Military Procurement
Sep 15, 2007

The Canadian defence procurement framework is one of the most effective in the western world. It was flexible enough in 2002 to buy Challenger aircraft for Prime Minister Chretien in nine days – and that included cabinet committee reviews, all necessary authorizations, contract award; and formal acceptance of the aircraft. In other words, even doing everything “by the book,” the entire “acquisition cycle time” was only nine days. That very procurement system was simultaneously accommodating the same PM's decade-long delay in buying the maritime helicopter – and again, doing everything “by the book.”

If there is a flaw in the Canadian system it is that only one person in the country can approve a major defence purchase, namely the prime minister. The procurement process proceeds as fast or as slow as the PM wishes it to.

The system’s flexibility also allows procurements to be steered in specific directions. If you want a specific aircraft, such as a C17, set the requirements such that only the C17 can meet them. For example: the aircraft must be FAA certified, and the firm must deliver the first aircraft within 12 months.

This is somehow deemed “bad” by many, but that is the way business is con­ducted in the commercial sector. As long as the requirements are reasonable, and the two I just suggested could be judged reasonable, it is hard to fault the defence buyer.

So, there are really two issues here. The first is whether the existing procurement framework is an appropriate one. The second is whether there were improprieties within the existing system. That in turn begs the question of what is an “impropriety,” defined by Oxford as “incorrectness; unfitness; indecency”?

Was it improper, incorrect, unfit or indecent for a BC senator to derail the Light Utility Vehicle project until the procurement strategy was changed to allow a specific BC firm to compete?

Was it improper for a PM to order DND to purchase something that the department said was not required?

Is it improper to insist on building the JSS in Canada, when offshore options could have produced the ship years faster, and at less cost?

Is it improper to pay lobbyists to gain the ear of someone in the procurement management chain?

So far, the answers to the foregoing are No, No, No, and No. These are simply reflections of the procurement framework that we have. We are not going to tell politicians that they can no longer argue for supporting their constituency. We elect the PM to lead, so we can’t fault him/her for doing so. The national shipbuilding policy was supported by all the major parties. And we are not going to outlaw lobbyists.

So, where are the improprieties?

If someone went outside the existing legitimate procurement framework and somehow influenced specific decisions (such as bribing one or more cabinet ­ministers), that would be an impropriety. It would also be illegal. But there are absolutely no suggestions that such interventions have ever happened.

Some folks, including media, smell a story... but there is only a story if some of the players strayed outside the existing rules. Personally, I doubt that happened. You can influence decisions by operating within the rules. If a cabinet minister wants a prescribed percentage of IRBs to accrue to your province, invoke a national security exemption, thereby removing the procurement from the Agreement on Internal Trade, and “presto!” the contractor can be required to direct a specific percentage of IRBs to your home province.

And everything is done by the book.  

The real question should be whether or not the current defence procurement framework passes some basic tests of fairness and transparency. Otherwise known as the “smell test” in some circles.

It is not enough to say that the process is transparent. It must be seen to be transparent. The latter condition is clearly not being met. The public, the media, even Parliament considers much of today’s defence procurement system as not being as transparent as it should be.

Bits and pieces of the system are indeed open, but almost all the important decision making is done in secret. There is no public long term capital or defence investment plan. Procurement proposals going to Cabinet are secret. Contracts going to Cabinet are secret. Cabinet ­delibera­tions are secret. There is no debate, public or otherwise – not even a review by Parliament, or even a parliamentary committee – before major procurement decisions are made. What is being procured is a matter of what the players (CDS, MND, other cabinet members, lobbyists, et al) can convince the PM is appropriate – and it is done behind closed doors for the most part. What the government buys, such as the C17, may or may not be what the CF needs. Since the process is so shrouded in secrecy, there is no way for the public to really know.

Once projects are approved, there is no routine, formal reporting of individual project’s performance, either by DND or a third party.

With defence procurement responsibilities and authorities spread among ­various departments, no one can be, or indeed is, held responsible for project performance such as meeting cost, schedule, and performance objectives.

When is the last time a project manager was fired or a major capital contract cancelled? In the absence of openness and transparency, the media occasionally gets wind of project slippages, cost increases, and performance shortcomings. More and more frequently, losing firms impugn the integrity of the system. In some cases, the CITT and courts confirm the losing firm’s assertions of unfair source selection practices, as in the recent CF-18 AMIRS contract.

As Canada’s defence procurement system becomes less and less transparent, allegations of impropriety will not only result, but will increase.

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© FrontLine Defence 2007