Four steps for fixing Canada’s trouble-prone procurement system

by David Perry

iPolitics
February 8, 2016

Two years after it started, the federal government’s latest attempt to fix its ramshackle procurement system is officially stuck.

Two years ago last week, the minister for Public Works and Government Services Canada (now Public Services and Procurement Canada) announced with great fanfare the Defence Procurement Strategy, the Conservative government’s plan to improve defence procurement. Its objectives were threefold: to better leverage defence procurement into domestic economic benefits; to deliver the right defence equipment to the military in a timely manner; and to streamline the procurement process across government.

Two years later, half of these objectives have been met — sort of. Progress on the other half is still pending.

The leveraging objectives were designed to foster Canadian domestic economic competitiveness through technology transfers and investments in innovation with the goal of enhancing the export potential of Canadian firms. This component of the strategy has made the most progress. Canada’s industrial offset regime has been tweaked to make a ‘Value Proposition’ an evaluated component of a defence procurement bid (instead of a simple pass-fail test) under a revised Industrial Technological Benefit program.

But this shift was supposed to be centered around the concept of ‘Key Industrial Capabilities’, whereby certain portions of the defence industry — deemed strategically critical or economically competitive — would become the strategy’s focus. This aspect hasn’t yet materialized, so the idea of using the Value Proposition to strategically enhance specific industrial sectors remains just that — an idea.

This past summer saw an Independent Review Panel on Defence Acquisitions start work. The panel provides advice to the minister of National Defence and DND’s deputy minister about the operational requirements used as the basis for procurements.

Several big projects — like the one to buy a new search and rescue plane — ran into big trouble in recent years once their operational requirements were scrutinized outside of DND. The panel is supposed to help ensure these requirements are appropriately articulated, facilitating approvals by government. Although it’s too soon to say whether the panel is achieving its aim, at least it’s up and running.

The same can’t be said, unfortunately, of efforts to improve the timeliness of delivery or streamline the procurement process. DND only just decided to move forward with a plan to clean up its own byzantine system, which is a good first step. That needs to be matched by a comparable effort across government. Despite two years to work on it, nothing has been delivered yet — which is ridiculous.

As a result, in 2015, the federal government’s record on procurement worsened. As a recent report by the School of Public Policy at the University of Calgary noted, every single one of Ottawa’s biggest projects, and the majority of the others, were delayed last year.

The Liberal government, to its credit, promised to tackle defence procurement in its election platform and has created an ad hoc committee of cabinet to address the issue. Given the foot-dragging so far, they face a huge battle as they try to improve the situation.

With that in mind, there are four things the government ought to do to move forward:

First, require that a plan to streamline the defence procurement process across government be produced and ready to implement by no later than the start of the next fiscal year: April 1, 2016.

Second, as part of its Defence Policy Review, the government needs to identify the projects it considered to be most important. At present, the full list of military projects exceeds by several tens of billions of dollars the available funding. Similarly, on an annual basis, DND consistently has devoted time and effort to far more projects than they can realistically move through the system. As a result, scarce resources are being spread too thin and everything is slowed down as a result. Focusing the effort would let fewer, more important files move faster.

Third, efforts to bolster both the size and skill sets of the procurement workforce need to be invigorated. Both the Materiel Group at defence and the defence and shipbuilding secretariats at Public Services and Procurement need more people. We cannot reasonably expect swift progress on $40 billion worth of projects when the team managing it is half the size of an NHL roster.

Fourth, as part of wider efforts to measure performance and track results across government, Ottawa should institute a system for tracking progress on defence procurement that focuses on the actual delivery of military equipment. Currently, there are ample measures in place to ensure that the vast maze of relevant policies are complied with, and that procurements are fair and transparent. These things are important, but the focus and effort needs to reorient towards actually getting equipment into the hands of our men and women in uniform.

David Perry is the senior analyst at the Canadian Global Affairs Institute.