Lessons Learned
Rona Ambrose on Procurement
© 2017 FrontLine Defence (Vol 14, No 1)

This year’s Conference of Defence Associations Institute annual event featured a frank and illuminating discussion with the Interim Leader of the Conservative party and leader of the Loyal Opposition. The Honourable Rona Ambrose was first elected in the Federal Parliament in 2004; in the Harper Cabinet, she represented many portfolios, some of which included: Environment; Intergovernmental Affairs; Western Economic Diversification, Public Works (now PSPC), and Health Canada. She was gently grilled on the topic of defence procurement by CDAI Board Chair, retired Major-General Daniel Gosselin.

The audience listened intently as Daniel Gosselin asked her to share stories of her experiences and lessons as a Cabinet minister. Her thoughts on the defence policy review and defence procurement (for which she was a key influencer for many years), were of particular interest to many.
Lessons Learned
“First, thank you Daniel and thank you to all of you for the invitation to be here today to speak about policies that I am no longer intricately involved with but have a lot of interest in and passion for – and thank you to the Institute for all of the great work that you are doing,” said Rona Ambrose.

Early on, she reminded the audience that “the good news is that 90 percent of defence procurement is on-time and on-budget, but what politicians end up having to answer questions for are the larger defence projects.” 

(Photo courtesy of: Deb Ransom)

She noted that smaller projects (under $5 million) tend to proceed to speedier completion and suggests this creates opportunities to increase system-wide efficiencies. “I would argue that if you wanted to simplify the process that you would actually raise that amount […] to at least 10 million dollars.”

In discussing ways to improve the system, she identified “silos that currently exist within the different authorities that have to weigh in on any major defence procurement,” as one of the major roadblocks to progress.

For many years, defence analysts have identified these silos, and particularly the lack of a single point of accountability as the most serious impediment to efficiency. 

The Defence department (DND) identifies a requirement and then spends years waiting and jumping through ever-increasing numbers of hoops to get their equipment. PSPC (formerly Public Works) handles the contracting, fairness monitoring, and policy. ISED (formerly Industry Canada) deals with the offset spin-offs and Value Propositions that benefit the Canadian economy. And last, but equally, Treasury Board handles the money piece, but also related checks and balances and milestones they have put in place.  

As mentioned in numerous FrontLine articles over the years, all of these silos have their own agendas and all have equal veto rights on any and every procurement. This can cause delays in ways that are simply frustrating. For instance, a small procurement is currently being held up due to a Fairness Monitor position not being filled at ISED.

“What I’ve found very frustrating,” said  Madame Ambrose, was “the level of effort to make sure that we have everybody in the room when necessary to make the decisions needed to move things along.” 

When the government took a look at simplifying the process, “we started to do some work on the policy side around the idea of a defence procurement secretariat and – this is my opinion, this is not policy of the past government – but it’s my strong opinion that we see these kinds of policy models in other countries and my strong belief is that we need to do that. We need to centralize these authorities in one place in a secretariat. It should be independent, it should not involve politicians, it should be headed up, potentially, by a DM level but a senior person in the bureaucracy so that we have that institutional memory because Ministers get shuffled, people get moved, and then you lose that commitment to a large project,” Ambrose asserted. 

“If you have that kind of a model where it’s a large project office, and I would suggest anything over $100 million dollars potentially would go through something like that – and really, that’s where you would want the IRBs and the value proposition policies to kick in. There’s a lot of complexity around those policies, and I developed a lot of it myself, but what I would argue now, is that I think it’s the major projects where we see a lot of funding moving through where we really want to work on the value propositions to support those Canadian businesses and small enterprises through our supply chain opportunities with an OEM,” she explained. 

“I suggest that would be a good threshold in terms of a major project office – and then give that office the authorities necessary, and staff it with people from [PSPC], Treasury Board, [ISED], all of the people that need to be there and create that expertise.”

Ambrose recalled a massive defence procurement for which the person in charge was “a very good public servant” but had just transferred over from Agriculture Canada. She felt more expertise on managing massive, highly specialized, defence projects was called for, and that a defence procurement secretariat would be the answer. “That institutional memory […] is lacking because people get moved around and then you end up having situations where there are a lot of delays. I would suggest those are some of the ways that you could simplify some of the major projects because the truth is, it’s only the major projects that become an issue. The majority of procurement goes well but if there’s a bit of a delay, then all of a sudden, politics start to come into it, and I don’t mean politics around the decision making because these processes should really be free of politics, but on the outside, you start to get political pressure on how things are going.” 

The Element of Expertise
When it comes to major defence equipment, it is hardly surprising that few if any senior public servants have any real understanding of the basics of what makes one ship, aircraft or vehicle perfect to fulfill the requirements while another would create additional fleet, training, maintenance and storage-related challenges. Not to mention the intricacies of technological integration. Defence sector observers point to this lack of understanding of military requirements as an obvious defect in the procurement decision-making process.

Take the CF-17 Globemaster as an example. That procurement was pushed through very quickly due to political will of the day, but if it had gone through normal channels, the decision-makers would have been obliged to account for the fact that Canada didn’t have large enough hangars at that time, and it would have caused considerable delays as those discussions and approvals dragged on about the added expense. This is where military expertise and a knowledge of how the CAF operates is critical to the procurement process.

From left: CDA President, Major-​General Daniel Gosselin (retired) and CDA Chair, Vice-​Admiral Denis Rouleau (retired), discuss issues with Rona Ambrose between conference sessions. (Photo courtesy of Deb Ransom)

Rona Ambrose talked of the need for expertise as well as the myriad components that ministers focus on when they look at procurement issues. “You have to have a very clear policy, and then you have to rely on the experts, but you have to decide what is going to drive that decision and, in my experience, the number one issue was the delivery of the equipment. From there, if there’s an ability to deliver IRBs, if there is an ability to implement the defence procurement strategy where we see some value for potentially small businesses, then that’s important also. There has to be an over-arching, clear policy goal and a prioritization of the end goal” she said. 

“I am not involved with it at this point, but I think that is the important thing,” she continued. “I also think transparency is very important. It is very frustrating for people that are going through this process to not know where things are at, and there is no reason why the [PSPC] department can’t transparently post at what point things are at. I never understand why that wasn’t something that could have been done, it wasn’t a focus of mine but I’ve seen it in other countries and in other models and I think it takes a lot of mystery out of a lot of the concerns that bidders [who] are watching a particular procurement and wondering where things are at,” she said.

When asked for advice to military officers tasked with project management,  Ambrose confirmed that “everybody did their job really well and came to the table with the information that was necessary to move forward. The problem was that everybody was in a silo and trying to get everyone into a room together and make sure everyone was on the same timeline as these milestones move forward is very difficult unless you come up with a model where people are not just in the same room but actually working together. This idea of having one central place like a defence procurement secretariat that’s housed at the Department of National Defence, that has the right institutional knowledge, expertise, the people that are going to be committed long term to this kind of a project, I think is really necessary, otherwise we are going to continue to have one department ready to go, waiting for another.” She recognized that each silo has multiple priorities, and defence procurement will continue to get shuffled off and delayed for years because of it. “But I never felt that people weren’t doing their part,” she attested.

Defence Policy Challenges
On defence procurement, as Minister of Public Works for more than three years (from January 2013 to July 2015), Ambrose worked with Peter MacKay, the Minister of National Defence; Christian Paradis and then James Moore as Ministers of Industry Canada; and Tony Clement, President of the Treasury Board, and clearly put much thought into how this process could be simplified. 

Ambrose has come to the conclusion that “it really it has to be the military that makes these decisions. I feel very strongly that politicians should not be making decisions about equipment, and they need to rely on the expertise of the military to make these decisions.” 

She went on to itemize some of the complex threats and geopolitical issues that threaten global stability, such as Russia’s illegal occupation of Crimea; destabilizing actions that China has taken in the South China sea; serious situations in North Africa; failing states and the terrorist threat.

Canada’s own domestic safety and security needs are also of prime consideration. “We have the Coast Guard, we have the Search and Rescue, the military plays such a huge role on so many levels, so it is a very complex policy to put together, I saw that, but I feel very strongly that it has to be the military experts and even people like you [the defence companies] that have the huge amount of experience and knowledge that weigh in and give the government good advice, and I hope that’s happening. 

Defence Spending
Canada is reportedly spending between 0.9 and 1.1% of its GDP on defence. At the time of the conference, the Trump administration was focusing on global defence spending and reminding NATO countries of the 2% GDP target suggested by NATO.

Rona Ambrose admitted to the traditional Conservative pro-defence leanings, and noted that there was pressure to increase defence spending back when her party was in power. She believes the U.S. is “doing everyone a great service by saying it’s time for people to step up. I am going to make the assumption that our government is going to find a way to increase military spending […] I think that’s positive,” she said.

CDA/CDAI Security and Defence Conference 2017

That said, Defence Minister Harjit Sajjan has rightly identified that there are disparate methods for determining defence spending among the various NATO countries. With a view to ensuring an “apples to apples” comparison on this serious matter of optics, Minister Sajjan has “ordered officials to look at how Canada calculates military spending compared to other NATO members.

Predictable Funding
As noted by MGen Gosselin, the one thing consistently identified as necessary in a Canadian defence policy, is predictable funding, but the challenge is in creating a non-partisan, long-term model that can withstand changes in political leadership.

Rona Ambrose agreed that “predictability is important,” and pointed to the ship building strategy as an example. “It’s not just a commitment to the navy, it’s a commitment to an industry, and that puts a huge amount of pressure on politicians to make sure that the funding is there. I know this is very political but it’s the reality […] you tell the thousands of workers in Vancouver or Nova Scotia that you’ve decided to cut back on a couple of ships, and watch what happens. It is an interesting dynamic when you have supply chain jobs now integrated with defence spending.” 

“One of the things that I think is lacking in the analytics for people who make decisions […] is the economic output,” she revealed. “I am not saying that [IRBs] should ever drive the decision making,” she stressed while noting how strongly offsets that result in economic opportunities will resonate with a politician. “Those things do make a difference when it comes to defence spending.”  

Without U.S. pressure about defence spending and NATO obligations, she believes “we would probably see deeper cuts.” The fact that Canada is being challenged to meet NATO target obligations, she expects may result in “some increased funding but also a level of predictability moving forward […] I think it’s a positive thing to see that we may have to be pushed in that direction.” 

Responding to America
Daniel Gosselin mentioned the level of uncertainty around how the world will respond to the new Trump Administration, and wondered how much time Canadian politicians will spend thinking about the United States.

“I am sure it’s the number one issue. I think it’s changed everything for our Prime Minister and our government. I think they had a very clear agenda moving towards the next election and literally everything changed in November and that’s defence policy, environmental policy, fiscal policy, social policy, it’s everything. I’m sure there’s a huge endeavor to recalibrate or figure out what we are going to do to address all of these issues. The landscape changed dramatically.” 

It is obvious that Canadians are incredibly proud of the CAF toops and want to ensure that these brave men and women have the protection they deserve when they return from dangerous missions. Ambrose wholeheartedly agreed, saying “I think there is no political party that doesn’t want to be seen to be champion of veterans and I think at least the two mainstream political parties, the Conservatives and Liberals, want to be seen to support the military, and I think that’s important.” She recommends that members of the defence community build “closer relationships to the people who are communicating directly with the public, and that’s the members of parliament – find a way to get the information to them.” She is disappointed that DND doesn’t do deployment briefings as much anymore. “People would watch them and found it really interesting – being as open and transparent and present as the military can be, is important, and I think Canadians are very interested in what is going on.” 

In a clear jab at the media for possibly blowing things out of proportion on the procurement side, she encouraged defence experts such as those in the audience, to explain these issues to the public (presumably in the media), “because you don’t want to lose the confidence of the public on these important projects.” 

Ferry de Kerckhove, a former Canadian diplomat, revisited the shipbuilding strategy. Mentioning the boom and bust cycles of past procurements, he specifically identified the significant corporate investments Seaspan has made to respond to the government’s shipbuilding strategy, and asked about the sustainability aspect of the government’s plan for the shipbuilding industry. He wondered how Canadian industry can be competitive on the international market “considering the cozy relationship” with the Government of Canada. 

“We have to recognize that [Seaspan] was about to close it’s doors and now it has spent at least $250 million of its own private investment, hired hundreds of people and it will be thousands, and they are creating a center of expertise that didn’t exist in that region around shipbuilding,” responded Ambrose. “Yes, there are challenges to the boom and bust. I understand that, but that is a risk that the shipyard takes and, at the end of the day, their hope is that they are building the expertise to build ships for other people, not just the government. I think the government can play a role in supporting that industry, but I know it is very competitive and of course that is an issue that people worry about but they are a commercial entity, they went into this knowing the risk. Obviously these are large projects, and there is a huge opportunity for them to be part of these government contracts but I think also it’s the building of an industry that didn’t exist before. There’s risks but there’s obviously opportunities.” 

Chief of the Defence Staff, ­General Jonathan Vance, hosted the Commander of NORAD/NORTHCOM, General Lori Robinson. Both addressed the conference audience. (CDA/CDAI Security and Defence Conference 2017)

Chuck Davies (a CDA Institute research fellow and former army officer who previously worked in the ADM-MAT organization) mentioned the enormous difficulties that western democracies have “in generating the staying power to see these really tough problems […] and even formulating a strategy to get it to a conclusion.” He was interested in her experiences in a Cabinet that had been grappling with the complex strategic questions of committing, continuing or terminating a military option, and asked about the dynamic inside a Cabinet trying orchestrate the national response to complex and difficult long-term problems. 

“That’s a big question,” Ambrose responded, observing that “we are seeing a failure in ‘small-l’ liberalism,” noting it is having a “huge impact on our liberal democracies.” She talked of the “unsettling” emergence of populist sentiments and the impact on governments around the world. The Brexit vote in the UK, the anti-Turkish sentiment in Germany, a rise of populism in France as that country heads towards elections in May, and the election of a non-conformist as President of the United States are recent examples of population unrest. “There is a whole realignment of ‘small-l’ liberal ideology, and it has a huge impact because – at the end of the day – politicians want to get elected.” Prime ministers and presidents around the world are making decisions based on this new reality, and “we are watching the pendulum swing completely the other way on some important social policy issues, and even some issues that touch on defence policy. And the other part that is really unsettling […] is the erosion of institutions,” she said, using Trump’s conflicting comments about pulling out of the NATO alliance one day, and supporting it the next as an example. 

“This notion that we can’t rely on those same institutions of liberal democracy the way that we always have, like NATO, the United Nations, and others that create that predictability and stability […] is a huge challenge for politicians, and it’s why politicians have to stand up and be counted, and make those difficult decisions. You make decisions that are unpopular but important for the country – and then sometimes you regret them because you lose the election over them, but you still have to make them because it’s the best thing for the country,” she told the audience. 

“I worry most about the erosion of those institutions – and we see it, the erosion of parliamentary democracies, a lack of confidence that people have in political parties and the lack of confidence they have in their democratic institutions. It has also spilled over now into international institutions. I think that’s a big concern.”

And with that, MGen (ret) Gosselin thanked interim Conservative leader Rona Ambrose for speaking to the conference attendees and for sharing her invaluable thoughts and lessons. “It’s not too often that we have someone with your experience in cabinet and government and politics to share some of this. We could probably spend hours and, if you’re still on the Hill next year, we will try to get you back, thank you very much. 

Chris Maclean is the Editor-in-Chief at FrontLine Defence magazine.