Adding new procedures to defence purchases could exacerbate delays, deputy warns

Senior officials at National Defence were concerned last fall that the Harper government’s plan to rescue its problem-plagued military procurement system would make a bad situation even worse.

A briefing prepared for Defence Minister Rob Nicholson shows there was worry within the department that a proposal to leverage big-ticket purchases in order to benefit Canadian industry would add a smothering layer of bureaucracy to a system already mired in red tape.

The department understood the wider concept of using defence dollars to contribute to Canada’s economic prosperity and growth, but feared things could slow down even more, depending on how rigidly the system was constructed.

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“This is a challenging endeavour (prospect), as our procurement processes are already cumbersome, and adding additional, new procedures, runs the risk of exacerbating this situation,” wrote the department’s top civilian, deputy minister Richard Fadden.

“The proposed approach to leveraging could well increase the complexity of the procurement process, posing potential risks to cost and schedule for the defence equipment program.”

The six page briefing, dated Oct. 10, 2013, was written in advance of the release of the plan last winter and obtained by The Canadian Press under the Access to Information Act.

In notes scrawled on the bottom of the cover page, Fadden further underlined his concerns to Nicholson, emphasizing the importance of focusing on the real goal of military procurement, despite the desire to fix a persistent political headache.

“Aside from everything else mentioned in the attached, I think we should remind them of the core objective of defence procurement, i.e. getting the equipment to the troops in a reasonable time frame,” Fadden wrote.

The new strategy, launched with much fanfare in February, was largely seen as the final stage of stripping National Defence of much of its power to make its own purchasing decisions.

It added a number of safeguards, including independent third-party assessments of military needs, a direct result of a series of high-profile embarrassments, including the auditor general’s 2012 report on the F-35, which accused Defence and Public Works of lowballing the cost and not doing their homework.

There have been other fiascos, including accusations the air force was biased in favour of one particular search-and-rescue plane.

Alyson Queen, a spokeswoman for Public Works Minister Diane Finley, said the intent of the overhaul was always to make the system more efficient, and that’s what it will do.

“The defence procurement strategy should not, and will not, slow down the process,” Queen said.

“Rather, as Minister Finley has stated, when fully implemented, the level of co-operation between multiple department and early industry engagement will actually improve the process.”

The briefing describes the new strategy as “a significant departure” from the old system of regional benefits, where defence contractors were required to return 100 per cent of the value of the contract through either investment or purchases.

“It is a 100 per cent legitimate concern that the new strategy will add another layer of bureaucracy in a system they’ve been trying to make lean and mean for years,” military analyst Dave Perry said of the briefing.

In coming up with the plan, the government examined four options: establishing a stand-alone agency to buy military equipment; a beefed up version of the old inter-departmental system; a single secretariat at Public Works to oversee purchases; or multiple secretariats for every project.

In the end, cabinet opted for a single secretariat.

Much has been made about the so-called “premium” for buying in Canada. The notion that some military equipment can be sourced more cheaply overseas was dismissed by Finley when she announced the strategy.

“There is no premium to choosing a ‘made in Canada’ solution,” she said at the time.

Yet, in its analysis of the strategy, National Defence said the department’s “limited defence resources” must be used to “greatest effect” and that “any premium, schedule delay or increased technical risk associated with ‘economic leverage’ should be clearly identified and where possible, with the capability or cost trade-offs highlighted for decision makers.”

One of the pillars of the strategy is to publish a defence acquisition list annually and engage industry early. National Defence says that’s a good idea as long as contractors do not misinterpret it as a commitment to buy.

Nicholson, who plans to release the first list on June 16, made it clear in a recent speech to industry that the 200 items on the list are not carved in stone.


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