More on defence procurement

I have said, more than once, that the current Canadian defence procurement “system” is, to be charitable, a wasteful inefficient, ineffective mess.

It is not the fault of civil servants, nor of admirals and generals who do, I suspect, try to push procurement decisions in certain, favoured directions, nor, even, of politicians who want to misuse and abuse the defence budget to create jobs! Jobs!! JOBS!!! in their regions. In fact the blame, such as it is, can be laid at the feet of experience and good intentions.

The whole mess started in 1939 when CD Howe persuaded the government (William Lyon Mackenzie King was prime minister) to pass the Department of Munitions and Supply Act, which received royal assent in September, 1939 and came into force in April, 1940. It was a great idea that worked exceptionally well. I would argue that Canada’s three greatest contributions to winning the Second World War were:

  • The British Commonwealth Air Training Plan;
  • The Battle of the Atlantic; and
  • Being a disproportionately large and effective part of the “arsenal (and breadbasket) of democracy.”

Under Howe Canada went from being a minor, mostly agricultural and resource economy to being an industrial powerhouse in five short years. One of the tools he used was the Department of Munitions and Supply which, in some part, should be revived. But, just above, I said that it was the start of the whole mess … and it was: a great idea that was taken too far and in the wrong directions.

Two lessons were learned from the old Department of Munitions and Supply:

  • First ~ centralized procurement and supply can be efficient and effective; and
  • Second ~ some things, like warships and fighter planes and howitzers, are difficult to design and build.

The first point led us towards a “common user,” centralized procurement system which also had the perceived advantage of taking procurement decisions out of the hands of line departments and putting them in the hands of trusted, “arm’s length” agents. This is still a perceived advantage because there is a constant suspicion that, in DND, for example, the 13988210_1239794832718306_1587598347786480617_oNavy admirals and Army and Air Force generals put undue pressure on technical specialists to “tilt the playing field” in favour on one ship design or aircraft, or tank or another. (And there are just enough examples of equipment looking for a role to suggest that such things can happen.) Please note that this sort of interference in contracting is quite different from the wholly politicall appropriate situation in which a cabinet says to DND and to the procurement agency “The CF 2706052471_a9648fabc6_zneeds a new helicopter and it can have as many of the best ones that are available as long as they are built in Quebec.” That may or may not be good policy, but it is a valid, allowable political decision for which the government of the day may be called to account by the voters. Admirals and bureaucrats are not allowed the same latitude in a properly functioning democracy … it is the people’s money that is being spent in the people’s best interests and the people’s representatives must have the final say on how it is spent and only they can be held accountable for it.

There is a role for a “common user” procurement agency to serve the whole of government, including DND and the Canadian Forces and the RCMP, and, and, and … for true “common user” goods and services. Part of Judy Foote’s Department of Public Services and Procurement should continue to exist and to do the good work it does now, in what is really “common user” procurement, but it should not be asked to buy warships or tanks or fighter jets. That should be a job for another “special user” department.

There is, therefore, also a need for a quite separate and distinct “special user” or “Major Crown Project” (that what we called these “big deal,” costly and complex things when I was involved, many years ago) procurement agency dealing with the big, huge, expensive and politically sensitive projects ~ often but not always military ~ that require special business, engineering and negotiating skills to manage well. This should be a major department of government, completely separate from National Defence, the Industry department (now Innovation, Science and Economic Development Canada) and Ms Foote’s Public Services and Procurement department. It should be a powerful ministry with a powerful minister and deputy and, additionally, it, unlike most departments, should have a Board of Directors consisting of the Clerk of the Privy Council and the Deputy Minister of Finance and the Secretary of the Treasury Board and one or two MPs and a very senior executive or two from the private sector.

Finally, after the folks at “major crowns” have decided what DND needs to do its job ~ and that is a political/policy decision, not a military one ~ then there needs to be an “in house,” inside DND, procurement agency funded and empowered to buy consumables and running spares and parts and replacement items on an ongoing, as needed basis to “keep the bins full” and keep fleets of ships, tanks, trucks and aircraft and all the associated bit and pieces running and up to strength.

So: three agencies to replace one:

  • A reduced “common user” procurement agency in Public Services and Procurement Canada;
  • A new, powerful, “special user” or Major Crown Projects” procurement agency; and
  • Within DND, a day-t0-day, special to DND procurement group to keep the bins filled.

I have said before that I do not believe that politics can or even should be removed from defence procurement: it is the people’s money being spent on the people’s defences and the people’s elected representatives need to be held accountable for it. But politicians, we have learned from bitter experiences, are poor at “picking winners” and are always likely to put partisan advantage too high up on their priority lists. Bureaucrats, guided by political and policy positions, are better able to balance ways and means and requirements.

Politicians, in government and in opposition, can and should, however, help to explain both the military requirements and the costs to Canadians and, especially, to a generally innumerate media. It is difficult, even for the initiated, to grasp “life cycle costing” vs “fly away cost” for big, complex systems and it is wrong for politicians to try to fudge the numbers and use them for partisan advantage … politicians, of all parties, should do better.

4 thoughts on “More on defence procurement”

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