Both Portage College and Lakeland have a significant focus and robust programming in EMS, Fire and Emergency Services Training.

Established in 1913, Lakeland College is the largest post-secondary institution in the area. It has campuses in both Vermilion and Lloyd minster that serve more than 7,000 students per year. Programs are offered in agricultural and environmental sciences, apprenticeship and industry training, energy, fire and emergency services training, wellness and human services, business, and university transfer programs. Trades programs include Power Engineering, Electrician, Parts Technician, Steamfitter, Welder, Gasfitter and Heavy Equipment Technician. Lakeland International actively supports international study and internships abroad, offers one of the largest student­ managed working crop and livestock farm programs in North America and has highly recognized first responder-EMS programs.

Lakeland also has a Renewable Energy management program that is run out of their Center for Sustainable Innovation. The center focuses on identifying practical applications for distributed energy generation. Lakeland also has an Applied Research branch which focuses largely on agriculture sciences, energy, and environmental sciences.

The college has created courses addressing precision agriculture since 1998. This initiative has expanded into a Diploma Program that incorporates low level drone flights for crop mapping, weed detection and livestock monltorlng. A Draganfly XP-4 drone was acquired in 2015 for these purposes.

Those working with drones on agricultural applications are collaborating with colleagues in lakeland's environmental sciences program to explore applications for land surveying and environmental monitoring. This initiative pulls in expertise from across programs at Lakeland. Lakeland College staff recognize that there are many opportunities to deploy unmanned aerial vehicles to serve agricultural, environmental and emergency service requirements. Ono of the goals is to develop programs lo train operators. With an emergency training facility on campus, there may be opportunities to explore operator training of terrestrial unmanned vehicles for emergency applications.

Blue Quills University, located 5 km west of the Town of St. Paul, is a locally-controlled non-profit Indigenous post­ secondary organization serving cross-cultural academic and training needs in an unique socio-cultural and academic environment. The university, Canada's first Indigenous controlled education centre, is governed by seven local First Nations communities which represent more than 18,800 individuals. The University offers a wide range of programs including nursing, Indigenous studies, general studies, education, health sciences, social work, and leadership development. Given its histoiv as a residential school (one of twenty in Alberta) there is a strong emphasis on language revltallzatron and culture. Blue Quills is a founding member of the First Nations Adult and Higher Education

14 I Page Consortium. lnnoîech facilitates the profitability and sustainability of Alberta's agriculture industry ($4.4B) with an emphasis on canola, barley, flax, and hemp. lnnoTech also houses the Alberta Biomaterials Development Center (ABDC) which is developing new technologies for fibre processing to be commercialized by SM Es. Housed within lnnoTech is the Alberta Biochar Institute which is developing production methodologies using biomass feedstocks from Alberta-sourced agriculture, forestry, and municipal waste residues. The Environmental Analytical Services has facilities to analyze organic and inorganic compounds in air emissions, effluents, pesticides, etc. The Bioanalytical Lab performs analytical services for the crop industry and industrial medical marijuana. lnnoîech also has experimental wildlife monitoring protocols and capabilities to detect and analyze ecological impacts.

While it was not within the mandate of the study to produce an inventory of SM Es operating in the region that could be relevant to the ATDUS industries study, there are a number of established companies with engineering services, metal fabrication, manufacturing capabilities principally located around Bonnyville and Lloydminster.

15[Page Chapter 3 - Understanding Canada's Aerospace, Defence and Unmanned Systems Industries

ln 2016, the defence industry contributed close to $6.2B ln GDP and 60,000 jobs in Canada. SME's represent 90% of the firms in Canada's defence industry. The Alberta aerospace and defence ecosystem generates $1.3B in revenue; is comprised of 170 aerospace and aviation companies and employs over 6,000 highly skilled individuals. Alberta leads Canada ln Unmanned systems.

Alberta's Aerospace and Defence Profile includes the following sectors:

• Unmanned vehicle systems" Alberta companies have expertise in command and control systems, wireless communications, avionics, navigation systems, global positioning systems, remote sensing, nanotechnology, and manufacturing.

• Logistic Support to the military-four military bases operate in Alberta including CFB Edmonton (HQ Land Force Western Area and Joint Task Force West); CFB Cold Lake (Premier Fighter Training Facility, Home to Aerospace Engineering Test Establishment (AETE) and the Canadian Flight Test Centre (CFTC)); CFB Wainwright (Canadian Army Training Center of Excellence); CFB Suffield (Largest military training base in the world, home to DRDC and the British Army Training Unit (BATUS);

• Aerospace Based Geomatlcs and Scientific Research: Alberta Is home to 25% of Canada's geornatlcs, navigation and global positioning firms; exporting 60% of their wireless communications and sensor technology products to US and European markets. Researchers at the University of Alberta, the University of Calgary, and the University of Lethbridge focus on space research. The National Institute for Nanotechnology (NINT) is a world-class nanotechnology research unit (University of Alberta); while the University of Calgary hosts a world class Biometrics research lab.

• Defence Electronics: 12 key companies focus on tactical communication systems, software, and specialized sensors.

• MMRO-Alberta is renowned for comprehensive manufacturing, maintenance, repair, overhaul, modification and modernization of military and commercial aircraft

Canada is among the leading aerospace nations in the world-the fifth largest and the second largest relative to the size of the economy. The sector generates $22B in annual revenues, employs a workforce of 66,000, exports 80% of its output and is the second most research-intense industry in Canada.

The sector includes a wide range of global leaders in everything from helicopters to landing gear, simulators, engines, aero-structures and maintenance and repair services. While the Aerospace sector is largely shaped by global manufacturers such as AirBus, Boeing, Lockheed Martin, etc., all contractors shop the world continuously to a) create competitive supply chains b) reduce the number of suppliers they're required to deal with and c) push themselves and suppliers to invest in research and design of new technologies to advance their performance. The Alberta HUB is home to a number of these OEMs.

The Alberta aerospace and defence ecosystem generates $1.3B in revenue; is comprised of 170 aerospace and aviation companies and employs over 6,000 highly skilled individuals. The niche areas-robotics and unmanned vehicle systems, defence electronics, aerospace-based geornatlcs, and scientific research; manufacturing, maintenance, repair and overhaul and logistic support to the military- serve to define Alberta Internationally.

16 I i Page I

I

I , I The Western Canadian Defence Industries Association (WCDIA), works along with the Government of Alberta and Western Economic Diversification to promote Alberta's capabilities, drive sales, create synergies, and stimulate research opportunities.

The new defence policy, "Strong, Secure, Engaged" has and will create significant economic development activity within Canada. The theme of the new policy is modernization of the Canada's military. This will translate into substantial investments to upgrade military equipment (and the Canadian Coast Guard) as well as embed, to the highest degree possible, new technology. On Canada's agenda is its intention to improve its (ID" rating in the area of innovation. Its strongest lever given the scale of financial commitments associated with "offsets", is defence procurement. Canada has committed to increase defence spending over the next 10 years from $18.98 in 2016-2017 to $32.78 in 2026-2027.

WCDIA participated in shaping the new defence policy and since then has worked aggressively to position largely Alberta-based SM Es and public Institutions to "get in the game" of military defence procurement. The stakes for Alberta generally are very high - particularly because several in-service support programs will be implemented in the province. Also, there are significant opportunities that could harnessed associated with Canada's Shipbuilding Program. Understanding these opportunities and programs is critical to participating in the defence industry. The new defence policy has unprecedented provisions for the public sector, as well as Canada's Industrial and Technological Benefits policy-the mechanism that ensures winners of defence contracts invest in Canadian businesses and the economy at a level commensurate with the contract value.

The defence policy describes the federal government's intentions to outfit the military with appropriate equipment including everything from ships to clothing and armour; to deploy new technologies to assist with surveillance and reconnaissance; and plans to reduce DND's carbon footprint. Investments in support of this initiative are anticipated to amount to $32.78 over the next decade. Acquisitions within the defence industry are segmented into air, land, marine, and security. Canada released its 2018 projections of intended acquisitions in late May 2018. Formerly referred to as Defence Acquisition Guides, these documents that outline Canada's planned acquisitions will now be referred to as Canada's Defence Investment Plan.

An overview of Canada's major procurement includes:

Marine: Canada is immersed in the largest acquisition programs in Canadian shipbuilding history. Ihe "National Shipbuilding Program" will acquire a new "combat vessel package" consisting of 15 Canadian Surface Combatant ships to replace its existing frigates and retired destroyers ($26B); 6 Artie Off-Shore Patrol Vessels ($3.18); and a "non-combat" vessel package which includes 2 Joint Support Ships; 1 Polar Icebreaker/Canadian Coast Guard and 4 Off-shore science Vessels ($3.58 in total). The package also includes small ship construction ($2M) and an in-service support ($S00-$600M).

Land: The Canadian Army will undergo a recapitalization of its land combat capabilities and invest in simulation and training. Air: The RCAF will acquire 88 advanced fighter aircraft. This plan, which is estimated to cost $19B will be discussed in

17 I Pa g c more detail below because of its direct implications for CFB Cold lake. Next generation surveillance ail craft (drones) and space-based surveillance assets will be acquired to significantly expand joint Intelligence, Surveillance, and Reconnaissance capacity.

Personnel: Canada's reserve force will be increased by 1500 to 30,000. Canada will address issues related to recruitment, training, retention, health, and wellness of regular and reserve force personal.

Infrastructure and DND Weapons Ranges: DND is the largest public-sector employer and maintainers of equipment and real property in Canada. Assets of $268 includes )6,000 buildings, 5,500 krns of roads; 3000 km ot waler works and 2.2M hectares of land. DND also generates over 50% of Canada's public-sector carbon footprint. Given this, the defence policy proposes changes to infrastructure, conversion to clean technology, auditing and remediation of flora and fauna; and improvements in handling gray water, waste water, etc.

Aspects of the defence policy relating to the business of defence management practices and reduction of greenhouse gas emissions could be relevant to the HUB. This proposed new spending represents the largest commitment of capital funding and modernization in decades. To achieve its targets "Canada wlll work with the I private sector to explore best practices and achieve better infrastructure managementfor defence". The goa is to reduce greenhouse gas emissions by 40% from 2005 levels by 2030. To do this Canada has chosen a number of specific targets that include a spend of $225M by 2020 in Infrastructure projects; a commitment to convert all new infrastructure to meet LEED standard or equivalent; and expansion of the use of l:nergy Performance Contracts.

Defence Energy and Environmental Strategy (DEES)

Canada has captured its new role in energy and environmental stewardship in an element of the "Strong, Secure, Engaged" initiative referred to as DEES (Defence Energy and Environment Strategy). Canada intends to create a new culture and deliver on four objectives (Appendix 2- DEES TARGETS): • Less Energy Waste • Cleaner Energy • Reduction in Environmental Footprint • Better Managed Energy and Fnvironmental Performance

Canada's Industrial and Technological Benefit Polley

Associated with Canada's purchase of equipment for the military, another policy that has a high level of significance to the Alberta HUB is Canada's Industrial and Technological Benefit (1TB) framework. Contractors awarded a military, security or Coast Guard contract with Canada over $100M are required to undertake business activity at a level commensurate with the value of the contract.

Ultimately, the purpose of the 1TB framework is to ensure that the Canadian economy grows because of these large procurements - some in the billions of dollars. Since 1986, $418 of obligations have been discharged in Canada; $9.3B arc in progress and $3.8B are outstanding for future business opportunities. Boeing, Lockheed Martin and General Dynamics and their suppliers have $1.2B in outstanding obligations.

Examples of Outstanding Industrial and Technological Benefit Obligations are:

Bell Helicopter Textron Canada: Acquisition of light lift helicopters (15)/0utstanding 1TB Obligation: $147M Thales: ln-Service Support - Arctic Offshore Patrol Ships and Joint Support Ships/Outstanding 1TB Obligation: $800M Babcock: Victoria ln-service Support Contract/Outstanding 1TB Obligation: $400M L-3MAS: CF-18 Primary Air Vehicle-Optimized Weapon System Management/Outstanding 1TB Obligation: $416M

I To become more targeted regarding fB investments, Canada introduced a new method of scoring bidder's 18 I Page proposals by adding a new requirement in addition to technical merit and price the component called a "Value Proposition" has been added to the bid evaluation process. This is the economic commitment that bidders make to Canada, up front at bid time, which is a scored and werghted factor in winner selection. The Value Proposition becomes a contractual commitment for the winning bidder. Value Proposition (VP) requirements are tailored to each procurement to allow the government to steer investments and take advantage of the unique economic opportunities offered by each project

The VP includes a combination of direct commitments (business activities that relate directly to the equipment, such as procurement of parts or modules (or service) for the equipment being procured by Canada and "indirect" commitments which are not directly related to the equipment or service procured by Canada. These include work undertaken by the bidder, purchases of goods and services from suppliers, investment, in R&D, technology transfer, and supplier development. Contractors must identify 30% of these direct and indirect commitments at bid time. Bidders are expected to demonstrate a willingness and capacity to undertake business activity in all areas of Canada. ln addition, generally 15% of 1TB obligations must involve SM Es.

The defence procurement process is established in such a way that defence contractors must submit a plan and value proposition with their bid that responds to the many specific requirements that are lard out in each specific RFP. Canada has targeted 4 criteria, and these include: a) growing Canada's aerospace and defence sector, b) building supply chains and particularly SM Es, c) promoting research and technology development, and d) promoting Canadian exports.

Industry, Science and Economic Development in association with regional agencies (for example, Western Economic Diversification in the west; ACOA in the Maritimes) administers the 1TB framework. There are different types of allowable transactions, some of which are defined by specific multipliers. As an example, transactions with a post­ secondary institution can yield a 5 times multiplier. Multipliers provide strategic incentives for investments by primes. (Appendix 3: 1TB Investment Mechanisms) ln April 2018, Canada's agenda around 1TB investment became even more specific. Minister Navdcep Bains announced "that Canada will use lhe 1TB framework to motivate defence contractors to invest in Key Industrial Capabilities (KIC)". These are 5 areas of Canadian industrial strength in emerging technologies, which have the potential to grown quickly, and 11 established industrial capabilities where is Canada is globally competitive or where domestic capacity is essential to national security.

I

Canada's Emerging Techno?ogies:

19 I Page • Advanced materials • Artificial Intelligence • Cyber Resilience • Autonomous technologies • Space systems

Canada's Leading competencies and Critical Industrial Services:

• Aerospace systems and components • Armour • Defence system integration • Electro-optical and infrared systems • Ground vehicle support solutions • Marie ship-borne mission and platform systems • Munitions • Shipbuilding, design, and engineering services • Sonar and acoustic systems • Training and simulation

Defence and Security Science and Technology Challenges

Another "door" leading to working within the defence sector includes the Science and Technology (S&T) challenges that Canada has provided to research and academic institutions,

Canada is looking to invest in next generation technologies that respond to a number of capability requirements related to: a) Understanding and Addressing Post-Traumatic Stress Disorder b) Recruit, retain and reach 20% of women by 2026 c) Cognitive Performance enhancement d) Predicting and Optimizing Personnel Performance e) Human Performance in Extreme Climatic Condition f) Detection and Classification of Objects of Interest g) Persistent Marine Detection h) Lightweight Ballistic Protection i) Chemical, Biological, Radiological Hazard Detection and Planning j) Proactive Deterrence k) Collaboration of Robotic Systems I) Resilient Non-Global GPS based on Positioning, Timing, Navigation m) Identification and Characterization of Space Objects n) Full motion video analysis o) Social Media Analytics; and p) Cyber attribution for the defence of Canada. ln order to finance this research Public Works and Government Services is issuing calls for proposals through the IDEaS program, (https://www.canada.ca/en/department-national-defence/programs/defence-ideas.html). Canada has presented "Challenge Statements" to which Canadian companies are encouraged to respond with early stage technologies that can be supported with short term (6-month block) incubation and investment ($200K to $1MM) to help develop solutions to these challenges, Some HUB companies may have technologies that provide a full or partial solution.

20 I I' age Unmanned Systems

488 Canadian Unmanned Systems (UMS) companies from across Canada were surveyed by Unmanned Systems Canada in February 2018. The survey helps to Inform future actions that may be taken on the part of the HUB regarding autonomous systems.

• Alberta has the largest percentage of UMS company headquarters followed by Ontario and British Columbia, This is related largely to the development of the ecosystem in and around Foremost, Alberta. Unmanned Aerial Vehicles (UAS) were at the core of 43% of the companies surveyed,

• Unmanned systems organizations are often small -66% of those sampled were under 10 people. 90% of companies surveyed had sales of less than $500,000. UMS companies are generally young-25% of companies have been in business 3-5 years.

• ln 2017 the percentage of domestic sales by province was highest in Alberta (46%), with Ontario and British Columbia following with 36% each. 72% of respondents are service providers, followed by 23% identifying themselves as either a research and development or training organization.

• Nearly all the companies surveyed had no Intention of growing their business through an increase in exports.

• An extrapolation of growth in employment Is significant. Canada could be looking to train over 20,000 employees for the burgeoning industry. The need for engineers and pllots will be the greatest.

• Alberta HUB has opportunities ln training and Beyond Visual Line of Sight (BVLOS) testing and support projects. This requires defining specific zones as a drone friendly region. One of the largest BVLOS trials is currently underway in Alberta.

Unmanned Systems Canada recently undertook an unmanned systems industry survey on behalf of Transport Canada. The following are excerpts pertaining to the UAS sector in Alberta. The data was collected in February 2018, with 488 respondents. Responses were restricted to Canadian companies, or foreign companies with an operating entity in Canada.

Findings related to the survey:

? Companies are small: 33% of companies are sole proprietorships; 33% have between 2-10 full time employees; 17.5% have over 100 full-time employees. ? Alberta has the largest percentage of company headquarters; followed by Ontario and British Columbia. ? 50% had been in operation for over 10 years; 25% in business for 3-5 years. ? UAS technology was the core of their business in 43% of cases. ? 90% of companies had sales less than $SOO,OOO; a small number had sales between $1-SM ? ln 2017 the percentage of domestic sales by province was highest in Alberta 46%, with Ontario and British Columbia following with 36% each. ? 72% of respondents are service providers, followed by 23% identifying themselves as either a research and development or training organization.

Western Provinces are taking the Lead in UA Vs in Canada ? Table 3 illustrates the significant strength of companies headquartered in Alberta in comparison to both the population and share of national GDP. This is not entirely surprising due to the long history of the Unmanned Aerial

I 2:1 Pa g c Vehicle (UAV) industry in the Province. Likewise, British Columbia has a higher proportion of UAS companies. Quebec and Ontario have significant numbers but are still under-represented relative to their GDP share and population.

Alberta 4067175 11.6 15.6 28

British Columbîa 46480S5 1,2 13.0 18

Manitoba 1278365 3,6 3.3 s

New Brunswick 747101 2.1 1.7 2

Newfoundland and 519116 1.5 1 .,,­ 1 ! abrador

Northwest Territories 41786 0.1 0.2 1

Nova Scotia 923598 2.6 2.0 2

Nunavut 35944 0.1 01 0.1

Ontario 13448494 38.3 39,0 24

Prince Edward Island 142907 0,4 .3 1

Quebec 8164361 23.2 19.4 14

Saskatchewan 1098352 31 3.7 4

Yukon 35874 0.1 .1 0

Table 3 - Comparison of Province vs. UAS sales as a percentage of overall business Source: Unmanned Systems Canada 2018

22 I Page ? The four provinces of Alberta, British Columbia, Ontario and Quebec house the largest number of headquarters of UAV-focused organizations. Of note is that Alberta ranks 4th in population {only 11.6%) yet has almost 30% of the UAV headquarters. This is a direct result of Alberta's strong economy that spurred investment in industry, research and development, and the presence of the test facility in Foremost, Alberta.

? 58% of companies are over 6 years of age in Alberta, Ontario, Quebec and BC; slightly older than other companies in Canada

?50% of businesses are driven by UAS related activities and yet USA-related goods and services comprise less than 10% of their business. ? The primary focus of their operation is providing services {30%), followed by research and development {R&D) at 12% and training {10%).

? Based on the 188 responses to a question on employment, respondents cited there were approximately 4,201 employees across Canada. This figure was then extrapolated across the distribution of company sizes to an estimate of a total of 22,346 full time equivalent employees. When asked, as of December 31'', 2017 how many employees their organization had grouped by job title, the responses were:

• 96 companies employ 548+ Engineers, Scientists, and Researchers • 69 companies employ 259 Production Workers • 132 companies employ 438+ UAV Pilots • 106 companies employ 972+ Technicians and Technologists • 125 companies have over 1,984+ 'Other Employees {including Management, Administration, Sales & Marketing, etc.) in UAS-related work.

Expectations around employment could drive some assumptions regarding the need for training. The majority indicated that they would be expanding their labor force within the next year. The survey found that those responding to the survey would be hiring approximately 1916 new employees {FTEs) in 2018.

23 I Page . .. ------. . . . . 5 ? .. 2-10 45% 423 - 11-25 18 8% 271

26-99 62.5 4% 470

100+ 100 4% 752

. ---- ····------..

? Nearly 85% of respondents export as part of their business strategies and generate on average up to 25% of their sales in foreign markets. A small percentage (6%) generate a majority (76%) of sales from exports. This could suggest that Canadian innovators are in demand in other countries thereby indicating a Canadian competitive advantage. ? Of these export sales, the majority were in the United States, primarily to non-government customers. ? Central America and the Caribbean are the primary target markets for academia, auditors and financial services to export their services; South America is the target market for Research & Development, Service Providers and Training focused companies; the United Kingdom is the target market for test facilities. The interest is driven by the location of the UK Centre for Connected and Autonomous vehicles which provides the integration of unmanned systems technologies, the telecommunications sector, and artificial intelligence industry. ? Nearly 65% of Canadian UAS organizations are not planning to expand their export activities over the next three years. ln fact, 94% of respondents expect Oto 25% of their business to be from exports between 2018 to 2020. ? Government support mechanisms with programs such as the Built-in Canada Innovation Program and the National Research Council IRAP Program, help to stimulate the UAS industry. other positive influences evolve from strong research and development environment and institutions in Canada, with highly educated technical workforce; federal budget provisions in 2017 and 2018 enabling the establishment of UAS Fask Force atTC and raising R&D funding respectively.

? BVLOS trials are being executed by ln-Flight Data. ln-Flight is collecting data from 1500km of BVLOS flight conducted across 14 different sites in western Canada. Two types of UAS-the sense Fly eBee and eBee Plus are being utilized. The project involves over 20 Canadian organizations including the City of Calgary, NRC, sense Fly. The purpose of the study is to validate technologies and to help guide the development of future BVLOS regulations.

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24 I Page Chapter 4 - Opportunity Assessment

There is a myriad of opportunities available to businesses, educational institutions, and local government. These Include:

• Opportunities related to Canada's defence policy and procurement strategy-yearly equipment procurement ls rising from $68 to $10B per year, and the Future Fighter Program ($14B) will see significant construction activity ln the HUB. • Opportunities related to local Defence Procurement- approximately $10MM per year Is spent on local procurement. Businesses need only register with the local procurement office to participate. Opportunities related efficiency and ONO Is recapitalizing buildings • . to energy environment- many to achieve LEED certification and there are significant opportunities related to reclamation and remediation efforts on the Base. • Opportunities related to education-there are many interested Defence primes who would like to partner for energy efficiency research as well as general research opportunities • Opportunities related to Canada's industrial and Technological Benefits Framework-15% of the value of all large procurement projects must be spent on Small and Medium Businesses. Defence primes are actively looking for partnerships with local companies and post-secondary Institutions for Investment to clear billions of dollars of offset obligations. • Opportunities related to Unmanned Systems Unmanned systems are used extensively within the region, particularly with agriculture and oil and gas. There- are special opportunities for companies willing to work with the Cold Lake First Nations. • Opportunities related to demographics-the region's young population can be tapped to provide a strategic opportunity to develop STEM programs that can help diversify the HUB from an industrial and service economy to a knowledge economy. The share of STEM occupations was three times that of the manufacturing sector.

The HU B's capabilities have been matched with opportunities in the ATDUS industries and then "clustered" into areas ot opportunity. Each opportunity has several recommendations concerning next steps that could be taken by the HUB to pursue each opportunity.

• Opportunities: Canada's Defence Policy and Defence Procurement Strategy • Opportunities: Cold Lake Air Base: OEMs, Procurement and Maple Flag • Opportunities with Canada's Defence Environmental Strategy (DEES)-Going Green • Opportunities with Canada's Industrial and Technological Benefits Framework • Opportunities: HUB's Post-Secondary, Research Institutions • Opportunities: Unmanned Systems • Opportunities: Demographics-Creating Talent

After a discussion on each cluster there are a number of recommendations to guide the direction of the HUB.

I OPPORTUNITIES RELATED TO THE DEFENCE POLICY AND CANADA'S PROCUREMENT STRATEGY

Canada is undertaking a very significant modernization of its military. Specifically, there are several defence procurements that will have a direct impact on the region and CFB Cold Lake. The Interim Fighter Program will see F-18s from Australia shipped to Canada and upgraded to ensure that the CF-18 fleet will remain viable until the Future Fighter Program is executed. Longer term, the Future Fighter Program will deliver 88 new fighter jets within the period of 2025 to 2032.

25 I P age At least half of these fighters will be stationed at Cold Lake which will create a very large investment in new hangars, simulator buildings and other base infrastructure. Although these infrastructure contracts will be awarded following a national competition conducted by Defence Construction Canada, there will be a significant requirement for local workers, trades, and subcontractors. There will be near:y a decade of overlap as the current CF-18s will be gradually replaced with the new jets. Temporary infrastructures to house the larger number of aircraft and Ground Support Equipment will be needed for both fleets of aircraft.

This defence procurement will also significantly affect the nature of activity on the base. L-3 MAS has the contract for aircraft maintenance. As of May 2018 they had augmented the aircraft maintenance fleet working at Cold I ake with an additional 37 aircraft maintenance engineers and technicians. Peraton, which recently won the long-term support service contract regarding avionics, will be servicing all the newly acquired fleet. lloth L· 3MAS and Pe raton are currently located on the Base. Pe raton has revised their business model to accommodate this expanded scope of work and is now transporting avionic units that require repair back to Calgary.

This major procurement will affect the region in several ways: a) Local or regional temporary shelter manufacturers, construction companies, trades people, labourers, support services will be required in the next decade for the construction of new and temporary infrastructure. It is feasible this will impact employment and the possibility of new business start-ups related to construction or the manufacturing of temporary structures. b) Workforce projections regarding expanded operations on the base will be necessary so that the region can exploit well-paying technical jobs. It would be advisable for the region to conduct a feasibility study concerning the establishment of an Aircraft Maintenance Engineer program. If appropriately designed, the program could attract youth from the surrounding communities including the Indigenous population. Portage College has expressed some interest in looking at the facility established by the Saskatchewan Indian Institute ofTechnologies (SIIT). These Transport Canada approved facility house both Aircraft Maintenance Engineer and Commercial Pilot training programs.

Recommendation: With adequate planning between the local communities, DND and the college trades training programs, "readiness" could be created to exploit this infrastructure development. Leadership is advised to scope and scale this infrastructure with lîND prior to engagement with the public sector and colleges to create appropriate expectations as to the size and nature of the opportunity.

All three colleges in the region have industrial and trades training programs. It would be prudent to convene a meeting with DND to scope the infrastructure development to prepare trades training programs to respond locally to the significant infrastructure development.

I OPPORTUNITIES ASSOCIATED WITH THE COLD LAKE AIR BASE

OEMs: The Cold Lake Air Base hosts several OFM companies that are amongst the leaders that drive the aerospace and defence markets. Unless suppliers, post-sccondarv and research organizations are well connected to OEMs, there is the risk of being frozen out of markets and opportunities.

As mentloned, the presence of these companies operating 1n the region, even with minimal capacity, is a differentiator for the HUB that should be exploited as much as possible. These companies provide linkages to growth opportunities and ITBs. Attending provincial defence events, exhibiting knowledge of the sector and displaying interest in collaboration within the aerospace and defence sector are critical to business attraction and building relationships with local OEMs. Building relationships and a reputation in the Alberta defence eco-system wrll take time but will have a critical role in diversifying the economy.

26 I Page Aerospace and defence OE Ms are diversifying in response to market and technology drivers. They need to be looked at as advanced technology companies that have tentacles in other sectors such as renewables. With extensive immersion over a period of six months it is feasible that the HUB leadership can build extensive relationships and knowledge of the new sector.

Recommendation: It is important for the HUB to be well connected to industry players and the government agencies that administer ITBs, specifically ISED and WED. There are several approaches recommended: a) at the beginning of this process, in order to learn and develop relationships with SMfs, 01:Ms, research agencies and post-secondary institutions should consider joining associations such as the Western Canadian Defence Industries Association to raise awareness of their capabilities, meet decision makers and learn more about programs and initiatives as they emerge. b) consider enrolling in boot camps or seminars targeted at defence procurement c) consider attending western Canadian defence events starting with WESTDEF (July 2018), Abbotsford (August 2018) and the Global Offset and Trade Organization which has an on-line "matching" program (October 2018).

Recommendation: Develop an engagement strategy with the OE Ms located in the HUB. These companies include L-3 MAS, Peraton, Lockheed Martin, Magellan, CAE.

PROCUREMENT: It has been identified that within the CAF bases in the Eastern Corridor, which includes Cold Lake, Wainwright and Suffield, the economic impact within the local economy includes spending in the "multiple tens of millions of dollars" in procurement of local goods and services. With the growing level in the capital planned for expansion of housing stock, training for advanced technology and increased deployment, that future spending at all three bases will be substantially increased. The $10M of existing procurement spend on goods and services (2014) was assigned to medical services, tailoring, repair/maintenance of infrastructure; research and development, professional and technical services; equipment services and contracted services.

Strong business connections exist between the Cold Lake Chamber of Commerce, the City of Cold Lake and the HUB. There are also strong relationships between the community and 4 Wing, which all parties should endeavour to maintain and grow. Although local procurement is less than 10% of the CFB Cold Lake spend, close relationships enable the sharing of vital information with local businesses and can assist them in developing connections and partnerships related to DND's larger national procurements.

It is also important to note that each Wing Commander serves for two or three years. As command changes, the

I 27 Pa g c priorities of 4 Wing may also change. l he Wing will always strive to have a good working relationship with the City and Region, although priorities may shift over time.

Recommendation: It is recommended that the Chamber of Commerce and City of Cold Lake work with 4 Wing to organize a monthly "Business Lunch" where local business people can attend a networking and two-way briefing lunch at the base. Encouragement should also be provided for attendees to attend from within the entire HUB region. This approach has been very helpful in maintaining connections and relationships in Edmonton, Calgary and many other cities across Canada.

With respect to spending authority within the base, spending within DND is highly centralized and authority limits are quite low before Public Services and Procurement Canada must be engaged to provide a competitive bidding This level is $25,000 is is process. currently set at · anything above this level procured nationally. However, there an ongoing effort to simplify procurement and devolve a larger spending authority to senior personnel such as the Wing Commander. Consequently, these limits may change and increase opportunities for local businesses to work with CFS CL procurement officers to provide a wider variety of goods and services. This is an issue that the City of Cold Lake and Chamber should discuss with 4 Wing officers in the months ahead.

The Base and City currently cooperate in many areas. Schools are a shared resource, as are recreational facilities. 4 Wing currently hosts the community library and a new medical centre is under construction on the base. Future collaborations could open runway and base facilities for use by civilian aircraft and air cargo, and possible interconnection with regional feeder networks. As the future fighter program moves forward, there will be a substantial amount of construction and related activities on the Base that should create opportunities for participation by local companies.

For reference, DND manages construction differently than other procurement activities. The overall policy and management of real property is handled in Ottawa by an Assistant Deputy Minister (Infrastructure and Environment, ADM(IE)), whose authority flows down to a regional Defence Construction Canada office located at CFB Edmonton, and then finally to the Base, where the Real Property Office manages local efforts. Construction contracting is handled centrally in Ottawa by Defence Construction Canada and is procured nationally. There are abundant opportunities for small local construction businesses to subcontract, as they will have a cost advantage over other construction contractors that will have to travel to the area.

One of the key areas of concern for the Base is housing and the condition of the housing stock. Much of the housing on the base is aging and repair is no longer commercially viable. As a result, large tracts of base housing have been shut down and are no longer available for shelter. This will present a serious problem to CFB Cold Lake in upcoming years, as they maintain a dual fighter fleet, begin a large amount of construction and rehabilitation, and continue to train and conduct operations. ADM(IE) and 4 Wing would both welcome good ideas on how to transition the current housing stock to a viable long-term solution for base personnel and their families.

Concerns have been expressed about local business "poaching" 4 Wing skilled personnel. Apparently, prior to the oil downturn, many personnel retired or resigned to seek higher paying opportunities in the energy industry. During the downturn these issues have abated, but the senior 4 Wing officers are concerned that it could arise again as the industry recovers. The main issue is that it is difficult, costly, and time consuming to train skilled talent, and when they leave for higher paying jobs, holes are left for a year or longer until personnel can be posted to cover

28 I Page vacancies. Additionally, Cold Lake does not always appeal to Canadian Armed Forces Personnel who grew up in larger centres, therefore it is more difficult to find people who want to stay in Cold Lake for the long term.

One of the ways to counteract this problem is to work with local community colleges to train skilled Airframe, Avionics and Aeroengine technicians from the region. While these would be "civilian" training courses, some of the technicians would likely join the Canadian Armed Forces because of the proximity of 4 Wing. This would provide a pool of more or less "permanent" skilled technicians who may be less inclined to move away.

There are several areas of cooperation between the Base and Lhe City that relate to maintenance and the provision of spare parts for older mobile support equipment. The Base has a shortage of working Snow and Ice Control equipment. This hampers operations during the winter as maintenance personnel are tasked to plow runways and taxiways, preventing them from conducting critical maintenance.

If the city was able to assist in plowing and brushing runways, this would potentially ease some of the problems. Similarly, base maintenance personnel spend an inordinate amount of time sourcing parts for outdated mobiles support equipment, such as fire trucks, snow plows and flight line equipment. There is an opportunity for a local parts distributor to source these parts on behalf of the base. If a local company could 30 Scan and Print some metal parts, this could also be a welcome addition.

Weapons Range: Established in 1955, the Cold Lake Air Weapons Range (CLAWR), has a very broad range of assets (airfields, buildings, communication towers, fuel depots and vehicles). The mock-ups accurately simulate tactical targets and provide all aspects of air combat, air to ground combat, weapons, and aircraft testing. To best exploit this asset, the base implements "Exercise Maple Flag" and it is the largest annual event at the weapons range. While the ground assets are of value, the combination of the targets and unimpeded airspace makes CLAWR a premium asset for the RCAF.

Recommendation: It is recommended that the HUB formally initiate discussions with 4 Wing to explore possibilities of providing community outreach and extension of Maple Flag beyond hosting and hospitality for visiting allied aviators. The Maple Flag exercise has in the past brought significant economic benefits to the Region. With the in change the use of tactical training space - i.e. there is an evolution in training tactics around precision attack which scenarios might move away from previous practices of large scale bombing and interventions - there needs to be a dialogue between the Region and the Base to discuss how this may impact activities.

There is an interest on the part of HUB officials to explore participation in hosting a high-profile event, either modeling an amplified version of Maple Flag, or moving to a new format comparable to the Abbotsford Air Show and related activities. l hat event has successfully attracted OEMs who participate in a trade show and B2B meetings with regional industrial participants, culminating at the end of the week with an air show.

There needs to be a series of discussions-some with the Air Base regarding their plans and vision for a potentially revamped Maple Flag, and the organizers of the Abbotsford Air Show. It's feasible that the path forward could also involve WCOIA and the principal OEMs operating on the base, such as those who have just won major procurements (Peraton, Raytheon).

Recommendation: The Weapons Range is situated on top of the Cold Lake Oil Sands deposit which contains an estimated 328 cubic meters of oil sands. The Foster Creek project is the energy industry's first commercial SAGD 29 I Page project which now produces 1?0,000 gross barrels per day from 18S wells. Canadian Natural Resources Limited, Cenovus, TransCanada Pipelines, Enbridge, Husky, Inter-Pipeline and Bow Energy are all co-located at the Weapons Range.

The range has few usable roads other than to common oil and gas extraction sites and target facilities in the area. Studies regarding the effect on explosives, metals, and environmental contamination have been consistently conducted with some significant outcomes that could create new business opportunities.

Recommendation: Because tho Cold Lake Air Weapons Range (Cl AWR) falls on Treaty 6, 8, and ro-n aditional hunting, trapping, fishing and gathering territory the Cold Lake First Nations has been significantly impacted. The land was taken in the early 195D's without a negotiated agreement with First Nations. ln 2002, a settlement was reached that provides access to most of the CLAWR for Nation members to exercise Treaty rights, traditional land uses, and other cultural and traditional practices.

Cold Lake First Nations through their many investments in commercial projects have demonstrated their willingness to invest in diversification. Given their entrepreneurial spirit and a tolerance for business risk, the Cold Lake First Nations need to be recognized as an important stakeholder 1n actlvrnes in the Alberta HUB moving forward.

Recommendation: Indigenous groups across Canada are mindful that this is time of Reconciliation. While nothing is prescribed here in terms of actions on the part of the Alberta HUB it is important to respectfully acknowledge that the actions of Canada has created hardship for Indigenous groups that have had, and continue to have an impact on their traditional way of life.

Recommendation: The Government of Canada has decided to acknowledge diversity, gender, and inequalities in socio-economic status in an amended version of the Value Proposition associated with the 1TB framework. Recognizing this, Cold Lake First Nations and the other Indigenous groups may want to investigate participation in new defence related projects. It is suggested that the Alberta HUB work with WCDIA to better understand the potential in this new opportunity.

I OPPORTUNITIES WITHIN CANADA'S DEFENCE ENERGY AND ENVIRONMENTAL STRATEGY (DEES)

Canada has established a range of targets for the reduction of its carbon footprint to reduce DND's contaminated sites liability by an average of 7% per year by 2020 as part of the Defence Energy and Environment Strategy (DEES). Because ranges and training areas are paramount to Defence's ability to generate combat-effective forces, DND has committed to improving how it both idenlifies and rnrngates environmental risk. This presents many opportunities for small and medium sized enterprises in the area and particularly for the HUB's post-secondary institutions and lnnoîech.

Recommendation: The region's post-secondary and research institutions have very strong capabilities in the Environmental and Renewable Energy sector that could be linked to Canada's commitment to invest in science and technology related to DEES.

The advantage of the HU B's post-secondary institutions and lnnoTech holds is access to the weapons range. It is recommended that the Alberta HUB organize a session with Canada, DND, ln noTech, Lakeland College, Portage College, Blue Quills University to identify areas of research and leadership that are required in implementing the

30 I Page DErS Strategy.

It may be feasible, depending on Canada's Action Plan concerning DEES, that the entities could even form a consortium which could provide leadership to DND as to how to execute some of this work and research. DEES provides a commitment on the part of Canada to:

- "implement a systematic process to identify, monitor and report on site-specific indicators of sustainability"; - "better understand the environmental impacts of munitions constituents": - "develop protocols as to how to respect species during training exercises"; and "establish modernized decision-support tools to Improve land management within ranges and training areas".

Throughout DEES, Canada describes that it has gained a solid understanding of the flora and fauna present on Defence establishments and considers this information when planning military training and maintaining training areas to minimize impacts. The strategy states "When new training infrastructure is being considered, an environmental assessment is conducted to identify potential impacts on species at risk or other sensitive environmental components. This includes plans for avoiding or minimizing impacts."

Recommendation: It is suggested that the post-secondary institutions and lnnoTech obtain a copy of the data that DND collects and manages in relation to the weapons range. There could be a "warehouse" of data collected and the potential research opportunities that could be very helpful to DND and the post-secondary institutions and lnnoTech. As well, there could be local capacity for outsourcing environmental assessments when il relates to the use of the weapons range.

Recommendation: It is feasible that Lakeland College and lnnoTech could contribute to a review of DND's intentions to protect the wildlife species on DND lands and work with federal institutions such as Environment and Climate Change Canada, Parks Canada, and Fisheries and Oceans Canada to prepare recovery documents and develop and endorse species-at-risk work plans for each Defence establishment. Lakeland College may also be interested in DND's plan to reduce the entire hfecycle of hazardous materials from purchase to disposal that corresponds to their plan to, "Implement modernized spill tracking and halocarbon management systems by 31 March 2018".

DND is interested in integrating sustainability considerations with capability development. DND will follow the Government of Canada Policy on Green Procurement, which covers green procurement training, the incorporation of procurement performance clauses for executives and managers, and the integration of environmental considerations in key procurement and materiel management policy instruments.

This includes a commitment to "procure the least hazardous products that meet operational requirements". Furthermore, DND will communicate its environmental requirements to contractors by making purchases through green standing offer agreements and by building these criteria into statements of requirements and statements of work."

Related targets include:

- Pursue opportunities to use clean power at all bases and wings by 2025; - Require new construction and major recapitalization projects to meet or exceed the Silver Leadership in Energy and Environmental Design (LEED) standard or equivalent for high-performing buildings; - Implement new energy performance contracts at all bases and wings by 31 March 2025; and - Integrate green procurement considerations in 90% of real property procurement instruments by 31 March 2019, where applicable.

I 31 Pa g c Recommendation: ·1 he Alberta HUB should review all proposed actions under the Green Procurement targets in the DEES strategy and look for local SM Es to deliver the required capabilities.

Recommendation: The DEES Strategy should be assessed for private sector opportunities and these opportunities should be packaged for discussion with the SME community in the region. As an example, Engineering and Construction Services available in the HUB that might be interested or have the capacity to address some of the following examples of private sector work including:

- "modernize the design, construction and maintenance of ranges and training areas"; all design - "assess the environmental risk of small arms ranges by 31 March 2019 to recommend modern range options and the sustainable use of range and training areas; (buildings works) by demolishing - "consolidate and optimize the use of land and built infrastructure or and or disposing of infrastructure that is no longer required or able to effectively deliver a capability; - promote joint-use and multi-function facilities; plans building materials - select demolition contractors to develop comprehensive waste-management that reuse as much as possible and dispose safely of non-reusable materials; well of oil, solvents chemicals - reduce the generation of blackwater and greywater as as the generation or hazardous agents through wastewater treatment; and - undertake water vulnerability assessments and develop monitoring tools.

1 ·oPPORTUNITIES WITHIN CANADA'S INDUSTRIAL AND TEêHNOLOGICAL BENEFITS FRAMEWORK

Canada's Industrial and Technological Benefits (1TB) policy states that programs going forward must define 15% of business activity be related to SME development. This could be by way of "direct" opportunities - i.e. SM Es participate in direct supply chain opportunities that are related to building a piece of equipment or "indirect" opportunities. These are related to the development of an SME through a variety of 1TB mechanisms such as research and development, and export. Canada's agenda is to grow the defence sector, build supply chains, advance science, and technology innovation, and improve exports. As mentioned, a new pillar, addressing socio-economic inequities related to strategies associated with gender and diversity was announced at CANSEC 2018.

Recommendation: While the study did not include developing an inventory and profile of the SME's in the Alberta HUB region, it is evident that there are a number of established companies with engineering services, metal fabrication and manufacturing capabilities, many centered around Bonnyville and Lloydminster. The energy industry has been the primary market for these companies, with the downturn in the oil and gas industry some may be looking for possibilities for diversification.

Recommendation: It would be useful to conduct a separate analysis concerning SME capability. It might be possible to link some SME capabilities to projected defence procurement, DEES (energy and environmental), DND Science and Technology Challenges (the IDEaS Program), direct supply chain opportunities, or indirect 1TB opportunities such as growing the capability of an SME.

Recommendation: A number of SM Es have been identified that could be connected to larger processes going on in Alberta in the defence sector. WCIDA could potentially help create these opportunities.

32 I Pa g c Recommendation: It 1s feasible an aircraft maintenance engineer program, avionics, avionics technician and/or a commercial pilot training program could be addressed through the new 1TB pillar relating to diversity, provided an Indigenous partner was involved.

Recommendation: With Canada's announcement to equalize socio-economic disparity, gender and diversify through an embellishment of the 1TB Value Proposition, the IIUB needs to analyze how to best leverage this opportunity. The "door" into this opportunity might be to identify projects of interest in the surrounding Indigenous communities.

OPPORTUNITIES ASSOCIATED WITH CONNECTING ALBERTA HUBS POST-SECONDARY INSTITUTIONS AND RESEARCH ORGANIZATIONS TO THE DEFENCE POLICY, DEES, AND S&TCHALLENGES

Post-secondary institutions play a key role in nurturing the local economy by responding to existing labor market requirements as well as projecting human resource needs for future economic growth of the region. They also play a key role in diversification. The Alberta HUB has strong post-secondary capability, particularly in the areas of trades, industrial, energy, the environment, and E:MS capability. lnnoTech and Lakeland College have research capabilities that should be leveraged.

Lakeland College also offers unmanned systems training courses. Defence primes are very interested in the capabilities of Canada's colleges and universities - in part because they provide a SX multiplier- but also, colleges drive innovation which is critically important to prime contractors. There is no central registry of domestic post­ secondary or research institutions in Canada for primes to access. That means regions such as the HUB need to capture their capabilities and market them accordingly.

Recommendation: It would be critically important to harness these capabilities and connect them to defence related opportunities. As a starting point, it would be highly beneficial to bring the post-secondary institutions and lnnoTech together to review the opportunities associated with the defence policy, the 1TB policy, DND Science and Technology Challenges and new government innovation funding programs.

Recommendation: As mentioned in the overview of the defence policy, it is the intention of Canada to focus on clean energy and the environment on DND sites. It would be ideal to cluster and market the academic and research programs in the HUB related to these areas and then market them to a prime contractor such as Lockheed Martin. Lockheed has recently created Lockheed Martin Energy, a company focused on building relationships with stakeholders who can advance their interests in renewable energy in Canada. Specifically, it would be worthwhile to connect Lockheed with Portage College's Natural Resources Technology facility, l.akeland's Lakeland College's Centre for Sustainable Innovation as well as therr livestock farm program, and lnnoTech's Biochar Project. Bundling these capabilities together could form part of the HU B's value proposition and markeling strategy.

Recommendation: Canada has created targets regarding a conversion to clean energy. It would be advisable to make connections between ONO and the institutions so that, wherever possible, new talent and new approaches being implemented by the Colleges and lnnoTech are incorporated into the work that is underway on the base and within the Weapons Range. I.e. The Alberta HUB could propose to organize a workshop with researchers from ln noTech, program leads in UAV, alternate energy and applied research from Lakeland College and staff from Portage working on programs such as the new water remediation initiative with 4 Wing to better understand work that is underway. The institutions should engage with DND to investigate opportunities for students. As an example, there would appear to be a connection between environmental monitoring on the Weapons Rage with the programming at 33 I Page Portage College. Students need opportunities to learn how to deal with environmental issues during disturbance, reclamation activities, vegetation re-establishment, etc. These activities will be going on at some level on the weapons range.

Recommendation: With most of the colleges having some capability in the Emergency Response sector, it would be worthwhile exploring their interest in pursuing some of the Science and Technology challenges that are associated with EMS (Challenge 9: First Responder Exposure to Toxic Substances; Challenge 12: First Responder Resource Allocation Tools; Challenge 13: Paramedic Practice; Challenge 14 Data Analytics; Challenge 15: Multi-Agency Health Information System; and Challenge 16: Data Analytics/Information System.)

Recommendation: Given the upswing in activity projected with the Base, it would prudent for the HUB to investigate the feasibility of establishing an Aircraft Engineer Program. Thel e are successful models such as the Saskatchewan Indian Institute ofTechnologies which has established the Saskatchewan Aviation Learning Centre, a Transport Canada Approved Training Organization (ATO) in Saskatoon, Saskatchewan.

The facility offers a 2-year diploma in Aircraft Maintenance Engineer Program (Mechanics) program as well as a Commercial Pilot Program. Established in 2010, of the forty-two individuals that have graduated, 50% are Indigenous. The program was created with legacy Industrial and Regional Benefit (IRB) transactions with Boeing, Lockheed Martin, and Rockwell Collins. The public private partnership (P-3) also included Western Economic Diversification and the Province of Saskatchewan, which commits funds for annual operating costs. The Saskatoon Airport Donated the land.

Recommendation: The Alberta HUB should explore additional training opportunities such as avionics, avionics technician, instrumentation technician and a Commercial Pilot Program in the region. There is domestic and international demand for all these programs.

Recommendation: It is feasible that Portage College's Natural Resources Technology program could have relevance to the Alberta HUB project. Students could potentially provide environmental studies and recommendations for the Cold Lake Air Base. Graduates of the diploma progr am find employment with governmental agencies and private industries in the oil and gas and forestry sectors. Duties range from pre-site assessments, dealing with environmental issues during disturbance, reclamation activities, vegetation reestablishment and facility monitoring. Job opportunities for graduates can include: Bird and Wildlife Services Technician, Environmental Field Technician, Field Plant Surveyor, Field Technician-Ambient Air Quality, Fisheries Technician, forester, GIS/GPS Technologist, Intermediate f icld Biologist/Technician, Intermediate/Junior Water Resources Engineer, Junior Air Quality Scientist, Junior Aquatics Environmental Technician, Weed Inspector, or Invasive Weed Monitoring.

I OPPORTUNITIES ASSOCIATED WITH AUTONOMOUS SYSTEMS

Canada has identified unmanned systems as a priority on its Enhanced Technology List for targeted 1TB investments. Unmanned Systems is also one of Alberta's leading "niche" areas in its aerospace and defence portfolio.

Recommendation: Exploration of possible connections between Lakeland College, which currently provides training for unmanned systems operators, SME(s) and a prime, to design an investment consortium is recommended. (Many

34 I Pa g c primes have business Imes committed to autonomous systems), Lakeland College is large enough to attract high calibre partners, The College was named as one of the top 50 research colleges in Canada in 2013 and it is currently collaborating with SAIT (Southern Alberta Institute ofîechnology) to establish the Centre for Innovation and Research in Unmanned Systems in Alberta,

Regular aerial surveys are conducted by energy companies within the Weapons Range and there is some amount of equipment transported by helicopter. Recently, there's been a move to utilize more unmanned systems such as Unmanned Aerial Vehicles (UAVs) for surveys, There is also interest in using the range as a test facility for commercial unmanned systems,

Recommendation: Given the concerns regarding classified target infrastructure and interference with training due to potential incursions between low level training flights and UAVs it is feasible the Alberta HUB could investigate how local SM Es with engineering experience could develop connections with CLAWR opportunities,

Recommendation: The HUB is also advised to explore and identify opportunities in the BVLOS project realm, These would be specific to training and operational requirements identified by the participating companies,

I OPPORTUNllY: ALBERTA HUB_DElvlOGRAPHICS-CREATING !ALENT J % Of Population in Age Categories Per Population Centre 40.0% 35,0% 30,0% 25.0% 20.0% 15,0% 10.0% 5.0% 0.0% Cold Lake St Paul ltoydmlnster Vegrevllle Vem1illon Bonnyvllte Cold Lake Elk Poînt Two HUis Lamont 149's 11%0-14 lllf%15-24 0%25-44 1si%45-64 llll!%65+ ? - -- -?----?-- -- -?-- --- r------?--? % of Population (0-14 old) , years ; 35.0'/4 30.0% ----- 25.0% - ? 20.0% ------15.0% 100% 5,0% 0.0%

35 I Page % of Population (15-24 years old) 16.0% 14.0% 12.0% I' 10.0% 8.0% 6.0% ' I I 4.Q"/o I 2.0% 0.0%

I 15-24 15-24 15-24 15-24 15•24 15-24 15-24 1 lj./4 J!')·24 15-24 I , ) I Uoydminstei ' Cold lake St Paul Vegreville Vermilion Bonnyvil!e Cold lake Elk Point Two HIiis Lamont I ) 1 1 ' 149's 1

Tables: Alberta HUB Census Data 2016

A demographic analysis illustrates that approximately 20% of the population is of the age 0-14 years This represents a relatively young population that could be groomed early for opportunities in Science, Technology, Engineering and Math (STEM), all-important antecedents of a creating a "knowledge based" economy, 15% of the population lies in the age group 15-25,

Recommendation: There would be significant advantages in orienting the education system within the HUB to STEM education, STEM plays a role in enabling communities to become economic and technological leaders. STEM is a curriculum based, interdisciplinary and an applied approach, Rather than teach the four disciplines as separate and discrete subjects, STEM integrates them into a cohesive learning paradigm based on real-world applications, The Art Smith Aviation Academy in Cold Lake is a trailhead program for integration of aviation themes in K-8 curricula.

STEM is a key roadmap to introducing and understanding new disruptive technologies which will become an important part of our economy, STEM related jobs, (many do not require a college degree), can pay significantly more than non-STEM careers, OE Ms such as Lockheed Martin support STEM programming in Canadian schools, The Alberta HUB strategy could also involve projects with lnnoTech and the new centre at Portage College

Recommendation: Blue Quills University should be positioned for opportunities once ISED releases its 5th "Pillar" to guide investments, The 5th pillar is to be dedicated to diversity, gender, and socio economic conditions, It is assumed that Indigenous communities and institutions will be important receptors for new 1TB opportunities, It is advisable that "projects" are identified early to position the Indigenous college for new opportunities under this new policy strategy,

Recommendation: It will be important for the HUB to have a dedicated strategy to retain the 5% of mdlvtduals with either a trades accreditation or university education. This "talent" is critical to the HU B's future economic development plans, particuiarly if there is an interest in strengthening the "knowledge-based" component of the economy. There are numerous channels to higher learning opportunities within the HUB through all the post-secondary institutions. The HUB could review its role and capacity to contribute to the marketing or these opportunities,

I 36 Pa g c Recommendation: The HUB may want to offer an annual event, in collaboration with the colleges and the Air Base that focused on illuminating learning pathways to education programs in Aerospace Technology, Defence and Autonomous systems.

Recommendation: There is an opportunity to support and grow an aviation "spirit of excellence" within the region. The Art Smith Aviation Academy provides early introduction of aviation to K-8 students on the Base, and there are a variety of courses related to the operation of unmanned vehicles at local colleges. As outlined in the previous section, it is recommended that the HUB consider an Aircraft Maintenance Training Program and a Certified Pilot Program to extend and expand the aviation spirit present within the region.

37 I Pa g c CHAPTER 5 - CHALLENGES

There are several challenges facing the Alberta HUB:

• There are transportation Infrastructure challenges that are an Impediment to economic growth • Broadband Internet Is expensive, slow and poor quality • The region does not have a strong capacity to work within current and near-term disruptive technologies.

Many of these challenges must be addressed and solved through creating and identifying solutions with the assistance of the Federal and Provincial Governments. Due to the young population, there Is an opportunity to pivot toward Science, Technology, Engineering and Math as a focus, and this will prepare the region, businesses and individuals to participate in future disruptive technology opportunities

Challenge: Infrastructure

There are issues related to the condition of major roads particularly Highway 28 with a lack of "pull outs", Also, the lack of rail services to Bonnyvillc/Cold Lake is considered by some to be an Impediment to economic growth. lack of CATSA-screened regional air service is creating another impediment

Recommendation: The HUB study researchers concur with the challenges identified in existing studies. Lack of air service is being addressed and the HUB researchers support this action.

Challenge: Broadband

On September 15, 2017, the HUB Region received an evaluation of broadband coverage in Northern Alberta entitled, 'Northern Alberta Broadband_Prepareçlne_ss Project. Broadband cov.9ra£e is regarded as an impor.\;.mt enablcro] business activi,y0 The report highlights the wide variation in broadband coverage across the HUB region. The study states "Accessible, affordable, and reliable high-speed broadband services, provided in a coordinated and interconnected system, is seen as foundational to supporting economic prosperity locally and regionally, enabling greater social connectedness and well-being of the region's population. High-speed broadband services provide foundational infrastructure for community prosperity, resiliency, and quality of life not unlike roads, electricity, water and wastewater, and other essential utilities that support economic activity and- community life."

Recommendation: The authors of the ADTUMS HUB study strongly supports investment ,n improved and affordable access to broadband capacity. With our experience working with companies active in the defence community, we strongly support the view that economic development is hindered by broadband access that is slow in either direction (download/upload), expensive and unreliable.

Companies of any size, and individuals, whether they are knowledge workers, independent contractors, or employees, require reasonably priced and reliable high-speed broadband access. Individuals, whether 'knowledge workers' or not - no matter what their field, need reliable Internet access for purposes that include research {weather updates, competition, data review), communications, client contact, marketing and sales, business management and recreational purposes that contribute to quality of life.

The business case for investment attraction of businesses and individuals to the HUB region will be supported by

I 38 Pa g c Improvements to broadband access and mobile phone connectivity (which is typically a complementary overlay on any fibre network). As the Broadband Preparedness report goes on to say, "Achieving continued economic growth in northern Alberta is highly dependent on having the necessary infrastructure to access global markets as well as providing connectivity for its residents."

Challenge: Disruptive Technology

The aerospace and defence sectors are technology intensive and are moving very quickly to become more competitive through the adoption of "disruptive" _:%.,,\. ln with l!J, technologies. order to join the conversation the ,..,."? ,f lfî:.1il .. defence community there must be a good understanding mi.?.,,? ,t ..i of where it is headed. 1 I lliiiiilll ÎÎÎ .fi An understanding of disruptive technologies such - as ; MechanlaU011, Mass production, - Computer and Cyl;ier Physlc;il artificial intelligence, augmented reality, and cybersecurity Wilterpowe:r,steam auemli!yllne, automation Systems power 11letlrldty - are not just related to aerospace and defence -they will soon become the new "normal". Thinking beyond the mainstream and understanding "Industry 4.0" will be critical for HUB leadership. This new acumen will help the Alberta HUB establish themselves within the Alberta defence is ...... ecosystem. (Industry 4.0 a name for the current trend of automation and data exchange in manufacturing technologies.)

Recommendation: As with all growing and highly competitive industries, there is a strong concern regarding the rapid adoption of disruptive technologies. "Many companies don't have the right skills and personnel to think of new business models and conduct the right analysis to determine what to do in thisfast-changing environment". Thinking beyond the mainstream is highly critical for the leadership of the HUB and understanding Industry 4.0 will better prepare for future positioning of projects and activities in the region.

39 I Page CHAPTER 6- Roadmap

Understanding the opportunities that exist in the areas of ATDUS for the Alberta HUB region are explained throughout this document. The creation of a roadmap is meant to provide a framework to guide a strategic plan, decisions and actions, lncluding who needs to be involved within the organization and the community. It will support the creation of a more formal plan and connect the dots showing how actions will create a path to a desired future state.

Based on the recommendations provided in this report, four key areas of focus for the ATDUS Roadmap have emerged, they Include:

• Education • Connection • Building • Promotion

Education- ln order for the Alberta HUB to embrace the Idea of diversification into a new industry or sector such as ATDUMS, efforts need to be taken to ensure education of all key stakeholders. The education activities are critical for understanding the opportunities that exist in the ATDUMS and how to achieve them. Activities recommended to achieve this recommendation are included for information sessions, workshops, government programs and industry events.

Connection -The community needs to make inroads into the ATIJUS sector by building points of connectivity and relations hips. By attending events, becoming members of an industry association or group, hosting activities for key Industry players and other related ideas that support connectivity, the Alberta HUB will be better positioned to generate relationships.

Building-Building capacity m the Alberta HUB "community" made up of the business leaders, champions and industry participants will be fundamental to the success of the growth of the ATDUMS sector. Specific education and information sessions directed to the key stakeholders will build on the strength and support required to build a foundation of understanding. Connection with ATDUMS leaders from industry, government and sector specialists who are already conducting business in the region and the province will also facilitate the bu riding process. These connections can be supported through the relationship with the industry associations.

Promotion -- fhe Alberta HUB will need to develop a strategy to promote the capabilities and capacities in the region. Once the strategy is complete, the promotion can be done via the champions, industry events and integrating marketing activities into the overall HUB communications strategy. Champions are defined by way of community leaders, academic institutions, industry partners or related associations who have been engaged in the education process and understand the opportunities.

With a plan laid out and the region united in development goals, area leaders and the HUB will be able to coordinate their efforts to develop sustainable growth in these st, ategic areas.

40/Page CHAPTER 7 - Marketing Messages

Key marketing messages focus on: • Post-Secondary and Industry partnership and investment with Defence primes • Growth and spending within the region by DND • Rich capabllltles in education and research • Young, growing and educated population • Disruptive thinkers within the region

1. The Alberta HUB has colleges, universities and SM Es that are interested in working with defence contractors to grow and diversify the economy.

2. The Alberta HUB has defence contractors already working within at 4 Wing Cold Lake. Efforts will be undertaken to develop a strategy with them to increase their engagement with the Alberta HUB region.

3. The HUB Cold Lake will Alberta and the 4 Wing see significant growth related to the extension of the Cf'..18 fighter jet fleet as well as the infrastructure growth related to the Future Fighter program. The Alberta I IUB is home to an incredibly bright future given Canada's intentions to modernize its fleet of military aircraft.

4. The Alberta HUB will involve itself with opportunities associated with Canada's Industrial Technological Benefits Framework. This policy ensures that Canadian companies and public institutions such as universities, colleges and research entities grow because of Canada's decision to purchase new equipment to protect and enable our Canadian military in times of conflict and peacekeeping. Canada's 1TB policy ensures that contractors awarded contracts over $100M invest the commensurate amount in the Canadian economy. It will be our intention to assess the possibilities in aligning ourselves with as many of these opportunities as possible.

S. The Alberta HUB is rich in capabilities ln terms of post-secondary institutions and research capabilities. We will work with these instrtutions to help promote Investments from defence contractors with obligations and we will work to build relationships between these institutions to cluster our capabilities, particularly in areas where they have common programming-such as renewable energy, the environment, EMS, trades, and industrial training. With superior human and educational resources, we will solidify our place as a lead researcher and trainer in the province.

6. We will promote our capabilities in research such as 1s occurring at Lakeland College, Portage College and INNOTECH to create investment and research around agriculture, biomass energy production, and unmanned systems.

7. Approximately 20% of our current population across the HUB region is under the age of 15. This represents a cohort of individuals that must be planned for, in terms of creating a knowledge-based economy. We will look for opportunities to introduce our educational institutions to STEM training (Science, Technology, Engineering and Math).

I 41 Pa g c APPENDIX 1 INFRASTRUCTURE (Detailed Description)

Transportation Infrastructure

The Alberta HUB Transportation Study, delivered on October 31, 2016 provides a thorough assessment of the road, rai! and air transportation infrastructure that serves the HUB Region. This report provides a baseline for measuring progress, identifies opportunities for improvement and illuminates the policy and planning process that determines prîorities for infrastructure investment.

The Transportation Study highlighted three trends of import that set the context for development of transportation infrastructure.

These trends were: 1) continuous growth in freight volumes and distance goods are transported, 2) changes in scope and natu-e of services offered by distribution industry, 3) shift in transportation and logistics created by increased value-added industry. (p. 97) Economic, land use and travel demand forecasting, launched in May 2015, will be completed in 2018. The new model will integrate economic development and transportation more closely (116), and w!ll link economic information, !and use patterns and transportation system in a consistent and cohesive framework to recognize funding issues, technological changes, safety, environment mu!timodal demographic changes.

Road

Travel around the HUB region establishes several firm impressions on visitors: - the region is criss-crossed by a series of narrow, well-maintained secondary highways - Highway 16, the Yellowhead Highway, is the main conduit for east-west traffic in the region. A wide, divided highway, it is the chosen route for industrial shfpments such as storage tanks and mobile homes - options for scheduled air travel into the region are limited -two flights a week Into the Bonnyvllle Airport and daily connecting flights into Lloydminster NE Cold - rail service options are limited, in particular to the quadrant of the region - Bonnyvi!le and Lake ln meetings with community leaders, issues relating to traffic infrastructure were highlighted. The Mayor of the City of Cold Lake underlined concerns about Highway 28 a long, narrow highway with no pull-outs that carries a lot of commercial traffic that render it slow and unsafe. The lack of rail- service to Bonnyville/Cold Lake is considered an impediment to industrial development of the energy industry and production of hemp by MLA Scott Cyr. The Transportation Study undertaken for the HUB noted that the Cold Lake Oil Sands Area CRISP concludes that on average the area's highways have, 'd considerable amount of available capeotv,' (vehicle to capacity ratio of 5.4%), and that the road conditions are, 10n average in acceptable condttion.' A more comprehensive review of the roads identified a number of inf astructure improvements required to facilitate industrlal shipping and improve access and safety on roads in the region. The absence of rail coverage and a !imlted pipeline network in the NE quadrant of the region, an area of significant oil reserves, requires onsite tank storage and shipment of oil via truck. Other issues that were highlighted included restrictive load limits on bridges, narrow highways such as Highway #28, with long stretches without pull-outs, need for road improvements which compel regular seasonal road closures (such as Highway 41 along Kehewin Lake that experîences sliding and as a consequence often has 75% road bans), and limited road access to a number of the Metis settlements and First Nations lands.

42 I Page Rall

The broad HUB region is served by CN (Canadian National) through its Prairie North Line, which has slower and less traffic than rna!nline, (estimated 6 trips weekly between Edmonton and Saskatoon), and a secondary line north through Lac !a Biche to Fort McMurray, although these trains no longer stops within the community of Lac la Biche. According to a press release in 2015, CN to allocate $100 mil to upgrade infrastructure of northern Alberta branch lines (125) CP has a spur line to Starr and connections to Lloydm!nster, primarily used for shipping grain and oil and gas. It is estimated that 5 trains per week run on CP's two subdivisions, Uoydminster and Bruderheim. As to rail storage, a new terminal has been built in Lamont County to increase efficiency of rail operations. The Alberta Midland Railway Terminal (AMRT) represents $34 mil investment, with operations commencing ln mid- 2017. (http://a/bertamidlandra,i.ca/oroiect hiqh/iqhts.html)

The absence of rail lines to St. Paul, Bonnyvil!e and Cold Lake is an issue for local residents and the business community, CN's right-of-way from Waskatenau to Cold Lake, with an arm branching off to Heinsburg was decommissioned and turned-over to a municipally-controlled not-for-profit organization and is now part of the Iron Horse trail, used by ATV, horses, mountain bikers and hikers. Local elected officials have proposed that rail lines could be of real benefit for transport of oil, agriculture products (mduding hemp, in the future) and inbound shipment of products such as aviation fuel for CFB Cola Lake.

The interest in improved rail service ls reinforced by comments made by corporate players regarding the relevance of rail as a mode of shipping hydrocarbons. cm Rich Kruger of Imperial Oil Ltd was quoted in the Calgary Herald on November 2, 2017, "Rail is increasingly There !ook pipeline rails cornpetrtlve .... are times when we at the alternative, (but) the variable costs aspect of is a more attractive means for us to get to the mid-Western or Gulf Coast markets" (p. 81, 2.11.17? Calgary Herold)

Air Service

HUB has eight municipally owned and operated aerodromes The Bonnyville airport, offering scheduled air service, accounts for 49% of regional flights (in 2015, 3000 of its annual flights were for charter or other scheduled flights, of a total of 3,439 flights). The Cold Lake airport handled 5% of region's flights in 2015. fhe energy industry downturn resulted ln 23% fewer number of flights at HUB region airports between 2013 and 2015. The primary reasons g!ven for air travel are health services, Industry charters, scheduled air traffic- at êonnvvil!e. At the Lloydminster Airport, served by Central Mountain, 2 flights are scheduled daily to Calgary, Aircraft movement reached 15,843 in 2015. A MoU is in place with the City and County of Vermilion to develop Lloydm!nster Airport as a regional airport. [Appendix? Tobie 7-detai/s about aerodrome infrastructure] The Transportation Study notes that the CLOSA CRISP assessed the area's 5 reglonal airports in the co.d Lake zone and it was determined that, 'these facilities are limited in their ability to accommodate growth for either regularly scheduled flights or larger industrial use aircrafts,' due to runway length, termina! adequacy and parking.

Broadband Infrastructure

On September 15, 2017, the HUB Region received an evaluation of broadband coverage in Northern Alberta entitled, 'Northern Alberta Broadband Prepared11ess Project.' Prepared by: Taylor Warwick Consulting Ltd,

This thorough and comprehensive study articulates the business case for reliable, affordable high-speed broadband coverage and underlines the importance of broadband coverage as an enabler of economic development. The report highlights the wide variation in broadband coverage across the HUB region. The approach taken was to assess the current state of broadband availability throughout the w3333region, propose a desired state of availability, guided by CRTC recommended standards, and examine the options, strategies and financial implicatlons to move from this current state towards the desired goals.

43 I Page The report forcefully advances the premise that: "Advancing a robust, diversified economy in northern Alberta is highly dependent on having the necessary infrastructure in place to access markets, reduce the costs of service delivery and enhance the quality of life." (p.1-2) The report recommends, "Tc accommodate both present and future economic development needs, facilitate full citlzen inclusion, and help eliminate aiy digital divides within member communities of the Alberta HUB region, a community driven, utility based, hybrid fibre to the premise FTTP/fibre to the tower deployment capable of enabling symmetric access up to and beyond 1 Gb/s to all is recommended for those counties/ cornrnunlties wishing to move ahead." (p. 8)

We concur wlth the fundamental premise advanced in the Broadband Preparedness Study that states, "Accessible, affordable, and reliable high speed broadband services, provided in a coordinated and interconnected system, is seen as foundational to supporting economic prosperity locally and regionally, enabling greater social connectedness and wellbeing of the region's population. High-speed broadband services provide foundational infrastructure for community prosperity, resiliency, and quality of life - not unlike roads, electricity, water and wastewater, ana other essential utilities that support economic activity and community life." (ppl-2)

With experience working with companles active in the defence community, we strongly support the view that economic development is hindered by broadband access that is slow in either direction (download/upload), expensive and unreliable. Companies of whatever size and individuals, whether or not they are knowledge workers, independent contractors, or employees, required reasonably priced and reliable high-speed broadband access. Individuals, whether 'knowledge workers' or not - no matter what their field, need reliable Internet access for purposes that include research {weather updates, competition, data review), co-rrnunlcatlons, client contact, marketing and sales, business management and recreational purposes that contribute to aual ty of life.

The business case for lnvest-nent attraction of businesses and individuals to the HUB region will be supported by improvements to broadband access and mobile phone connectivity (which IS typically a complementary overlay on any fibre network). As the Broadband Preparedness report goes on to say, "Achieving continued economic growth [n northern Alberta Is highly dependent on having the necessary infrastructure to access global markets as well as providing connectivity for its residents."

The report highlights differences in service levels across the HUB region. As noted, 'only 7 of 102 municipalities meet new basic service ruling standards of the CRTC.' (p. 14). (Also see Appetxl»: xx: include chartfrom Broadband Study) ln addition to the variations in service, pricing varies widely across the region.

Two anecdotes illustrate the contribution of the costs of Internet service to the costs of doing business. ln the town of Vermilion, the Pomeroy Inn and Suites, with 95 guest rooms pays a minimum of $3,000 per month for Internet charges. According the CEO of Envlronrnental Metal Works, based in Two llills, it is not uncommon to get a $.S,000 monthly charge from l elus to cover the cost of exchanging large data files with clients.

441Pagc APPENDIX 2 DEFENCE ENERGYAND ENVIRONMENTAL STRATEGY /DEES) TARGETS

Canada has committed to use less energy, move to cleaner energy sources, reduce the impact of the defence infrastructure and improve measurement and reporting results. Specific targets include: ? A spend of $225M by 2020 ln a wide range of infrastructure projects across Canada; ? A requirement that all new construction and major recapitalization projects meet the Silver leadership in Energy and fnvironmental Design (LéED) standard or equivalent; ? An expansion of the use of Eriergy Performance Contracts to Implement energy efflciencies on bases and wings across Canada, ? Installation of electric chargng stations for defence fleet and for personal vehicle use at new or retrofitted defence building; MEASUREMENT: Ensure 30% of DND light-duty vehicle fleet runs on hybrid, plug-in hybrid and/or electric technology, where suitable for operational needs and where veh!des with this technology are available in the Government Motor Vehicle Ordering Guide, by 31 March 2020 ? Examination of alternative energy options and their potential use for operations; Opportunity Assessment· First Nations/LM/University and Colleges, SME satellite location

MEASUREMFNT: Heduce petroleum-generated electrical energy consumption by 50% at deployed camps by 2030 ? Creating opportunities to purchase clean power in Alberta where as of January 2017, 90% of electricity supplying DND installations now comes from renewable sources. ? A target of 20% of non-rnllltary vehicle fleets to hybrid and electric by 2020; ? Canada will also address housing and it has committed to dispose of underutillzed or obsolete buildings. ? Designate energy managers at all bases and wings by 31 March 2019 To improve the "process" of ensuring environmental stewardship on the part of DND, significant changes in "processes" have been made including: ? Reducing approval time withm Defence by at least 50% for lcw-nsk and low-cornplexltv projects by decreasing the number of steps; ? Working with partners to increase DND's contracting authorities for goods up to $SM by 2018, a/lowing over 80% of defence procurement contracts to be rr anaged by Defence;

?Growing and professionalizing the Defence procurement workforce to manage the acquisition and support of management of complex military capabilities; ? Using procurement to incentîvlze Canadian research and development in emerging technology areas. This new role of Defence in energy and environmental stewardship has been captured in a Defence Energy and Environmental Strategy {DEES). It is the intention of Canada to shift to a new culture based on sound energy management. ln addition to the need to deliver on four objectives {less energy waste, cleaner energy, reduced environmental footprint; better managed energy and environmental performance), DEES also addresses the need to respond to the projected Increase in environmental disasters related to climale change. (4) DEES is directly connected to the 2015 Paris Agreement, the United Nations led pact to combat climate change and accelerate and intensify the actions and Investments needed for a sustainable low-carbon future.

Elements of DEES that are also relevant to the Alberta HUB study include DND's commitment to manage contaminated sites.

Defence will continue to leverage the Federal Contaminated Sites Action Plan to clean up contaminated sites to reduce its environmental liability related to rea! property.

45 I Page TARGET: Reduce DND's contaminated sites liability by an average of 7% per year by 2020 Management of training areas,

Because ranges and training areas are paramount to Defence's abrllty to generate combat-effective forces, ONO has committed to improving how it both ldentifles and mitigates environmental risk Again ONO will be looking to the private sector and its government allies to modernize the design, construction and maîntenance of ranges and training areas. Key Initiatives to be undertaken by Defence include: ? implementing a systematic process to identify, monitor and report on site-specific indicators of sustainability; ? investing in science and technology to better understand the environmental Impacts of munitions constituents; ? developing Innovative range designs and range-management practices to mitigate such risks; and estabhshrng modernized decision-support tools to improve land management within rdoges and training areas; ? respecting species at risk habitat during training exercise as well as flora and fauna. Through numerous studies, surveys and ongoing monitoring, Defence has gained a solid understandmg of the flora and fauna present on Defence establishments and considers this information when planning mllitary training and maintaining training areas to minimize impacts. When new training infrastructure is being considered, an environmental assessment is conducted to identify potential Impacts on species at risk or other sensitive environmental components. This includes plans for avoiding or minimizing impacts.

Defence IS also committed to protecting the wildlife species on DND lands by working with federal institutions such as Environment and Cl!mate Change Canada, Parks Canada, and Fisheries and Oceans Canada to prepare recovery documents as well as develop and endorse specles-at-rlsk work plans for each Defence establishment.

TARGET: Assess the environmental risk of all small arms ranges by 31 March 2019 to recommend modern range design options and the sustainable use of range and training areas TARGET: Endorse specles-at-risk work plans for all bases and wîngs by 31 March 2019

Because Defence uses a high vo'ume of hazardous materials in support of operations they have committed to reducing the entire life-cvcle of hazardous materîals from purchase to disposal, reducing their use and removing them where possible. ONO will also seek out materials that arc less hazardous while still meeting their needs. TARGET: Implement modernized spill tracking and halocarbon management systems by 31 March 2018

Green procurement

ONO is interested in integrating sustainability considerations in capability development. ONO will follow the Government of Canada Policy on Green Procurement, which covers green procurement training, the incorporation of procurement performance clauses for executives and managers, and the integration of environmental considerations in key procurement and materiel management policy instruments This includes a commitment to "procure the least hazardous products that meet operational requirements. f·urthermore, DND will communicate Its environmental requirements to contractors by making purchases through green standing offer agreements and by building these ente ria into statements of requirements and statements of work"

MEASUREMENT: Achieve an EnerGuide energy performance standard for all new or recapitalized residential housing units by 31 March 2020 MEASUREMENT; Pursue opportunities to use clean power at all bases and wings by 2025, MEASUREMENT: Require new construction and major recapitalîzat:on projects to meet or exceed the Silver Leadership in Energy and Environmental Design (LEED) standard or equivalent for high-performing buildings MEASUREMENT: Implement new energy performance contracts at all bases and wings by 31 March 2025

46 I Page TARGET: Allgn departmental poHcy on green procurement with the government's Policy on Green Procurement within 12 months of its issuance by Treasury Board TARGET: Integrate green procurement considerations in 90% of real property procurement instruments by 31 March 2019, where applicable TARGET 16: Achieve 100% compliance with the Cabinet directive on strategic environmental assessments for all relevant departmental proposals

Life -cvcle approach to mîlîtary equipment procurement

By considering procurement decisions through a life- cyde lens, DND Is committed to rnanaging military equipment in the most sustainable way posslble and in line with operational requirements. Defence will procure and use military equipment that 1s as energv efficient as is practrcal, thus reducing overall operating costs and environmental Impacts. Defence will focus on the early integration of design specrfrcatlons with an emphasis on energy performance and environmental considerations that examine miHtary equipment acquisition, maintenance, operations, use and disposal at end-of-life.

Sustainable land use development planning principles

By applying regional and site-level land use plans, moving the DND real property portfolio toward improved efficiency, affordability, and environmental sustainability. By consolidating and optimizing the use of land and built infrastructure (buildings or works) and by demolishing or disposing of infrastructure that is no longer required or able to effectively deliver a capability, DND will reduce its environmental footprint. DND will promote joint-use and multi-function facilities, as well as encourage employees to use active transportation such as walking and cycling, whenever possible.

!n addition, DND wîl! require demolition contractors to develop comprehensive waste-management plans that reuse building materials as much as possible and dispose safely of non-reusable materials.

TARGET: Integrate sustainability principles in all real property development plans by 31 March 2020

At all military bases there is the generation of blackwater and greywater as well as the generation of oil, solvents chemicals or hazardous agents. Wastewater treatment ls a big concern for ONO particularly because the usual wastewater treatment options are generally not avallable or applicable to military acuvrtles, Several DND establishments rely on well water, surface water or both to supply all or some of the potable water to employees and residents on site and, in some instances, neighbouring towns. ln some situations, the wastewater cannot be accepted by a municipal facility even if one 1s present. If there ls a movement to minimizing the volume of sewage generated, reduce per capita water consumption and at the same time earn points towards attaining Silver LEED status by treating and reusing greywater onsite.

Note: Operations in very cold climates such as Canada's vast Arctic region and in humanitarian mission's present particular issues and opportunîties but are relevant in the HUB study. Camp Sustain is a new Canadian Defence project aimed at delivering new camp utllltles to improve energy efficiencies and reduce the environmental footprint in operational environments. The project targets mclude reducing water demand by 50-75% and liquid waste by 5·'/5% through use of deployable water treatment plants with final delivery planned for 2025. Proprietary wastewater solutions are being carried out by Terragon.

To ensure the sustainability of its water supply over time, DND will undertake water vulnerability assessments, and develop vulnerability-based monitoring and management programs on sites where DND sources its own drinking water. ln addition, ONO will strive to manage and treat all wastewater from Defence establishments before it is discharged into the environment. Some bases and wings have their own wastewater treatment plants, while others are connected to munîdpal wastewater services. ln both cases, DND has a responsibility to ensure the discharge of wastewater complies with applicable legislation.) 47 I Page TARGET 18: Complete source water vulnerability assessments on all sites where DND supplies its own drinking water by 31 March 2020

APPENDIX 3 !TB INSTRUMENTS AND MULTIPLIERS

ln order to construct an 1TB transaction as to drive innovation Canada has focused on seven {7) major instruments for investment:

a) Consortium b) Investment Framework c) General Investment (cash) d) Post-secondary investment (cash) e) Purchase I) Venture Capital Fund

Consortium Transactions: A consortium is made up of a prime contractor with an 1TB obligation, a Canadian SME and a Canadian publicly funded research institute. An example of a consortium transactlon is a prime contractor providing funds to a Canadian in SMF partnership with a Canadian college or university to support R&D for a certain technology. A prime contractor can receive a 5x multlpller for putting together this type of R&D relationship in a transaction.

{IF) Investment Framework Transactions: An investment framework Is an investment made by a prime contractor with an 1TB obligation to a Canadian Stv:E for R&D efforts, commercialization or equipment. The IF must have a minimum duration of five years and have an accompanying business plan that outlines the description of the activity, the value of the activity to the SME and estimated impact, and certification and signatures for the ac:-uracy of the Information presented. The mult!pller to be applied on this type of transaction varies based on the end use or ourpose of the investment money. For instance, ff the is transaction to allow the SME to engage in R&D efforts or license IP, the multiplier Is 9x, if ft 1s for cash to purchase, or an ln-kind transfer for equipment It is 7x, and 1f it b an in -klnd transfer for cornrnerclahzation/rnarketlng/salas It is 4x. investment Frameworks are eligible to equal up to 25% of the contract value and can be submitted as part of the Value Proposîtlon prior to contract award, following contract award, or as a banked transaction.

Post-Secondary and Public Research Institution Transactions; This type of transaction involves cash contributions to post secondary institutions for research or research chairs, investments into advanced technology skills development at these institutions and research undertaken with public research institutions Examples of this type of transaction could include investments into a Canadian college or university or the National Research Council (NRC). A post-secondary and public research institution transaction i'i ellgible for a sx multiplier.

{VCF} y_entur? CapitaLfund Transaçtions? A venture capital fund transaction occurs when a prime contractor or eligible party with an obligation provides funding to a venture capital firm for mvestment into a Canadian SME for the development, manufacture or commercialization of an advanced technology. A VCF transaction similar to an IF transaction; however, the investment into the SME is managed by a third party {the venture capital firm). Initial investments into the Canadian SME must not exceed $110001000, the company must be privately held with less than SC employees if the company provides a service, or less than 100 employees if the company is manufacturing based. !n the instance that the SME releases an initfal public offering (IPO), the will 1TB transaction no longer be eligible for further credit, Venture Capital Fund Investments are etlgtble for a Sx multîpller.

481Page Criteria to Determine Eligiblllty for Review of a Potential 1TB Transaction on the Part of ISED a) Causality b) lncrementality c)Timing

Evaluation Framework for Bidders

The Canadian government leverages 1TB investments to grow the Canadian economy. Given plans to aggressively expand the defence sector (40% over next ten years), there are four major areas that are assessed ln a bidder's submission: a) direct commitments to place direct and indirect work wlthm the defence sector b) efforts to support the growth of both prime contractors and SMEs; c) emphasis on enhancing innovation through R&D; d) focus on potential to increase the export capacity of Canadian based firms.

Canada will use this framework on a procurement-by-procurement basis.

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