Feds should create a new, single entity Defence Procurement Canada

Amongst our close allies, Canada stands alone with its system of “dispersed accountability.” In the United States, the secretary of defence is accountable for military procurement. In the United Kingdom, this responsibility falls to the U.K. 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 December 2019, I was encouraged that the government was finally going to act on this issue. The mandate letters at that time for the ministers of national defence and public service and procurement Canada included a directive to bring forward options for the creation of a new single entity, Defence Procurement Canada. Sadly, my hopes were dashed when the December 2021 mandate letters to these two ministers no longer referenced this matter. I recognize that addressing this governance issue will not solve all the procurement problems, but it is a necessary first step. The benefits of creating a single procurement organization go beyond strengthening accountability. First, the process would also be streamlined. At the present time, the process only moves as fast as the slower of the two organizations permits. The result is that many months can be lost due to briefings and approvals through multiple organizations. Second, savings will emerge from the elimination of overhead and duplication of functions through the merging of the PSPC and DND resources. These savings can help mitigate the impact of the significant staff cutbacks over the past two decades. Third, until one minister is vested with overall accountability for defence procurement, it will be difficult, if not impossible, to introduce system-wide performance measures. With respect to 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." Without performance measures open to public scrutiny, performance suffers. We need indicators that, at a minimum, measure cost and timeliness. If costs are rising, why are they rising? If delays are occurring, where in the process are the bottlenecks? It’s impossible to make improvements, if we don’t have a clear understanding as to where the problems lie. With respect to the costs of large capital programs, two fundamental questions need to be answered. The first is what is the cost of the program? The second is can we afford it? Today both questions are inadequately addressed. The cost of any capital program has three major components-the cost to acquire the good, the cost to maintain the good (e.g., software updates) and the cost to operate the good (e.g., fuel, salaries) throughout its lifetime. As we have seen with both the F-35 and the Canadian Surface Combatant costing debacle, the Government focus is on only reporting on the acquisition costs. Equally troubling is that the available oversight structures such as the Office of the Parliamentary Budget Officer, the Office of the Auditor General and parliamentary committees such as the Standing Committee on National Defence and the Standing Committee on Government Operations and Estimates are complicit by not demanding full life cycle cost information. Instead they, too, focus only on the acquisition costs. The fact is, acquisition costs only represent about 30 per cent of the life-cycle costs. As such, the life-cycle costs for the F-35 will likely be in the order of $40-billion, not $19-billion and those for the CSC will be in excess of a quarter-trillion dollars, not $70-billion. Providing full life-cycle costs will properly address the first question. The issue of affordability can only be answered with a publicly available, fully-costed, cabinet-approved capital plan. The Department of National Defence’s Defence Investment Plan (DIP) is a weak and inadequate attempt to meet this need. It lacks sufficient granularity to be effective. The costing debacles of the F-35 and CSC proves this point. Unlike the DIP, the full life-cycle costs for each project should be displayed over a 30-year period and mapped against the projected available funds year by year. Cabinet approval makes it far more difficult for governments to change priorities for partisan political purposes. The benefits from such a public plan would be far reaching. From a public information standpoint, all Canadians would have a better understanding of what and how their money was being spent. Parliamentary committees could more readily provide rigorous oversight over these billions of dollars of expenditures. Lastly, knowing that this plan is less likely to be modified, potential suppliers will more readily take the necessary steps to position themselves in an optimum position to compete at the appropriate time. Defence procurement is a business. Let’s begin to run 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 DND. He is now president of The Williams Group providing expertise in the areas of policy, programs and procurement. He has authored two books, Reinventing Canadian Defence Procurement: A View From the Inside, and Canada, Democracy, and the F-35. He can be reached at williamsgroup691@gmail.com. The Hill Times