Managing defence procurement will always be a challenge, but it can be done better.
Successive governments come to power in Canada criticizing their predecessors’ mismanagement of defence procurement and promising to do the job more effectively. None has succeeded noticeably better than the others, and the reasons in every case are remarkably similar.
Some governments see the solutions purely in terms of funding and conclude that allocating more money to defence will solve the problem. There is some merit to this. As the Parliamentary Budget Officer has described, Canada does have a serious imbalance between its appetite to have military capabilities and its willingness to fund them, and this does place considerable strain on the acquisition machinery. However, governments that have increased defence spending have stumbled just as badly in the execution of complex procurements as those that have spent less, and, as defence analyst David Perry has shown, recent governments have been more or less equally inefficient in turning “bucks” into “bang.”
A second consistent problem is the inherent complexity of many defence procurements. Beyond the physical complexity of advanced systems and the challenges of integrating the diverse technologies involved, the process can also be politically complex. There is always controversy around defence spending, and governments, quite understandably, prefer to avoid controversial decisions where they can. Where they can’t, they need time to work out compromises among the many competing political imperatives and build support for the direction they choose. These delays can extend to months or years, inexorably driving up program costs and throwing schedules into disarray.
These problems are faced by all Western governments, but in Canada we have uniquely complicated matters further with the machinery we have established for executing major defence procurements. The deep flaws in it are described at some length elsewhere and need not be repeated here, except to say that better machinery won’t necessarily eliminate poor political management of issues or bad decision-making by governments, but it would help ministers up their games by providing them with more consistent decision support and establishing greater efficiency, rigour and discipline around the acquisition processes.
There are several ways the government could improve Canada’s machinery. The simplest measures are the easiest to implement but have the least likelihood of delivering sustained and substantive improvement. The Conservative government’s 2014 Defence Procurement Strategy reflected this minimalist approach. More comprehensive reform, if done well, has much greater potential to deliver real improvement over the long term, but it is harder to do. We’ll consider three points along the spectrum of possible reform.
At the low end, selective enhancements to the defence procurement governance model introduced by the Conservative government could strengthen the management of acquisitions. These would need to include, at a minimum:
- Concrete measures on the part of the four main departments involved (Public Services and Procurement [formerly Public Works and Government Services]; National Defence; Innovation, Science and Economic Development [formerly Industry Canada]; and Treasury Board Secretariat) to ensure effective business integration between the procurement function and the full life-cycle management of complex defence systems. The 2014 Defence Procurement Strategy ignored international best practices and increased the risk of poor outcomes by treating acquisition as a distinct function led by one minister, and in-service support as a separate function led by another. This flaw must be corrected by, at a minimum, providing effective integrating direction across all departments involved, backed up by clearly defined performance expectations for ministers and senior officials. This change will be somewhat difficult to implement and sustain in the Canadian government’s complex comanagement framework for defence procurement, but it is not impossible.
- Establishment of integrated performance management of defence procurement across all four main departments involved. This system needs to include clear horizontal performance standards and measures; integrated data collection, analysis and reporting of results; active review of those results by the leadership; and collective follow-up, monitoring and reporting. Creating an effective performance management regime would take much effort, but without it the current collaborative business model will never consistently deliver improved results.
A more ambitious option would be to replace the current collaborative approach with one that adds an integrating structure. This would require the prime minister to move defence procurement from a primarily “push” mode, where National Defence has to build a consensus across departments for each project, to a “pull” mode, where the four departments are given top-down direction and timelines to work to. This approach would require implementation of several specific measures:
- Creation of a multiyear plan setting out an intended schedule for government decisions on defence procurements, based on National Defence’s current major assets and their remaining operating lives as well as plans for changes to Canadian Armed Forces capabilities.
- Establishment of an office in a central agency such as the Privy Council Office or Treasury Board Secretariat responsible for orchestrating the development of the multiyear decisions plan, getting it approved by cabinet, and directing and coordinating implementation by the departments involved. Again, this measure would need to be backed up by clearly defined performance expectations for ministers and senior officials.
- Establishment of the integrated horizontal performance management framework for defence procurement described above for the first option.
A third, much more radical option is to establish in the structure of the government of Canada a single entity responsible for the acquisition and life-cycle management of defence materiel. This model has been widely adopted in Western nations, including the United Kingdom and Australia. It establishes a single point of accountability and responsibility for getting the basic machinery right and, contrary to what some might fear, provides an effective means for consistently balancing the many competing public policy priorities governments have to consider in deciding on major defence procurements. No nation has a perfect model, but the evidence suggests that the single-point option generally performs better than the current Canadian collaboration approach.
In order to implement a similar solution here, the government and Parliament would need to study options appropriate to the Canadian context. These could include integrating the entity into an existing department; establishing a separately managed entity within the National Defence portfolio but reporting to a separate minister and possibly deputy minister; or creating a completely separate entity.
The second model is more common because it both supports effective management of materiel acquisition and support and enables good integration of the force generation processes that bring together the elements of defence capabilities: personnel, equipment, infrastructure, and military knowledge and doctrine. It also maintains the essential alignment between support and operations.
Whether the government elects to stay the current course, consider any of the above approaches or do something else entirely, it remains a certainty that there is no easy way to “fix defence procurement.” It is a complex activity that requires sound machinery to support good decision-making, and even with that, not everything will always run smoothly. Technology challenges, system complexity, cost challenges, competing national policy objectives, political dynamics and many other factors inevitably affect the acquisition of advanced defence systems.
Canada’s machinery for managing defence procurement is particularly badly designed for the purpose, which is one reason every government has struggled to make good and timely decisions. The previous Conservative government, for the first time in over four decades, opened the door to reform with its Defence Procurement Strategy, but it showed little ambition to change the basic machinery. The new Liberal government has committed to doing a better job, but unless it is prepared to fix the flawed fundamentals, this government and future ones will continue to struggle to consistently manage defence procurement well.
This article is part of the Equipping the Military special feature.