The Devil is in the Details
GEORGE MacDONALD
© 2014 FrontLine Defence (Vol 11, No 2)

As promised, since the 5 February announcement of a new Defence Procurement Strategy, Minister Diane Finley and her Public Works and Government Services Canada staff have been working to communicate the advent of the new strategy and explain some of its key features. The government is clearly focused on providing a substantive response to the Jenkins Report which advocated better leveraging of defence spending to the advantage of Canadian industry. While much of what has been said sounds positive and constructive, the devil is very much in the details. Personnel in PWGSC and Industry Canada especially will need to cope with a number of changes in the policies they implement on a day-to-day basis, and the specifics of those changes are far from being defined. Until they are, it will be difficult for everyone involved in the process to determine how best to respond to the new strategy and to make the best possible use of it.

While expectations are high in industry that the new DPS will improve and streamline the procurement process, it will be important to be patient as government stakeholders work their way to put these new initiatives into practice.

At present, there are many more questions than answers. As expected, most of the questions centre on the concept of a “value proposition” where bidders will have to identify the benefits of their proposal and how key industrial capabilities will be leveraged. Evaluation will favour actions which include investments that strengthen key industrial capabilities, investments that support enhanced productivity in Canadian firms, and broader industrial and technological high-value activities, such as “IP/technology transfer."

Staff working on projects singled out for early implementation of the concept are struggling to define what a value proposition really means. Consistent with the mantra of engaging with industry, they are asking potential bidders to identify what they feel should be included. This appears to be the beginning of an iterative process that could take some time to refine into an approach that makes sense and accomplishes what the Government has in mind. And even then, the process by which criteria will be established objectively and ultimately evaluated will remain a significant challenge. Of course no two projects are the same, and we are led to believe that value props will be developed on a case-by-case basis, presumably applying lessons learned from each experience.

The introduction of new, fundamental changes requires definitive and consistent leadership to implement. And while the new direction appears to be positive, managing expectations will have to be a key component of the communication process. The issues are complex, and adjustments will be needed as experience is gained. Effective implementation of this new governance structure will be needed to work through the new processes and, hopefully, contribute to their improvement. It won’t be easy, and it won’t happen overnight.

One concern throughout this entire discussion is the decreasing emphasis on the operational requirement. While ministers are quick to refer to the need to ensure that the men and women of the Canadian Armed Forces are properly equipped for their mission, the focus of discussion quickly reverts to the importance of a value proposition and (good) jobs for Canadians. The interpretation by many is that the requirement is no longer primordial and that it is clearly losing ground to other considerations to benefit Canadian industry. There is hope that this won’t be the case, especially with a more robust process for validating requirements within DND, but only time will tell. Throughout, it should be kept in mind that the speed bumps and failures experienced with several major defence projects over the past few years have had as much to do with contracting and competition issues as concerns with the requirement.

New Defence Procurement Strategy Report Card

Value Proposition Too early to tell. Needs structure and definition.
Increased Governance Seems OK. Is it really different than what should have been done all along?
DND Requirements Challenge Good. Should strengthen identification of mandatory operational needs, avoiding issues later on in the process.
Defence Acquisition Guide Excellent initiative. The level of detail provided will determine utility.
ITBs: Industrial and Technological Benefits Jury’s out. Need to clarify how much these will be different from / better than IRBs.
Defence Analytics Institute Seems like a good idea. Usefulness will depend on response and credibility.
Increased Contracting Authority for DND Positive, but will increase demand on already-stretched DND personnel.
   

Overall, it will be interesting to monitor how DPS initiatives evolve and how these changes affect the ability to effectively and efficiently procure the equipment and services essential to the military. Will the new DPS contribute to streamlining the process, as in speeding it up? This is certainly desired, even expected, but there is thus far no obvious evidence that this will be the case. If anything, changes to the procurement process may complicate and slow it down even further. More governance, more involved ITBs, and, yes, more engagement with industry will all tend to prolong the process, with the concomitant effect of consuming more time and resources by everyone. Streamlining is not impossible, but will certainly require a collective, cooperative effort by all concerned. Let’s hope, in the end, that the new DPS will be more successful in delivering the capability needed to carry out the mandated military missions important to all Canadians.

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George Macdonald served as Vice Chief of the Defence Staff from 2001-2004.
© FrontLine Magazines 2014

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