By Charles Davies

Buried deep in the recently released Liberal Party election platform is the following commitment:

And to ensure that Canada’s biggest and most complex defence procurement projects are delivered on time and with greater transparency to Parliament, we will move forward with the creation of Defence Procurement Canada.

No details are provided on what this change in government organization would look like, but it is clearly aimed at the perennial political challenge of “fixing defence procurement.” It is also likely an acknowledgement that the 2014 Defence Procurement Strategy – initiated by the Harper government in 2014 and largely also followed by the Trudeau government – is not delivering all the intended results and so further measures are needed.

Despite the lack of detail, it is possible to infer a number of things.  First, this is not an “out of the blue” idea.  Public Services and Procurement Canada has already reorganized its Acquisitions Branch to move all defence procurement into a new Defence and Marine Procurement Branch (which also includes Coast Guard and other larger ship procurments).  This represents a major change in philosophy for the Government of Canada – since 1969 when the Department of Defence Production was disbanded and the pan-government Department of Supply and Services created, defence and non-defence procurement had been stubbornly intermingled and forced into common “cookie cutter” processes and controls despite a number of studies and reports that were critical of the concept.  The creation of the new branch represents a much-belated acknowledgement that this one-size-fits-all business model was unsuccessful.

A transition of the Defence and Marine Procurement Branch into Defence Procurement Canada can thus be seen as a logical step along an already chosen path towards something else.  That could be a Crown Corporation broadly similar to Defence Construction Canada, which has operated for over six decades under more flexible business rules than are typically found in government bureaucracies.  Indeed, the necessary legal authority to create a new Crown Corporation reporting to the Minister of Public Services and Procurement already exists in the Defence Production Act.  Alternatively, it could be similar to the Shared Services Canada model, which is more akin to a traditional government department.

Either way, will the new model solve the problem?

Probably not.  While the Defence Construction Canada experience in particular shows good potential to deliver some improvement in the defence procurement function (the Shared Services Canada model less so), either approach would perpetuate a fundamental flaw in institutionally separating the procurement process from the end-to-end life cycle management of complex defence systems.  International best practices adopted by NATO and most Alliance members, and more widely promulgated by the International Standards Organization, call for the integrated management of life cycle processes for complex systems, from concept development through to ultimate disposal and the end of their lives.  This includes the procurement process.

End-to-end process integration more consistently brings procurement decision-making into the context of full-life management of these systems, and their total cost of ownership, and discourages undue focus on short-term considerations like purchase price and delivery schedules.  It also enables better optimization of business processes and facilitates the objective measurement of business efficiency – something that is virtually impossible under the current model with multiple departments directly engaged in the procurement process.

Were Canada to move to this more integrated model, it would involve a more fundamental change than the one contemplated in the Liberal platform.  It would mean bringing the equipment life cycle management functions of DND’s Materiel Group and the defence procurement function together into a defence materiel organization under unified management.  Australia, the UK and many other nations have done this, typically assigning political responsibility for the function to a single minister within their defence portfolios (in the Canadian context perhaps an Associate Minister of National Defence for Materiel).  The process of implementing such a change is neither simple nor quick – the experience of other nations shows that it can take a decade or more to fully integrate and optimize the business.  However, the long-term benefits are real in the form of clear accountability for optimizing processes, ensuring strong management controls and oversight, and improving consistency in the delivery of these important equipment programs.

That said, the defence materiel organization model is not a panacea for “fixing defence procurement.”  By itself it cannot tame the many difficulties and complexities inherent in the development, acquisition and ownership of technologically advanced systems.  It also won’t eliminate the political complexities that can be involved or alter the fact that large defence procurements will always be expected to also further other important national objectives.  However, in all cases the integrated model can smooth the path by bringing greater consistency to the way challenges are analyzed, options and recommendations developed, and decisions made.  In other words, it can get the basic machinery right and in so doing provide political leaders and program executives with the best possible chance to deliver the kind of results Canadians expect.

In this context, it must still be acknowledged that the Liberal Party platform commitment to create Defence Procurement Canada, if implemented, would be an important and quite far-reaching reform of one of the most perennially troublesome functions of government.  It therefore deserves much greater recognition and discussion in the current election campaign.  That said, as a reform it falls short of achieving the international “gold standard” for managing the complex business of developing, acquiring, using and ultimately disposing of advanced defence or other systems.  We are too far into the election writ period to open a full discussion of this complex subject now, but post-election Parliament (whatever its make-up) and the new government need to be pressed to give deeper consideration to the question of how to truly “fix defence procurement.”

 

Colonel Charles Davies (Retired) is a CDA Institute Research Fellow.  During his prior CAF and Public Service careers he served as senior director responsible for materiel acquisition and support policy, business processes and standards in DND; strategic planning director for DND’s Materiel Group; and Chair of the NATO Life Cycle Management Group, among other appointments.

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