NDDN Committee Report

In May 2002, the Standing Committee on National Defence and Veterans Affairs (SCONDVA) tabled its report Facing Our Responsibilities: The State of Readiness of the Canadian Forces.  Therein, the Committee argued that the status quo with regard to the equipping and funding of the Canadian Forces (CF) was no longer acceptable.  At the same time, the Committee, in making its recommendations, was careful to note that realism and common sense must be brought to bear on any acquisition program; such exercises are no place for the self-indulgence of perfect solutions or visionary schemes. The report recommended, inter-alia, the acquisition of strategic lift and new replenishment ships.  These recommendations were a reiteration of similar recommendations made in a report tabled in November 2001, entitled State of Readiness of the Canadian Forces: Response to the Terrorist Threat.  These reports had been undertaken in response to the dramatically changing strategic environment.

Both reports came on the heels of a study done by SCONDVA on defence procurement, tabled in June 2000.   In part, the study was undertaken because of concerns voiced by the then Auditor General Mr. Denis Desautels and because of concerns the Committee itself had heard about the procurement process.  For example, during its “quality of life study” (1998), the Committee heard many complaints about the lack of goods and equipment, the length of time it took to acquire new goods and equipment, the often poor quality of these, and about the generally cumbersome nature of defence procurement.

The Auditor General was concerned that the CF was procuring low-end capability as a result of its design-to-capability strategy.  That is, the Department of National Defence had for too long been purchasing partial capabilities or equipment that did not meet the original military operational requirements. 

In light of this the Committee went on to recommend that the Department of National Defence move to a system of performance based specifications when purchasing equipment; something which it has done.  The conclusion drawn by SCONDVA was that funds need to be determined by what the CF is required to do.   The latter, in turn, is set by official policy.^[1]

At the time the Committee was conducting its study the Department of National Defence was already working on ways to streamline the acquisition process.  Given what we have heard, it would be fair to say that matters have improved.  By having streamlined statements of requirements, by doing away with excessively detailed technical specifications and by moving to a capability based approach, the procurement system has become more efficient; though this is not to say that further improvements cannot be made.

According to Mr. Dan Ross, Assistant Deputy Minister of Materiel, the department is moving to a performance based best-value competitive process where industry is provided broad, high-level, mandatory performance criteria and invited to propose their solutions.  The new system also seeks to ensure that there is single point accountability within performance based procurement, where a single prime contractor is responsible not only for the provision of the equipment but for the long term effective operation of that equipment.  And finally, wherever possible that the option of procuring proven off-the-shelf equipment, as opposed to somewhat riskier and lengthy development technologies, always be an option. ^[2]

Ross also went on to assure the Committee that, while these initiatives are intended to improve the existing procurement system, they are not meant, in any way, to circumvent the rules and processes put in place by Treasury Board and Parliament.  He went on to note that departmental and interdepartmental approvals and oversight processes remain exactly the same.  According to Ross, the basic tenets of fairness, openness, and transparency have not changed and continue to be the cornerstone of the procurement process.

The equipping of our troops for the mission in Afghanistan is proof that with a degree of political will and bureaucratic initiative, the procurement process can indeed work effectively.  As we noted in our recent Report on Afghanistan “…Canadian soldiers in Afghanistan have been provided with some of the best equipment in the world and, perhaps of more importance, the national defence procurement process has been dramatically successful in delivering new, important operational equipment quickly.  Where it traditionally took up to 10 or more years for major equipment to reach the troops in the field, new artillery guns, new mine-resistant armored personnel carriers, uninhabited aerial vehicles and additional armor plating for trucks all arrived in Afghanistan within one year of the request by commanders.” Thus, “…in November 2005, the M777 lightweight howitzer was an urgent operational requirement purchase.  It was deployed in February 2006 – a mere four months later.   DND is now negotiating for six additional M777s, with options on 15 more.  Precision munitions that use a Global Positioning System (GPS) to steer precisely to the target are being purchased for the new howitzers.”

Furthermore, in 2006 the CF deployed a squadron of Leopard tanks, as a consequence of “lessons learned” from the nature of the operational environment in which forces personnel found themselves.   Canada is the only ISAF contingent to have tanks in Afghanistan.  The LAV III armored personnel carriers have proven most effective when confronted with machine gun fire, RPG rocket launchers and in cases of Improvised Explosive Devices (IED) explosions.  To meet the increased IED threat the CF acquired the South African made RG-31 Nyala wheeled vehicle, which has a specifically designed hull to withstand the shock of a mine explosion from underneath.  This most important acquisition only took a little over a year from first request to operations in theatre. The speedy acquisition of medium lift helicopters will only further enhance the combat capability of our troops.

In a very basic sense, there are twelve steps to the procurement process.  These are:

• The Canadian Forces identifies a capability deficiency.
• The CF establishes capability requirements to address the deficiency.
• The Department of National Defence (DND) confirms the capability is justified by defence policy and identifies the capital funds and other resources required to undertake the Major Crown Project (MCP).
• The Minister of National Defence (MND) sponsors the MCP in Cabinet, seeking Approval-in-Principle.
• The MND sponsors the MCP at Treasury Board (TB) seeking Preliminary Project Approval and Expenditure Authority to begin the project.
• When Cabinet Approval-in-Principle and related Expenditure Authority have been granted, DND forms a project team, that includes DND, Public Works and Government Services Canada (PWGSC) and Industry Canada (IC) personnel who cooperatively work with industry to complete the Project Definition Phase which defines the number, location, and type of equipment, how it will be operated, personnel, operating and support costs, contractual Terms and Conditions and Industrial and Regional Benefits (IRBs), etc.
• When MCP Project Definition is Complete, the MND returns to Cabinet for Effective Project Approval for the Implementation Phase.
• The MND then returns to Treasury Board for further expenditure authority to continue with the project and tender a Request for Proposal (RFP) to industry.
• When both Effective Project Approval and Expenditure Authority are granted PWGSC proceeds with formally releasing the RFP and, once bids are received after a specified time frame with bid evaluation.
• Bids are evaluated against pre-set evaluation criteria and done in three separate parts – technical ( by DND, contractual Terms and Conditions (by PWGSC) and Industrial and Regional Benefits (IRBs) by Industry Canada.  A bid roll-up of all parts for each bidder determines the overall winner.
• Approval for Contract Award from Cabinet is sought and, once granted, PWGSC awards a contract on behalf of the government.
• Thereafter, DND takes on overall responsibility for managing project implementation (aided by PWGSC and IC staff) until project completion.