Run defence procurement as a business, under a single minister

Article content

The recent commitment by the Prime Minister and the Minister of National Defence to spend two per cent of gross domestic product on defence by 2032 has been met with much fanfare and skepticism. I would like to address two key issues raised.

First, in his commentary, John Ivison states: “People with knowledge of the process say Canada should look at the top three options, pick one, sole-source it, and tell the Navy there is no time for customization. That way, we could see the first new sub in the water by the end of the decade.” This is a great idea if your objective is to get the government into trouble and encourage legal action. Fact is, such an action is illegal.

Article content

Recommending this action is irresponsible. Defence procurement is governed by the Canadian Free Trade Agreement. Under this legislation, all procurements must be competed unless a “national security” exception is invoked or one of the specific circumstances cited applies. With respect to submarines, there is no legally valid reason to bypass competition.

Furthermore, before spending in the order of $75 billion on the life-cycle costs of new submarines, Canadians are entitled to be confident that the acquisition process was open, fair and transparent, not based on someone’s personal opinion or agenda.

Nor is sole-sourcing the time-saving panacea generally assumed. When sole-sourcing, the chosen supplier has not agreed to a competition’s many terms and conditions. By negotiating these after publicly announcing a winner, the government forfeits all leverage and reaching agreement with the supplier can be very time-consuming.

It notably took less than three months to sign the contract for the CH-149 Cormorants after it was selected via a competition and about four months with respect to the CH-148 Cyclones. But it took over three years to sign a contract for Canada’s CH-147 Chinooks and over one year for Canada’s C-130 Hercules, both selected without a competitive request for proposal.

Article content

Second, when interviewed by CBC News, Defence Minister Bill Blair suggested that “some allies have it easier than Canada does when it comes to hitting that target.” He is right. What he neglected to say was that the impediments in Canada’s defence procurement process are self-imposed.

Among our close allies, Canada stands alone with its system of “dispersed accountability.” In the U.S., the Secretary of Defense is accountable for military procurement. In the United Kingdom, this responsibility falls to the Secretary of State for Defence. In Australia, defence procurement is under the authority of its Defence Materiel Organization, accountable to the Minister of Defence.

In Canada, the roles and responsibilities for defence procurement are shared between the Minister of National Defence and the Minister of Public Services and Procurement Canada. Unless and until one minister is placed in charge of defence procurement, it will never be as efficient and effective as it could be.

Addressing this governance issue will not solve all procurement problems, but it is a necessary first step. The benefits of creating a single procurement organization go beyond strengthening accountability. The process would also be streamlined. Presently, the process only moves as fast as the slower of the two organizations permits, and many months can be lost due to briefings and approvals through multiple organizations.

Article content

Also, savings will emerge from the elimination of overhead and duplication of functions through merging PSPC and DND resources. These savings can help mitigate the impact of the significant staff cutbacks over the past decades.

Lastly, until one minister is vested with overall accountability for defence procurement, it will be difficult, if not impossible, to introduce system-wide performance measures. Famed management guru Peter Drucker once stated: “Any government, whether that of a company or of a nation, degenerates into mediocrity and malperformance if it is not clearly accountable for results.”

We need indicators that, at a minimum, measure cost and timeliness. If costs rise, why are they rising? If delays occur, where in the process are the bottlenecks? It’s impossible to make improvements if we don’t clearly understand where problems lie.

Defence procurement is a business. Let’s begin running it as such with one minister accountable for results, with full disclosure of life-cycle costs, with appropriate plans and reports that measure performance and with rigorous and timely oversight.

Alan Williams is a former assistant deputy minister of materiel at the Department of National Defence.

Article content