One PWGSC Perspective
JOHN J.D. READ
© 2006 FrontLine Defence (Vol 3, No 1)

Government procurement is a complex process, requiring careful planning, constant oversight, and highly sophisticated professional skills.  It is a delicate balancing act: meeting the operational requirements of government while seeking to leverage each transaction to achieve broader government socio-economic benefits; moving quickly while ensuring openness, fairness and transparency; all the while ensuring that taxpayers receive full value for every dollar spent.

Nowhere is this more evident than defence. PWGSC has the exclusive responsibility for the acquisition of defence supplies. In any given year, PWGSC – whether in that highly specific role or as the government’s common service procurement organization - contracts on behalf of National Defence/CF for anywhere between $4 and $7 billion dollars of goods and services (usually between 45% and 55% of the total annual PWGSC transaction value for the whole government.) Individual defence contracts frequently involve millions and billions of dollars, spread over many years. These are crucial business opportunities for Canadian defence suppliers if they are to grow and prosper in the Canadian and international marketplaces, but potentially difficult for a supplier, its employees, and local economies if a major contract moves from one geographic location to another.

Defence procurement commands attention. Countries around the world judge us on our approach to and spending on defence; potential suppliers seek actively to be involved; contract awards are lightening rods for complaints about the fairness of the procurement process; the debate over what Canada should buy, and whether it should be from Canadian sources or abroad, continues unabated. Military and possibly civilian staff – the men and women who are called on to go into harm’s way in defence of our country and the international community – count on Canada for the best equipment and support for the purpose – and are frustrated when it appears that those needs are being compromised by other public policy agendas.

The origins of defence – the business of war – were political. Today, defence has a much broader context: from defending our sovereignty, to peacekeeping around the world, to disaster relief, to search and rescue. The essential element remains, however: in whatever form, defence is a core business of government, used by Canada, as by every nation, to define and project our national identity. It is how we choose to act – and to be seen to act around the world. Defence procurement is a business that is inherently political.

Within this context, PWGSC’s job is to support, facilitate and implement key decisions that are made by its procurement partners. We do not decide what is needed: that is for the military experts. We do not decide what will be acquired, or when: that is for the elected government. Our job is to make those decisions happen. We consult with potential suppliers, to make sure we are on target with our requirements. We develop the procurement strategy to encourage the best possible suppliers to come forward. We work with partners such as Industry Canada, Indian and Northern Affairs, ACOA, Western Diversification; and Canada Economic Development for Quebec Regions, to identify ways to leverage a procurement to achieve broad government socio-economic objectives such as regional development, innovation and international competitiveness. We design bid evaluation and supplier selection criteria to ensure we select the “best of the best”; and when the contract is awarded work with National Defence/CF and the chosen supplier to ensure that we get full value for each tax dollar spent.

We do this well, but we can do it ­better. Effective procurement, particularly in the defence context, is the product of a series of dynamic tensions between all of the parties, and dynamic tensions always need to be adjusted. What worked yesterday may not work today; what works well today may be better done tomorrow. Stresses need careful management to ensure that they remain positive and productive.

Do we know where, what and how to improve? Ask me in six months.

After 35 years in the public service – the last 13 in PWGSC acquisition policy – I just moved into a new job with Janet Thorsteinson, newly-appointed Executive Director, Defence Procurement. Her brand new mandate is to make sure that PWGSC procurement services for National Defence/CF are as good as we can make them. We will look at what we do now, and how well it works. We will identify the areas where improvements are possible, and work with National Defence/CF and the PWGSC procurement community to make those changes.

I took on this challenge with some personal – and obviously professional – views. I noted that procurement is about balance. How might we make sure that we have the “right” balance in defence procurement?

We need focus. Usually, balance is about taking different and often conflicting perspectives, and seeking to arrive at positions that meet the needs of all concerned. It is not clear that this view of balance works in the defence environment. Perhaps we should not seek automatic win-win situations in every case. Rather, we might better be guided by one of the core objectives of federal procurement, as expressed in the Treasury Board Contracting Policy – ensuring the pre-eminence of operational requirements. In defence, this would mean making sure that the men and women in National Defence/CF have the tools they need to do their jobs – and if we can at the same time achieve other worthwhile government objectives, then that is the route we should take.

We need knowledge. A senior National Defence civilian executive recently went to Afghanistan to experience the conditions our forces work under. That visit provided a new understanding of what Canada’s business of defence is all about. Perhaps we might consider making it a requirement that any government department seeking to use defence procurement to achieve other objectives must send its key policy and program people into the field with the CF?

We need effective oversight. In all procurement we need to examine continuously the processes the government used to approve major new expenditures. I once asked a government construction expert how much longer it takes the ­government to build a new building. He said what the private sector can do in five years, the government does in seven – with the differences being in the many government approval processes. If this applies in construction, then it clearly does in defence – it is an area that we have to work on unceasingly, to reduce the time it takes – and the price Canadians pay – to get a procurement under way and completed.

We need thoughtful decisions. Part of that planning and approval process is deciding how National Defence will meet its needs – often a choice between existing off-the-shelf solutions, or innovative proposals from potential suppliers. Either approach can work well in the appropriate circumstances. We need to ensure that we do select the right one to meet any given need. More than that, we must always seek out different and better ways of bringing a procurement to fruition – such as more interaction with potential suppliers before we actually issue a call for bids, to ensure that the CF get what they actually need (not always the same as what a static call for bids sometimes asks for.)

We need strategy. That planning and approval process is often based on individual transactions – National Defence identifies a need, and procurement takes place. Dealing with transactions is a responsive approach, taking time when time may be at a premium. More emphasis might perhaps be put on preparedness – putting the groundwork in place before an actual need arises, so that responses to that need are faster. You do not start to procure new equipment only after the need is identified – you start long before, to select the supplier(s) who have the demonstrated capacity to respond quickly according to already agreed-to arrangements (much like a call-up against a standing offer, or a task authorization contract.)

We need effective management. Procurement is not only about selecting suppliers – it is about working with those suppliers after the contract is signed, to ensure successful completion of the contract. There is a need for flexibility, so that when circumstances change during the contract, all involved can adjust quickly. There is a need for streamlining, so that resources on both sides can focus on delivering the product, rather than feeding the system. When we design and implement better contract management systems that minimize the need for government resources to deal with administrative issues, we free up those resources for to carry out the core business of National Defence/CF.

We need efficiency. In particular, we need to see if we should do anything about low dollar value procurement. Almost 70% of PWGSC’s contracting work for National Defence/CF, in terms of the number of transactions, is contracts of less than $25,000. Each of those needs to be handled individually – a huge amount of administrative effort, by National Defence/CF and by PWGSC, for less than 1% of the total annual National Defence/CF spend. It may be, when all factors are taken into account, the best way of meeting National Defence/CF needs – but then again, it may not. We need to work this thought, to ensure that we do produce best value for every dollar spent.

That is what Canadians expect; that is what they need, and that is what ­procurement must and will deliver.

As I said, these are personal views, going in to a new assignment. Let me stand back, though, and summarize from a more global perspective.
Does defence procurement work well today? Yes. Could it be better? Of course – any process can be improved.

Do I really know where, what and how to improve defence procurement? Not now – but ask me in six months.

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John J.D. Read is the former Director, Acquisition Policy and Process, in the Acquisitions Branch of PWGSC.

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