The federal government is taking another step towards awarding defence contracts based partially on the value they create for Canadian firms.
By Jacob Serebrin
The new Defence Procurement Strategy was announced last week by Public Works Minister Diane Finley and Defence Minister Rob Nicholson during a speech given at the Economic Club of Canada in Toronto.
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The plan is supposed to promote Canadian businesses by requiring that all Department of National Defence procurements worth over $100 million include a “value proposition” – evidence that a successful bid will create jobs and support Canada’s defence-related industries.
While bids below that level won’t be required to have a value proposition, it will count for around 10 per cent of a bid’s final score.
The exact percentage will vary from procurement-to-procurement and can be waived entirely or replaced with other mandatory requirements if the government decides “specify a targeted, desired industrial outcome.”
“We know that 10 per cent can make a difference and affect the outcome of a bid, especially when it is an element that is weighted and rated,” said Ms. Finley in prepared remarks.
“Yes, we’re all mindful that common sense needs to prevail in each case. So that’s why the percentage is approximate and will be flexible.”
The ability of defence technology and equipment to be exported, as well as used by Canadian Forces, will also be considered as part of the value proposition, with the goal of making Canada’s defence industry more competitive on the world stage.
The plan also calls for the release of an annual Defence Acquisition Guide, which will list large planned procurements so that Canadian companies can prepare in advance.
“The larger point here is that the capability of our men and women in uniform will remain paramount. When there are multiple suppliers who can meet that need, we should not—and frankly, will not—be afraid to ensure that the successful supplier provides real economic benefits for Canada,” said Ms. Finley.
The plan will also centralize decision-making around large defence-related purchases in the new Defence Procurement Secretariat, which will be part of Public Works and Government Services Canada.
The government is hoping the secretariat will encourage coordination between multiple government departments. This includes Foreign Affairs, Trade and Development Canada, and Fisheries and Oceans Canada.
“It ensures a whole-of-government approach,” said Ms. Finley.
The plan also calls for third-party reviews of DND’s requirements for large purchases.
“What we found was that requirements are too complex. Too often they appear to be set to achieve pre-determined outcomes. And industry is not engaged early enough. Because of this, the process is costly and complicated, and we take too long to make decisions,” said Ms. Finley.
The plan will mean more oversight over large purchases because the federal government is also calling for a review of the maximum amount of equipment DND can buy on its own, currently any purchase over $25,000 has to include PWGSC.
The government would like to increase that amount.
