Debate: Is Defence Procuremt Broken?

Jul 15, 2008

FrontLine readers will not be surprised at the common perception that the current system of defence procurement is broken and beyond repair. Over the past few months, there have been a number of examples of major defence programs that have either been delayed, ­cancelled or returned to DND for a review of the requirements. Examples include the MSVS ­Commercial Truck procurement (announced in 2006; no compliant bids received); the Maritime Helicopter program (awarded in 2004; could be delayed by up to 15 months); the Joint Support Ship (both proposals received in early this year could be non-compliant); Fixed Wing Search and Rescue Aircraft (announced in 2003; fast-tracked in 2006; no RFP to date); and the CH 47F Medium Lift Helicopter (announced in 2006; ACAN to Boeing; no contract to date).

As this mess indicates, the Government of Canada seems unable to produce a coherent set of requirements that can be translated into an acceptable RFP to which industry can respond with a compliant proposal at a cost deemed affordable by the Government.

Foremost among factors that have brought us to the current state of affairs is, of course, the chronic underfunding of DND over the past two decades. While the Government has recently announced the long awaited Canada First defence strategy, with a funding formula that will result in a significant increase to DND’s budget, many analysts doubt that it is enough to overcome past underfunding.

Underfunding has contributed to a very cumbersome procurement process that many suspect was designed to minimize the number of programmes that could move to the final approval stage. Some ­procurement officers have joked that the system was designed to ensure that no ­programme would ever make it to final Treasury Board and Cabinet approval... but it did keep a large number of personnel busy producing the mountains of documentation required for internal approvals!

Analysts note that the Canadian Forces has a tendency to add ‘extras’ to ­otherwise off-the-shelf systems. This inevitably results in very expensive equipment that is unique to Canada. Reasons for adding these ‘extras’ are understandable when ships, aircraft and land vehicles are generally required to last 40 years or more. With rarely enough funds for the number of units needed to satisfy all the requirements, procurement staffs are forced to include as much capability as they can in the reduced number of systems that eventually make it into service.

A somewhat hidden factor in this ­equation was the Force Reduction program. Designed to reduce the number of uniformed personnel by over 30% as part of the mid 90’s deficit reduction program, this affected DND and PWGSC procurement professionals disproportionately, as many experienced and effective mid-level officers, who would be leading and managing today’s procurement programmes, took advantage of generous release offers to seek other careers.  

Canada stands out as one of the few NATO countries to divide various procurement functions among separate departments. Operational and technical requirements are set by National Defence, along with technical authority for the actual project, but contractual aspects are managed by Public Works. As has been previously described by previous FrontLine contributors and by Parliamentary committee members, no one department or individual can be held accountable for problems with defence programmes. If the Government addresses only this aspect of defence procurement, it would go a long way towards resolving the current crisis.

Solving a problem that has developed over the past 20 years cannot be accomplished overnight, but as a first step, the Government must first recognize that there is a problem with defence procurement and be prepared to introduce real reforms to a broken process. The next step, using the Australian Defence Material Organization as a model, would be to assign total responsibility for defence procurement to an organization within DND, and directly responsible to the Minister. Other steps should include the following:

  • Increase defence budget over the next five years to levels recommended by a number of recent Senate committee reports.
  • Minimize number of approvals required to move a programme from the conceptual stage to final approval. There is no need to keep going back to Treasury Board for approval of programmes that have already been included in the approved DND estimates and budget, nor does Cabinet need to be briefed at every step in the process.
  • Focus operational requirements on performance elements that tell a potential contractor what the CF requires, but not how it will be achieved.
  • Involve industry in the development of requirements so that the operational requirements will reflect what is currently available and attainable
  • Minimize Canada-specific requirements to those needed  to address uniquely Canadian environmental concerns, such as range and temperature
  • Train and retain procurement specialists (both military and civilian). Leave them in their positions for at least 5 years, to achieve better continuity and a better understanding of the overall process
  • Foster a cooperative environment between industry, government and the Canadian Forces. This would go a long way to removing the current adversarial atmosphere that sours relations between the various parties
  • Develop a plan to secure what is left of the Canadian Defence Industrial Base, so that domestic industry will be able to support current and future defence requirements.

It is not time for another study or Royal Commission. Something must be done now if future increases in defence procurement are to be managed efficiently so that equipment arrives on time, on budget and satisfies requirements. As a first step, Canada’s Government could implement the above outline with relative speed – this would go a long way towards fixing our broken defence procurement process.

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© Frontline Defence 2008