Win-Win-Win Scenarios in Defence Procurement
Sep 15, 2012

In a recent Commentary article in FrontLine Defence (issue 4 2012) entitled “Project Management Undone”, author Robert Day makes some good points regarding defence procurement, but he also takes a stand that seeking economic benefit to Canada from defence programs is inappropriate. I could not disagree more on this particular point. It is government policy, and should be, to get the best possible “whole of government” outcomes from defence procurement given the billions of taxpayers’ dollars that are being spent. It is not about individual “aspirations”, it is about pursuing national interests, like every other country does.

To understand this better, let us parse out the elements of the issue. Like many others who have written on this subject, Mr. Day tends to structure his hypothesis as a win-lose relationship. The thought goes that if the military gets the equipment it needs, nothing else can be achieved; alternatively, if other benefits are achieved, it forces the military to accept substandard equipment. Undeniably, it is always possible to dredge up a shocking defence procurement example from the past to prove the point of any skeptic. However, as with most things in life, the best course of action is in the sensible middle ground. It is both possible and rational to create win-win-win scenarios in defence procurement – wins for the military, wins for Canadian industry and wins for the taxpayer.

"Both CADSI and AIAC have repeatedly made recommendations to government as to how [defence procurement] could be improved."

First of all, most would agree that equipment that does not meet the minimum mandatory requirements should not form part of the potential solution set. This of course is predicated on the assumption that the project High Level Mandatories have been fairly and objectively set – not products of some project officers attempting to lock in their favourite solution through a “wired” requirements specification – for all competitive solutions. However, “assumption” may not be the best scenario either… Industry players should be able to “depend” on fair mandatories. That being the case, why would economic benefits to the nation not be as much a part of the “best value” criteria as additional performance features?

Mr. Day states that “many other government departments seek a piece of the Major Crown projects pie, which quietly and needlessly increases costs along the way”. The “senior government administrators” to which he refers are not meddling in the process to selfishly benefit themselves or their departments; they are doing their jobs as defined by government policy. For example, the Treasury Board Procurement Review Policy says that “the government has determined that its procurement activities should also be consistent with and supportive of such national objectives as industrial and regional development, aboriginal economic objectives, the environment and other approved socio-economic objectives”. Mechanisms such as Senior Procurement Advisory Committees (SPAC) have been set up to permit the various departments to work together and do the job the government has asked of them. My concern is not that this occurs, but rather that it does not always seem to achieve fruitful outcomes.

Now let us examine the issue of increased cost. It is quite possible that a “Canada First” solution could cost more. Ships would be an example. But if, after doing the business case analysis, the government concludes that the extra cost and more could be recouped in downstream economic benefits to Canada, is that not a good Return on Investment? On the other hand, Canadian solutions that would cost less are sometimes overlooked, partly as a result of our quintessential, self-deprecating nature that if it is Canadian made, it cannot possibly be as good as foreign competitors.

The article also makes reference to “individual MP’s aspirations” affecting the outcomes. As unlikely a person as I am to leap to the defence of politicians, I think that this assessment, in the context of defence procurement, is inconsistent with reality. In general, MPs want jobs for Canadians and perhaps, even more enthusiastically, jobs in their ridings. That is a good thing and what I would expect from our elected officials. But do I see examples of MPs and Cabinet Ministers inappropriately intervening in defence procurement? No! That may have happened a decade or two ago, but not today. These days, Ministers are so afraid of being accused of political interference that they have gone to great lengths to insulate themselves from the process. NSPS is a good example of that. Indeed, perhaps the pendulum has already swung too far. I would posit that Ministers do need to be involved in defence procurement – not meddling in operational requirements or source selection but asserting themselves into the launch of a program to establish procurement strategies and to set the proper conditions to ensure that national objectives will be achieved. My complaint is that they often fail to do this and leave it totally to the military and public servants to devise what truly needs to be government policy. Ministers are displeased when things go off the rails later in the program but, by that time, the damage has been done.

Mr. Day is absolutely correct that there are many problems with defence procurement. Both CADSI and AIAC have repeatedly made recommendations to government as to how things could be improved, and we hope the government will act on these. Industry believes there is room for more benefit to the Canadian economy if proper industrial strategies are put in place, if processes are improved, if better governance structures are established, if a more effective IRB program is invoked, and if government and industry start working together as Team Canada rather than in an adversarial manner that is so prevalent today.

If we can do all of this, the military will definitely get equipment that meets its operational needs, the government and industry will save money and get better outcomes, and the economic prosperity of Canada will be enhanced. Now that is a win-win-win!

Peter Gartenburg is a Defence Industry Employee (ex-Military).
© FrontLine Defence 2012