Transformation 2011
Sep 15, 2011

The Department of National Defence (DND) and Canadian Forces (CF) transformation team was established in 2010 to develop ideas to increase efficiency and effectiveness, and to act as the driving force behind organizational changes needed to reposition DND/CF for the future. The final report, submitted by Lieutenant-General Andrew Leslie, has been the catalyst of much dialogue on the subject of expected military cuts. The ­following commentaries (edited somewhat for space), were originally written for the Conference of Defence Associations’ publication: On Track.

By LGen Andrew Leslie
Together, DND/CF is an organization that is growing increasingly responsive and focused, that has a great deal of self-confidence, and which has become a world class military. Supported by the civil servants who see themselves as part of a winning team that has earned the respect of its citizens, the CF is admired by its allies and those we have been assigned to help.

The triumphs of today do not, however, guarantee the successes of tomorrow. The international economic climate is grim, and what happens out there has an impact at home. Resources are finite, and DND/CF can expect to contribute a proportional share to better ensure our financial security as a nation by helping to reduce the deficit. Not only is the CF going to have to continue to live within its means and balance the books, but careful reallocation from within will be required to meet the new and emerging defence demands of tomorrow (including the Arctic, more part-time reservists on the armoury floors, cyber, space, special forces, human intelligence, aircrew for the new helicopter squadrons and more sailors going to sea) that will drive the CF to be even more agile, more deployable and more ready to respond.

The vital ground of the CF is its people, their equipment and their training, all of which are increasingly expensive and have to be focused on producing capability for wherever the government chooses for deployment. Reductions in overhead will be necessary to be able to invest in output.

The CF will have to become slimmer, to trim the top and middle while protecting and investing in the various systems that result in the people, ships, battalions and squadrons of aircraft doing the tough and often dangerous work that Canadians are so proud of. In short, we are going to have reduce the tail of today while investing in the teeth of tomorrow.

The report contains an unprecedented level of research into and around DND/CF, based on facts and numbers made possible by new information technologies. This led the transformation team to consider new ways of blending similar organizations so as to achieve potential efficiencies, and to streamline while maintaining the required operational focus – ultimately identifying areas that could lead to significant yearly administrative savings. At the same time, there are recommendations for reducing overhead while protecting deployable forces (both regular and reserve), along with their associated equipment, training and infrastructure needs, from potential reductions. At the core is identifying how to make the Canada First Defence Strategy (CFDS) more achievable within the resources available.

The following are the broad and most compelling findings of the trends that took place within DND/CF from 31 March 2004 to 31 March 2010:

  • Overall, the number of regulars, reserves, and civilians grew by a total of 18%, and overall funding has increased by a Nominal 51%;
  • Regulars grew by 11% (6,524 people), about half went to the Army and most of the remainder to non-Army headquarters. Reservists grew by 23% (6,651 people), most of these full time reservists in headquarters and administrative positions. Civilians grew by 33%, (7,318 people), most of those to headquarters;
  • The ‘tail’ has increased by about 40% (personnel in headquarters and in non-operational jobs);
  • The ‘teeth’ has increased by about 10% (personnel in operational and/or deployable jobs);
  • Consultants, contractors and professional services contracts consume about $2.7 billion annually, and that figure is growing (by at least 5,000 people, many of whom are in Ottawa);
  • The DND/CF employs about 9,000 full-time reservists (class C, class B and full time class A), mainly in headquarters and support functions, at an approximate cost of $1 billion annually; and,
  • The executive leadership, as defined by Treasury Board, grew at a rate higher than that of overall growth of lower ranking personnel within DND/CF: regulars (2%), reserves (75%) and civilians (25%), for a cumulative increase of 19%.

In terms of recommendations, the overall intent of the CFDS can be better achieved – as well as catering to emerging requirements – if the following high-level measures are implemented:

  • Cross-sectional administrative efficiencies in the amount of about $1 billion for either reinvestment or to pay whatever reductions are assigned to DND as part of the overall government intent to pay down the deficit;
  • Reduce overhead by:            
    • reducing the numbers of headquarters and staffs by grouping like functions or accepting risk in the entire elimination of certain organizations;
    • identifying and reallocating approximately 3,500 regular force personnel into areas identified for future growth;
    • demobilizing the number of full-time reservists back to a baseline of approximately 4,500, and converting these back to part-time service;
    • reducing, by up to 30% over several years, the $2.7 billion spent on contractors, consultants and private service providers;
    • reinvesting approximately 3,500 civil servants into higher priority activities.
  • Reinvest the funds elsewhere such as in future capital ­programs outlined in CFDS.
  • Minimize duplication and inefficiencies in support services/systems by establishing a centralized Joint Support Command with a dual civilian/military structure catering to the diarchy of command resp­on­sibilities and financial accounta­bilities;
  • Refocus the corporate military (Vice Chief of the Defence Staff and Chief of Military Personnel) and civilian organizations on strategic management and policy, and parsing out their service delivery activities to other organizations better suited to do so where efficiencies can be realized;
  • Group the strategic and common enablers within the existing services or within Joint Support Command to achieve efficiencies and act as a forcing function for a more joint approach; and,
  • Adopt a leaner and more focused command structure such as the one outlined in the report.

All of these ideas will take time to implement as the organization is big, complicated, and members need to be trained and prepared so they can understand where they will fit in the future.

Very few of the recommendations of the report will be easy, popular or risk-free. All need a transparent, second and third order consequences study, with input and discussion among the various stakeholders, to flesh out the many details that the transformation team could not resolve with the caveats, time and resources available.

Whatever decisions are eventually made will require a unified and coherent defence team pulling in the same direction under firm and dynamic leadership at all levels. Not everybody will agree – indeed, the report’s historical review has revealed that in previous transformation efforts there has always been significant resistance to change; in the past some have looked at themselves as individuals who may lose status, resources or power. Alternately, others have delayed making the hard choices, passing the issues on to their successors.

The key is leadership. Leaders at all levels must have their say, and compromises and common sense alterations must be adopted. However, eventually people have to be told what to do. Whether under current or subsequent command, transformation will occur. The times are changing and the CF must change with them. If it does not, the history of previous transformation efforts shows that front line output will suffer while the overhead continues to grow. Canadians deserve better. The great news is that we have leaders at all levels, military and civilian, regular and reserve, to move us forward and to embrace the demands of the future by making the hard calls today.

LGen Andrew Leslie retired in September after wrapping up his responsibilities as Chief of Transformation.

By Douglas Bland
The central finding in (now retired) LGen Andrew Leslie’s Report on Transformation 2011, his examination of the public administration of national defence policy, is this: “… the headquarters and other overhead [in the Department of National Defence (DND) and the Canadian Forces(CF)] grew while ships were decommissioned, regular and reserve battalions were disbanded and whole aircraft fleets cashed in.”

His observation is not surprising. That the probability is near zero that this report alone will result in significant redistribution of resources from the Ottawa bureaucracy to CF units in the field should not surprise anyone either.

In the early 1960s, the government appointed a Royal Commission on ­Government Organization – the Glassco Commission – to recommend ways to promote “efficiency, economy, and improve service in the dispatch of public business.” Glassco singled out for detailed scrutiny DND for reasons that remain valid today. “The most obvious,” he wrote, “are its size, the range and costs of its activities, and the impact of Western defence alliances.” In a supporting study (the McGill Report), researchers emphasized that while finding economies in defence administration might be important, “it is an objective secondary to the one of having enough to carry out [military] tasks.” McGill advised Glassco that “the ultimate waste and irresponsibility would be to allow the defence forces to become ineffective due to obsolete equipment or incompetent personnel.”

Glassco highlighted what ought to be the central concept governing any defence reforms contemplated today: “[Canada’s defence organization] … should be so designed that it will, without change, operate as efficiently in the emergencies of war as in peacetime.” The idea, as obvious as it may seem, reflected Glassco’s findings of a deep rift and near permanent divide between senior federal public ­servants (the guardians of ‘efficient public administration’), and senior military officers (guardians of ‘operational efficiency’).

The friction between these two groups remains evident today – in Leslie’s report and in the public service’s reaction to it.

The “diarchy”
Other ‘efficiency studies’ followed Glassco. In 1970, defence minister Donald Macdonald created the Management Review Group (MRG), composed of civilians from outside government. His main objective was to eliminate what Macdonald mistakenly saw as a confusing ambiguity of responsibilities in the DND organization directed (he assumed) by two separate leaders, the Chief of the Defence Staff (CDS) and the deputy minister. He was mistaken because such an ambiguity could only exist if the CF and DND were one entity. They were then and remain today, however, two separate entities as defined in the National Defence Act (NDA) each with distinct sets of responsibilities and two separate leaders appointed by order-in-council.

Nevertheless, the MRG, aided by public service ‘advisors,’ vigorously attacked this perceived ambiguity as the central cause of the “five basic inadequacies” they found in the management of the Department. Chief among these public service failures, they noted, were: “a failure to articulate a clear and credible rationale for the Department’s existence; a failure to manage human, materiel, and financial resources efficiently; and an abdication of [administrative] responsibility by those within the Department.”

Incredibly, given the MRG’s severe condemnation of DND officials, the MRG recommended amending the National Defence Act to subordinate the CDS, and thus the entire Canadian Forces, to the deputy minister as the most effective means of improving defence administration.

Rather than risk the possibility of a public outcry that such an amendment to the NDA might have created, the Liberal government simply created a diarchy, the joint rule by two individuals, by placing the CDS and the deputy minister in the same organizational box in National Defence Headquarters (NDHQ).

Where, in law, no ambiguity of responsibility and accountability between the CDS and the deputy minister had previously existed, this sleight-of-hand now created the imagined ambiguity that Macdonald and the MRG had set out to eliminate.

From 1972 until 1996, when the diarchy concept was formally repudiated by the government as a result of the findings of the Commission of Inquiry into the Deployment of the Canadian Forces to Somalia, the distinct responsibilities of the CDS and the deputy minister were routinely ignored by ministers, members of parliament, the public service, and the media. After the collapse of the formal diarchy, the duality reappeared under a new concept. Ministers, officers, and officials argued against organizational reform by declaring: “We are ‘a defence team’ all collegially accountable for the decisions taken within CF/DND.” Collegial management like the 1972 diarchy means, of course, that no one is accountable for anything.

These confusions continue to inhibit serious reforms in defence organization and administration.

In no important matter can the CDS or the deputy minister act on their own initiative; nor can either be held accountable for decisions taken by the “defence team.” Moreover, as collegial management is now the dominant organizing principle at all levels of NDHQ, no subordinate official or military officer has authority to act on ­anything without consulting their public service or military colleagues. The effect is defence by committee.

Because no one has authority, committees (even at the levels of the CDS and the deputy minister) must seek compromises – a sure recipe for policy inertia and bureaucratic expansion rather than contraction. Thus, neither the CDS nor the deputy minister can lead the reform agenda Leslie has set out, though left to their own interests either one could disrupt or negate any or all of the study’s recommendations.

Critical Role of the Minister
The history of defence administration reform in Canada is clear – meaningful reform occurs only when it is driven personally by a resolute, tenacious defence minister free of both military and public service special interests.

Only four ministers since the Second World War have, for better or worse, effectively exhibited these characteristics: Brooke Claxton (1946-54), Paul Hellyer (1963-67), David Collenette (1993-96), and, briefly post-Somalia, Doug Young (1996-97).

These ‘active ministers’ conceived, largely from their own consideration of the defence circumstances of their time, the policies, plans, organizational structures and distribution of defence resources necessary to ensure the effective use of national defence funds. None was particularly popular with senior officials or senior officers. Indeed, other ministers who sought popular support from the establishment inevitably came under the sway of charismatic generals or were ignored by domineering deputy ministers.

Brooke Claxton best captured the atmosphere in which an active minister can expect to work: “I met,” he remarked, “bitter and biased opposition to everything I did.” Yet he, not the establishment, prevailed.

Leslie’s recommendations for the transformation of the national defence establishment will not succeed or perhaps even be considered seriously in the present circumstances at NDHQ. The environment there is hostile to meaningful change.

Early in the joint CF/DND study process, senior DND public servants allegedly withdrew their support from the project. The final report presented to defence minister Peter MacKay sat unattended on the minister’s desk until it was forced into the open by media attention.

Effective change will only come to the present defence establishment if Minister MacKay takes charge of the process. To do this, he should order the CDS and the deputy minister to provide immediately and independently for his approval their comprehensive action plans and early deadlines for bringing Leslie’s recommendations into effect. Specifically, they should provide timetables for the elimination of redundant public service branches and directorates in NDHQ; a redeployment timetable to move CF personnel from headquarters and administrative duties to field duties; and a fundamentally revised defence budget aimed at strengthening today’s CF field units while delivering from freed funds urgently needed defence equipment.

Once the minister has taken control of the transformation process in this manner – despite whatever “bitter and biased opposition” he may meet from the military and public service leaders – he must remain in control of the whole process if he is determined to transform the defence establishment system of “too much management and too little command” into the recommended establishment Leslie presented to him at his request.

Dr. Douglas Bland is the former Chair of the Defence Studies Program at the School of Policy Studies at Queen’s University.

By Brian MacDonald
Over the six years, since the beginning of the Transformation Process in Fiscal Year 2004/5 to the end of Fiscal Year 2009/10, the Defence Budget has increased from $13.2 billion to $19.8 billion, a total Nominal increase of 51%, which reflects the annual Nominal and Real increases shown below, using the civilian inflation rate.

Total Nominal Increase – 51%

Average Annual Nominal increase – 8.6%

Average Annual inflation rate – 2.0%

Average Annual Real Increase – 6.6%

CFDS Promised Real Growth – 0.6%

Thus, the governments of Paul Martin and Stephen Harper can legitimately claim that they have delivered a very substantial increase in the Real Defence Budget during that period.

However, the global financial crisis has led the Harper government to seek to establish significant real decreases in government as part of the program to reduce and eliminate the federal deficit and to begin to reduce the national debt.

The point, then, of the 2011 Transformation Report submitted by LGen Andrew Leslie, is to identity efficiencies which would allow DND to make an appropriate contribution to deficit reduction as well as to transfer resources within the Department to higher order requirements.

Initial Findings – Comparative Growth Rates
The Report’s examination of comparative growth rates during the Transformation Period (FY2004–2010, this was also a period that saw changes driven by the very real needs of the CF commitment to the Afghanistan war – which were separate from the Transformation effects) revealed a series of comparative patterns which suggested that, broadly speaking, Headquarters and administrative functions had benefitted the most from Transformation, whereas the operation levels at the “sharp end” benefitted the least.

The Media, of course, given clear sets of numbers, such as those shown below, leapt quickly aboard the “wasteful spending” bandwagon and proceeded to savage both the Conservative government as well as the Senior Leadership levels within the Canadian Forces and civilian Department of National Defence.           

Navy Growth: +3%
Army Growth: +28%
Air Force Growth: +4%

HQs & Static Jobs Growth: +40%
Operational Units Growth: +10%
Senior Executive Growth: +25%

Civilians Growth: +33%
Reserve Force Growth: +23%
Regular Force Growth: + 11%

One of the drivers of growth in the Army during the period was, of course, the result of fighting a war and the necessity to increase force levels to deal with multiple rotations through a lengthy pre-deployment training period. The equally high growth rates among Headquarters personnel, civilian personnel, and Senior Executives seems unlikely to share the same driver, however.

In any event, the media and the “chattering classes” have had a good time with the numbers made available so far and are likely to continue to do so. This is a pity, given that the other two areas of modifications to the organizational model of the Canadian Forces and the Department, and the financial implications of the Transformation Review recommendations are at least as important as the populist case that the possibility of whether organizational nepotism is at hand.

The “5Fs” Organizational Model
According to the Report, the evolution of the 5Fs represents an attempt to group activities within the department by function so as to be able to determine activities carried out in various parts of the CF and the Department which are effectively identical and which could be amalgamated. The 5Fs represent an iterative model which allows for evolutionary growth.

The 5Fs are comprised of the following: Force Development under the control of the VCDS; Force Generation, under the control of the three Commanders of the Navy, Army and Air Force; Force Employment, under the control of the new Chief of Joint Operations (under which both international and domestic operations would be placed); Force Support, under the new Chief Joint Force Support Command, which would add a domestic support function in addition to its previous role in supporting international operations; and Force Management, which deals with the increasingly complex set of accountability and management relationships between the CF under the CDS and the Department under the DM.

This brings us to the wiring diagrams of the model proposed in the Report. Details of which include a proposed personnel count for regulars, reservists, and civilians. The VCDS, the driver of Force Development, continues of course, to report to the Deputy Minister for Departmental things and well as to the CDS for CF things.

Financial Transformation
The Report’s financial analysis began with the assumption that the Government’s Strategic Reviews, and the Strategic and Operating Review would require the Department to pay a proportional share of deficit reduction, and that on top of those reductions there remained the need for the CFDS to be made more affordable. The Report’s conclusion is that the “Tail” will, therefore, have to be rationalized to protect and invest in the “Teeth.”

Estimates within the Report suggest that in the Short Term (one year) cross sectional administrative efficiencies could generate as much as $1 billion to cover the Department’s proportional share of deficit reduction.

Looking out to the Short to Medium Term (1 to 3 years) the proposed reductions in full time reserve personnel might generate as much as $350 million annually. The implementation of the Joint Support Command could generate savings of 4% annually for total savings over the Short to Medium Term of $300 million.

A further 30% reduction in Professional Services Contracts could account for $900 million more in savings. And a variety of smaller Short to Medium Term administrative savings could generate an additional $200 million, for total Short to Medium Term savings of $1.75 billion.

Beyond the three year horizon, the key challenges that the CF and the Department face are those of how to increase efficiency, reduce overhead, and find the people from within to invest in the future. Here, the requirement is to identify and re-allocate 3,500 Regular Force personnel and 3,500 public servants from overhead and Headquarters, reducing staffs by grouping like with like, and focusing NDHQ/Corporate HQ on corporate policy and strategic management and parse out service delivery to Joint Forces Support Command.

In the same vein as the traditional statement “In battle no plan ever survives first contact with the enemy” we can say that, in the world of Organizational Development, no consultant’s report ever survives first contact with the Senior Management that commissioned it, particularly if sacred cows are getting gored.

The sharp-eyed observer will have noticed that a number of the existing set of Level Ones have not been mentioned. The  Transformation Report suggests merging ADM (Policy) with ADM (Public Affairs). ADMs (Information Management) and (Infrastructure and Environment) would be combined into ADM (Infrastructure Management). But the position of ADM Financial Services/Chief Financial Officer is established as a new standalone. On the CF side, CanadaComand and CEFCOM are combined in the new Joint Operations Command.

The Report itself, whatever the ultimate disposition of its recommendations will be, contains in its Annexes and Appendices a wealth of research material which has the potential to enrich the field of Canadian Strategic Studies enormously and, on that basis alone, deserves high praise.

Colonel (ret) Brian MacDonald is Senior Defence Analyst of the Conference of Defence Associations, and a Director of the Conference of Defence Associations Institute, and of the Atlantic Council of Canada.

These three submissions regarding the Report on Transformation 2011, which was submitted by General Leslie this summer, were first published in OnTrack, the Conference of Defence Associations’ quarterly magazine, fall edition.
© FrontLine Defence 2011