Lipstick on a PIG?
May 15, 2014

In February, the government rolled out its intent to reform defence procurement, one aspect of which is a Defence Procurement Strategy (DPS). It purports to deliver, leverage and streamline, but are these objectives compatible? This effort represents an incremental approach, attempting to build on recent evolution. Does it go far enough, and will it make a difference? It is a complex problem, but we can assess its prospects through four lenses.

The new DPS does not change the accountability of the various Ministers for those projects that have political visibility. This in itself will limit its overall effectiveness, particularly for the major crown projects that seem to be so problematic. An open question is whether the DPS effort to coordinate better will, over time, result in any significant change if accountabilities remain fractured. The move to permit DND to be the sole authority for projects under $ 5 million is a major step in the right direction. Once implemented, this initiative should help streamline those projects and improve cycle time significantly. This is important because these smaller projects constitute a significant percentage of overall defence procurement projects. If successful, it might be a harbinger of future evolution.

Note that the overall defence procurement program encompasses capital as well as other (Operational and Maintenance) investments (also, some major projects are for services not equipment). The DND capital investment ‘program’ involves many parts of DND, including ADM(Mat), the three services, ADM(IM), and ADM(IE) – all of which maintain various levels of project management responsibilities. Sorting this out will be a part of the DPS initiative and must be done before DND can accept the mandate to have its Minister approve capital projects under $5M in value. It may be about a year before a final decision to move that responsibility can be achieved.

The new DPS does not directly address the levels of procurement experience in DND and PWGSC. In any healthy system, it is the people with about 15 years of experience that do the heavy lifting. About 15 years ago, Canada was downsizing the public service, and although new people have been brought in, the overall depth of procurement experience has been less. Since the government defence procurement program (the complete DND capital acquisition program) is about four times the value of what it was 15 years ago, the levels of experience per project are significantly lower. This means there is less ability to understand the nature and the impact of military requirements on specific procurements. The effort to add a more robust challenge function is in part a reflection of this shortfall in experience, but this must be done efficiently. It is not clear that adding more people to the secretariat process will help at all. With time however, the levels of procurement experience should continue to improve, with or without DPS.

The new DPS might help improve decision quality in the short term, but it is unlikely to improve government decision speed. With government mired in the inertia of risk-aversion, the major limiting factor on cycle times for major crown projects is in getting government to make decisions. Each mistake leads to more process and delay for the following project; tolerance for error becomes less and less. Will the DPS help mitigate this negative cycle?

The new Defence Secretariat and its governance are a formalization of what has been happening in the past few years. Better and formal coordination will be helpful, but it is hard to imagine that yet more oversight process would speed things up. Even though the process will most likely become slower, however, it might mean that a given project only has to go through it once – getting it right would be a positive result. Multiple and potentially overlapping levels of due diligence and oversight will take longer and may hopefully result in better (fair and transparent) outcomes – but at what increased cost?

The value propositions with industrial and technological benefits will increase decision-making complexity in what is already a complex business. It has been well over a year since the Emerson and Jenkins reports, yet there are still no details to assess.

More seasoned readers will recall that industrial benefits were rated in the past, but found to add little value. While any country should support domestic industries to some degree, the devil is in the details. It is not comforting that it is taking so long to sort out the details, nor is it clear that this will streamline anything. In fact, more complexity usually has the opposite effect.

It appears at this stage that the well-intentioned effort to leverage defence programs to benefit the Canadian economy as a whole will result in adding even more process.

Like any new initiative, the DPS is presented with the best face possible. There are some positive attributes to incremental change. It is easier to manage, and easier for large numbers of people to grasp quickly. Defence procurement is a complex business, and building upon existing foundations involves less risk. There is nothing inherently wrong in DPS and there are a few positive developments, but it is unlikely to speed up project delivery and may well have the opposite result. The ­lipsticks helps make it look better, but it is still Procurement In Government (PIG) as we know it.

Ken Pennie retired as Chief of the Air Staff in 2005. Prior to that, he served as Director General of Strategic Planning for DND in 1998 before being selected as Deputy Commander in Chief of NORAD in 2001, where he oversaw intense activity during the attacks of 9-11. His PhD is from the London School of Economics, and he is a senior fellow with the Centre for Security and Defence Studies at the Norman Paterson School of International Affairs.
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