Defence procurement problems run deeper than the F-35

by Philippe Lagassé

Ottawa Citizen
December6, 2012

It’s been a rough year for Canadian defence procurement.

This past spring, the Auditor General lambasted the defence department’s lack of due diligence in selecting the F-35 to replace the air force’s aging CF-18 fighters. A few months later, the acquisition of new army trucks was cancelled when it became clear that industry would be unable to meet the military’s specifications within budget.

There are also signs that the widely lauded shipbuilding strategy is facing difficulties, as naval planners struggle to design vessels that do not exceed cost estimates. The 2012 federal budget, meanwhile, announced that the defence budget would grow at a slower pace than previously promised and that billions of procurement dollars would go unspent until 2015.

Defence procurement officials deny that there is anything worrisome going on. They insist that these are minor hiccups. A good deal of new military equipment has been bought in recent years without difficulty, and it is not unusual for complex military acquisitions to encounter setbacks.

Though things are not as disconcerting as they seem, it is time to accept that the recapitalization of the CF has not gone as well hoped, and the factors that have slowed the replacement of several major equipment fleets will continue to derail important acquisitions if left unaddressed.

A first obstacle was the situation inherited by Paul Martin’s Liberals and the current government. The defence department initiated relatively few large-scale procurements between 1994 and 2004. When the new Conservative government announced that all of the CF’s major fleets would be replaced, the news was therefore greeted with relief and enthusiasm.

But there was a problem: a defence bureaucracy that was staffed to manage a relatively small number of projects was now being asked to undertake a wholesale rejuvenation of the military’s equipment.

However well-intentioned, the accelerated recapitalization of the military overburdened a small procurement organization, which likely led to corner-cutting, mistakes, and poorer project management. To address this issue, the government will need to examine how the defence department can be better resourced to effectively manage the recapitalization of the CF.

A lack of resources, however, does not explain the more troubling procurement practices that have been allowed to fester in recent years. If these tendencies are not reined in, we can expect still more military procurement foibles.

Several acquisitions have been undermined or delayed because of inflated requirements and overly optimistic cost-estimates. While it is understandable that the military wants the best equipment possible, the trade-off between cost and capability must be tackled with greater caution, especially at a time when defence expenditures will be increasing at a slower pace.

Attempts to rig contract competitions in favour of one manufacturer or piece of equipment have not only been unethical, but counterproductive, too. A contract for new search and rescue planes, for instance, has been delayed for more than six years owing to the air force’s preference for a particular plane. With each additional postponement, the military’s ability to effectively perform search and rescue in the future has been further compromised.

Certain sole-sourced procurements have created a good deal of controversy as well. Declaring that the F-35 was the only aircraft that can replace the CF-18s has produced the exact opposite of the effect sought by the Joint Strike Fighter’s advocates; it led to a wave criticism which led the government to re-examine Canada’s fighter aircraft options. If the F-35 was clearly the best aircraft, it would have prevailed in a rigorous cost-benefit analysis of various alternatives. Despite Thursday’s confusing news about the F-35, the government’s insistence that all options are being examined suggests that such a comparative assessment may eventually take place.

Finally, the defence department must accept an uncomfortable reality: the plan to recapitalize the military was never properly costed and is no longer affordable under the existing defence budget. Unless there is a significant reinvestment in defence procurements after the deficit is eliminated, this means that the military must reconsider what the CF’s future equipment will look like, both in terms of quantity and quality.

A prudent government will ensure that the defence establishment comes to grip with this fact; otherwise, Canada’s defence procurement woes will continue for years to come.

Philippe Lagassé is an assistant professor at the University of Ottawa. His paper, Recapitalizing the Canadian Forces’ Major Fleets: Assessing Lingering Controversies and Challenges, is being published by the Canadian International Council and Canadian Defence and Foreign Affairs Institute.