Joint Venture Option Visibility for Managing Major Defence Projects
BY ALASTAIR ALLAN
© 2014 FrontLine Defence (Vol 11, No 4)

A recent FrontLine Defence article advocates the creation of a new organization with a single head and all the skills necessary to successfully execute these projects – the assumption being that performance would improve if everyone were to report to a single leader. I believe, however, that the integration of the different departmental cultures (military, supply, industry) into a new department would become problematic. Organizationally, it would be costly, divisive and disruptive. It would take a long time to become fully operational and would require a review of the reasoning behind the decision to divide the responsibility in the first place, which was to discourage the development of corruptive practices. That reasoning arose out of the controversy related to the Bren gun procurement of the early forties. Impropriety was alleged, and a royal commission appointed. Although it found no evidence of corruption, it recommended that civilian business advice be sought in future. This arrangement has been reiterated in all legislative changes since. Government needs to be permanently on guard against the corrupting influence of power. You see this in many organizations that seek a counterbalance by separating political and administrative powers.

The current structures work well for everyday procurements, but they have problems in achieving positive results on complex, high value, projects employing advanced technology. The performance of such programs, both past and present, leave a lot to be desired. For instance, the government has faced serious problems with shipboard helicopters, submarines, and F-35 aircraft, to mention a few.

A classic example of past complications was the DDH Destroyer program, where the original approval was for four ships to be built to a design that had just been completed. Procurement planning went ahead on based on the original design for four steam-powered vessels, each carrying one helicopter. However, during the procurement process, it was realized that the ship’s military configuration had been changed and that a totally new class of ship was being designed – the new design was gas turbine powered, carrying two helicopters each. This changed everything: cost, delivery, specifications and advertised outcomes. Once this got sorted out, the late Vice Admiral (then Lieutenant Commander) John Allan, and Larry Sellick from the civilian supply department, were appointed as Project Manager and Chief Government Contract Negotiator as partners charged with attaining a successful outcome. This was ultimately realized and all involved deserve credit for a job well done.

Many well-known programs were weak in the planning, cost estimating and execution phases, such as the Bonaventure refit, the CF-105 Arrow, and the Hydrofoil. To make matters worse, the government’s budgeting and planning systems tend to encourage low-ball estimates for the cost and time factors because honest and realistic estimates increase the risk of a turn down and a loss of the program.

For complex projects (like the new fighter replacement program), the need is to find a way to unite the management and functional skills existing in the various government departments, to coordinate them so the various options are professionally identified, priced, analyzed – and so tradeoffs can be made to accomplish program objectives. The way in which government departments are currently organized makes this difficult. Generally, departments are physically separated, and the expertise in each department is generally organized in silos, which effectively hampers communication, cooperation, and the sharing of professional expertise for solving problems.

Many believe the high profile projects involving advanced technology that requires unique knowledge, genuine communication and close teamwork would be best served by tailor-made, industrial type, Joint Ventures developed specifically to manage each project. This would take the form of a short term partnership between Public Works, DND and other departments, to jointly undertake the management of major projects for the mutual ­benefit of the Canadian Government.
 
In the Joint Venture, each participating party would share responsibility, as legislatively stipulated, in order for the planning and execution of the program to meet its specific objectives. Accordingly, each party to the agreement would contribute assets and share the risks (both positive and negative). The best of the best people in each department should be selected to lead and staff the project. They should have and understanding of the technology inherent in the procurement, as well as the industrial practices and accounting processes employed in that particular industry. In addition, they should be incentivized with promotional opportunities and monitory rewards for bringing the program home on budget and on time, with performance as promised. The Joint Venture should be located separately from home departments to improve cooperation, coordination, face to face communication, and a sharing of expertise among team members. In addition, the Joint Venture should report to an Oversight Board with senior members (at the ADM level with no substitutes) from each participating department plus the Treasury Board. This board would settle disputes should they arise, monitor progress, and report upward so all parties, including Ministers and Deputies, have the same information at the same time on a timely basis.

Finally, the authority and responsibility of the Joint Venture should be spelled out in a formal agreement and singed off by each deputy minister.  Let us keep in mind about the need for these projects to be planned and estimated in detail and executed following a strict plan, in order to maximize the chances of success. Additionally, to increase the teams’ sense of commitment to this end, it is important they be involved early in the planning process and have the authority to task home departments or contract out whatever work needs to be done.  Government approval to proceed should be based on a detailed project plan, complete with military requirements, operations analyses, detailed cost estimates (acquisition and life cycle), a procurement plan and schedule, and an enumeration of the risks inherent in the program, coupled with a strategy for managing them.

It should be noted that many of these principles were applied to the CF-18 project and although there were complications, it came home within budget and on-time, and with a superbly performing aircraft. Teamwork works!

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Alastair Allan retired from his position as Assistant Deputy Minister, Science and Engineering Procurement, at Supply and Services (now PWGSC).
© FrontLine Magazines 2014

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