In The Media

Our military procurement system is broken — but not beyond repair

by David Perry

September 24, 2015

The next government of Canada needs to increase the size and effectiveness of its defence spending. As the federal party leaders prepare for the coming Munk Centre debate on foreign policy, Canadians should think about both what the candidates say they want Canada to accomplish in the world — and how they expect to achieve it.

A few meaningful differences between the parties’ approaches to international affairs are already apparent — but they all seem to agree that they want Canada to remain engaged in the world and to keep Canadians safe at home. Delivering on those two basic commitments requires a military that has the tools it needs to do what the next prime minister wants it to do.

Having a military ready to do what the next Government of Canada wants it to do means buying it the right equipment for the job. Hopefully, the leaders will clearly articulate how they would task the military in support of their international policy. They may well do so in ways that would require more or less investment on certain types of forces. But all the leaders have to keep something in mind: No military capability is cheap, and the relative cheapness of alternatives is often oversold.

One of the most important tasks the next government will face will be to quickly decide what kind of combat ships it wants to build for the navy. This will be the most expensive Canadian defence procurement ever and the cost implications are enormous. The parties might differ on exactly what they want our navy to do. They might, for example, want our warships to concentrate more on defending our coasts than contributing to stability abroad. It’s more likely, though, that the next government will want a navy that can do both — and that would require an immense overall investment, even if some options are slightly cheaper than others.

And notwithstanding the political and media obsession with big-ticket items like warships and fighter jets, every nation’s military — no matter what it’s designed to do — needs hundreds of other pieces of equipment to function. Satellites, computer networks, cyber-defences, logistics systems, radar arrays — there is a multitude of items big and small that receive little public attention but are still essential to any modern military, no matter what specific defence policy a government wants to pursue. Individually, they’re not that costly — but they add up.

The next government likely will make changes to the existing defence investment plan to suit its vision of Canada’s defence policy, as it should. But unless radical changes are proposed, any new defence strategy will probably require a broad program of purchases. The problem the next government faces in doing so is twofold: the military needs more money, and it needs procurement system that works — one that can efficiently acquire real-world defence capabilities.

Current capital spending plans are underfunded by about $1-2 billion per year, due to a number of factors that have emerged since 2008. Government spending was reduced to pay off the 2009 stimulus program, and Defence made a major contribution to reducing the deficit. Meanwhile, the strategic landscape has changed significantly. To cite one example, Russia was once a defence partner — now it isn’t. The defence budget’s purchasing power has also declined. Inflation has eaten into budgets and the American dollars we use for many purchases are costing us almost 25 per cent more.

Money is needed, but money won’t be enough. It’s every bit as important that Canada finally develop a procurement system that can spend that money efficiently. Taxpayers want to know that their defence dollars are being spent appropriately; numerous additional measures have been put in place in recent years to ensure that. But the procurement system still can’t spend that money efficiently, so every year billions of dollars in funding go unused.

The next government could address this by prioritizing procurements and increasing the capacity of the procurement system. Right now, DND is trying to move forward on more projects than the federal procurement system can support. Selecting a shorter list of projects based on need and the next government’s priorities would allow a smaller number of the more important purchases to move forward faster. At the same time, the government needs to hire more experts to competently write project documentation and cost it, to engage with industry, manage complex projects and negotiate contracts, and to approve the files.

Only once the system’s capacity improves can the money we assign to procurement be put to good use. Regardless of who wins the election, this has to be a priority.

David Perry is senior analyst and Fellow with the Canadian Global Affairs Institute.




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