The defence procurement process in Canada has been the subject of extensive criticism, with many experts, academics, and stakeholders lamenting the failure of the government to get procurement ‘right.’ The culprits of such consistent shortcomings are varied, but the failures are overwhelmingly attributed to the exceedingly politicised process of procurement, which causes delays and inefficiencies in the process of asset acquisition.[1] Consequently, prescriptions aimed at ‘fixing’ the procurement process have often, in one form or another, focused on dampening the involvement of politics in the process so as to increase the efficiency and effectiveness of procurement.[2]

I will be analyzing the impact of political interference on the “success” or “failure” of defence procurement in Canada and to assess whether ‘removing’ politics from the process will 1) significantly improve the efficiency of the procurement process and 2) whether the potential benefits of an apolitical process outweighs the cost of divorcing politics from procurement. In so doing, this paper presents the argument that although political interference plays a significant role in causing delays and complications in the procurement process, these inefficiencies are signs of a democratic government that must remain fiscally accountable to its citizens. I will begin by reviewing some notable procurement failures in order to demonstrate the impact of politics on defence procurement in Canada. Next I will discuss what an ‘apolitical’ procurement process could look like.

The difficulties of defence procurement are also augmented by Canada’s unique geopolitical position. Thus, ‘removing’ or ‘dampening’ the role of politics is unlikely to remove significant obstacles to procurement and, instead of helping Canada get procurement ‘right’, it would be damaging to the process of government accountability in the long run. For the purpose of this paper, getting procurement ‘right’ follows Alan Williams’ definition of “getting the right goods at the right time for the right price with the right support, applying the right rules, all with the right people.”[3]

Procurement Projects Past

The history of defence procurement in Canada seems to be riddled with one instance of failure after another. A political impetus for a “National Policy” created a receptive milieu for the national production of the untested Ross Rifle.[4] Following the Ross Rifle’s poor performance in the field in 1915, the decision to ultimately replace the weapons with the Lee-Enfield rifle was a political decision which was only prompted following the release of the story of the Ross Rifle’s failures to the media.[5] In the case of the ILTES Jeep, the competitive bidding process for its replacement was disrupted by a political inclination to assign the contract to a local company, Western Star Trucks, as the promise of job creation in Canada proved too politically enticing.[6] Thus, the ultimate replacement of the ILTIS Jeep by the Mercedes-Benz Gelandwagon instead took significantly longer than it could have in a less politically charged procurement machinery.[7]

Another complex procurement project is the replacement of the Sea King helicopters.[8] A $4.4 billion deal for the replacement of the Sea King helicopters by EH101 at a time of budgetary restraint opened the Conservative government up to attack by the opposition.[9] Not surprisingly, the cancellation of the EH101 contract was included in the Liberal platform during the 1993 elections, and true to their word, the newly formed Liberal government withdrew from the contract with EH Industries.[10] The replacement of the Sea Kings with the Cyclones instead of the EH101 was a consequence of direct and consistent political interference on the part of the Chretien Liberal government in their attempt to avoid the political embarrassment of restarting the process of buying the EH101, whose acquisition they had criticized and axed in the first place.[11]

A Different Path to Procurement

There is very little doubt that the tendency to play politics with defence procurement has been a source of a lot of complications and delays in procuring much-needed assets for the Canadian military. The most vulnerable points in the process of procurement are those where decisions are made and responsibility is divided among numerous actors. Some of the main recommendations for ‘fixing’ the procurement process have focused on possible alternative organizational arrangements aimed at ‘removing’ politics from the equation. At present, the machinery of government tasked with defence procurement is made up of a complex set of competing political, budgetary, and capabilities focused interests, each vulnerable to interference and delays. The Department of National Defence (DND) is tasked with “determin[ing] defence equipment requirements”[12] and shares the responsibility of “acquisition” and “quality assurance of materials and services” with Public Services and Procurement Canada (PSPC).[13] Innovation, Science and Economic Development Canada (ISED) is responsible for the Industrial and Technological Benefits Policy (ITB)[14] which “requires companies awarded contracts to do business in Canada equal to the value of their contracts,” in an effort to maximize economic return to Canadians, for expensive projects such as defence procurement.[15] The Treasury Board of Canada Secretariat develops overall procurement policies, approves funding and, importantly, provides spending oversight of the projects that are undertaken.[16] The complex, multi-departmental procurement process is known to be prone to “cumbersome decision-making” which results in delays and incorrect cost estimations which are ultimately worsened by the absence of clear accountability due to the multi-level divisions of responsibility.

Given such criticism, and as discussed earlier, taking politics out of the process has been a persistent alternative posited by experts as a way of, if not fixing the procurement process, then improving its overall efficiency. Doing so would involve alternate arrangements for how the decision-making machinery is organized. A comprehensive analysis of all possible alternatives is well beyond the scope of this article.

Three recommendations for an ‘apolitical’ defence procurement process

The first recommendation focuses on the inception of a separate, independent agency to increase accountability and efficiency in procurement.[17] It minimizes the points through which actors, such as defence companies vying for specific contracts, can exert influence.[18] Collins emphasises that cooperation between the different departments is also impacted by “personality differences between senior officials” which can make intergovernmental cooperation “challenging and time-consuming.”[19] Thus, the recommendation involves the creation of “Defence Procurement Canada” whose responsibility would “[combine] the procurement resources from National Defence and the contracting resources from Public Works [PSPC].”[20] Overall, the impetus for one, centralized decision-making focal point aims to create transparency, efficiency, and to dampen, by way of structural reorganization, the impact of politics on the process.

An independent agency, as suggested by Williams, is similar to an undertaking by the Australian government in the early 2000s in order to alleviate many of the same issues faced by procurement in Canada.[21] A 2003 report on the procurement process in Australia recommended that procurement be placed under the purview of an independent agency, whereby the Australian government established the Defence Material Organization (DMO).[22]Originally meant to ameliorate the problems of the procurement process, the DMO was eventually “disbanded” and subsumed under the “Capability Acquisition and Sustainment Group” within the Department of Defence.[23] Assessing the potential success of an independent agency to solve many of Canada’s procurement processes is forward-looking and thus difficult to predict. However, there is a case to be made that the Australian experience with the DMO detracts from the arguments for the inception of an independent agency in Canada.

Other recommendations for how an ‘apolitical’ procurement process could be achieved focus on the creation of an oversight committee[24] or putting procurement under the purview of a Crown corporation.[25] The case for the creation of an oversight committee emphasises the importance of a “vigilant parliament” whose committee is tasked with “the duty to investigate defence acquisitions at every stage of the process from conceptualization, development, contracting, and life-cycle management to final disposal.”[26] Party discipline and partisanship in “committee deliberations and recommendations” need to be minimized in order for a procurement oversight committee to succeed and to hold the various actors in the process accountable.[27]

Defined as being “government-owned corporations” that conduct business “at arm’s length from the government”[28], a Crown corporation’s control over defence procurement could be used for defence procurement as it has been part of the procurement process in Canada as far back as 1946 with the establishment of the Canadian Commercial Corporation[29], as well as the presently operating Defence Construction Canada.[30] Even under this recommendation problems of interference are not substantially resolved as evidenced by the weak fraud prevention capabilities associated with Defence Construction Canada where management of “bid-rigging” has reportedly been weak.[31]

Many of the politicised procurement decisions that led to some of the most known failures in capabilities acquisition in Canada appeared under different procurement processes. The procurement of the Ross Rifle, for example, took place at a time when procurement decisions were being made under the directive of the Minister of Militia and Defence.[32] Other attempts to improve the procurement process include establishing the Shell Committee (subject to a corruption scandal and disbanded) and  the War Purchasing Commission (also disbanded).

Where Do We Go from Here?

The history of procurement in Canada has not been static. It has involved centralization, procurement by Crown corporations, committee and board oversight, and procurement by the armed forces themselves.[33]. There is very little convincing evidence to suggest that changing the structure of procurement to curb political interference is likely to improve the process. With the exponential rate at which technological capabilities are being developed, global integration and increasingly complex value chains, impacted by politics themselves, it has become increasingly difficult to predict the capability needs of 10 to 20 years in the future.[34] Thus, restructuring the procurement system with the hope that removing politics from the process will improve efficiency could do more harm than good. Streamlining the process under a central agency has ramifications for democratic accountability.[35] The several points of decision-making allow for a more thorough analysis of procurement which are reviewed through the mandate of different departments and are thus responsive to the various changing priorities of the government at large. [36]  Furthermore, reorganizing the machinery of procurement itself is extremely costly.[37] A system overhaul will include reorganization of the numerous departments currently involved in the system, legislative re-writes and re-assigning thousands of employees who will require further knowledge-based and legislative training to be able to navigate the new set of regulations.[38]

Another impediment to success is that regardless of the process itself, large procurement projects are always likely to be politicised by virtue of the size of the cost of acquisition.[39] There is a tendency for confirmation bias in how procurement is perceived in Canada where successful cases of acquisition go unreported and are overshadowed by high-stake projects that go wrong.[40] The situation is further aggravated by Canada’s unique geopolitical position which then creates unique Canadian problems that cannot be overcome by simply replicating procurement strategies of allies or those of the past. Pending a more nuanced approach to improving procurement based on the actual short-comings of the process, which require thorough investigation, it is important for projects to undergo the process of accountability through horizontal governance, in order to maintain democratic and financial accountability.

 

Delaram Arabi has an M.A in Political Science from the University of Toronto with a focus on civil war and post-conflict state-building. She is currently an M.A candidate in the stream of International Economic Policy at NPSIA with a focus on economic sanctions.

 

 

Banner image of the National Defence Headquarters of Canada: Major-General George R Pearkes Building, by mbpowell, courtesy of Wikipedia.

 

 

Works Cited 

[1] Jeffrey Collins, “Defence Procurement Canada: Opportunities and Constraints,” Canadian Global Affairs Institute, Policy Perspective, (December 2019), retrieved from https://www.cgai.ca/defence_procurement_canada_opportunities_and_constraints; LCdr R.K. Gerrior, “Running Political Interference on Military Procurement,” Canadian Forces College Papers, JCSP Exercise Solo Flight 40 (2014), retrieved from https://www.cfc.forces.gc.ca/259/290/301/305/gerriorr.pdf; Aaron Plamondon, The Politics of Procurement: Military Acquisition in Canada and the Sea King Helicopter, (UBC Press: Vancouver, 2010).
[2] Jeffrey Collins, “Defence Procurement Canada.”; LCdr R.K. Gerrior, “Running Political Interference.”
[3] Canada, Parliament, House of Commons, Standing Committee on National Defence and Veteran Affairs, Evidence, 36th Parliament, 2nd Session (March 21, 2000) at 1540, retrieved from https://www.ourcommons.ca/DocumentViewer/en/36-2/NDVA/meeting-22/evidence
[4] Willms, “Decision Making,” 203.
[5] Nossal, Charlie Foxtrot, 37-38.
[6] Nossal, Charlie Foxtrot, 52-53.
[7] Nossal, Charlie Foxtrot, 53.
[8] Byers and Webb, The Worst Procurement in the History of Canada, 5.
[9] Byers and Webb, The Worst Procurement in the History of Canada, 9.
[10] Nossal, Charlie Foxtrot, 66.; Byers and Webb, The Worst Procurement in the History of Canada, 9.
[11] Nossal, Charlie Foxtrot, 69.
[12] Charles Davies, “Understanding Defence Procurement,” Canadian Military Journal 15, no. 2 (April 1, 2015): 10.
[13] Martin F. Auger, The Evolution of Defence Procurement in Canada, (Ottawa: Library of Parliament, 2016): 8, retrieved from http://publications.gc.ca/collections/collection_2016/bdp-lop/bp/YM32-2-2016-9-eng.pdf
[14] Auger, The Evolution of Defence Procurement in Canada, 8-9.
[15] “The Industrial and Technological Benefits Policy,” Government of Canada, date modified December 18, 2018, retrieved from https://www.wd-deo.gc.ca/eng/11978.asp
[16] Auger, The Evolution of Defence Procurement in Canada, 9.
[17] Alan Williams, “Three Ways to Improve Defence Procurement,” Policy Options (February 1, 2016), retrieved from https://policyoptions.irpp.org/magazines/february-2016/three-ways-toimprove-defence-procurement/
[18] Williams, “Three Ways to Improve Defence Procurement.”
[19] Collins, “Defence Procurement Canada: Opportunities and Constraints.”
[20] Canada, Parliament, House of Commons, Standing Committee on National Defence, Evidence, 39th Parliament, 1nd Session, No. 40 (March 1, 2007) at 0920, retrieved from https://www.ourcommons.ca/DocumentViewer/en/39-1/NDDN/meeting-40/evidence
[21] Mark Thomson, “The Demise of the Defence Material Organization,” Australian Strategic Policy Institute (April 17, 2015), retrieved from https://www.aspistrategist.org.au/the-demise-of-the-defence-materiel-organisation/
[22] Thomson, “The Demise of the Defence Material Organization.”
[23] Department of Defence, “Creating One Defence,” First Principles Review, (2015): 35, retrieved from https://www.defence.gov.au/publications/reviews/firstprinciples/Docs/FirstPrinciplesReviewB.pdf
[24] Douglas L. Bland and Roy Rempel, “A Vigilant Parliament: Building Competence for Effective Parliamentary Oversight of National Defence and the Canadian Armed Forces,” Institute for Research and Public Policy (February 24, 2004), retrieved from https://irpp.org/research-studies/policy-matters-vol5-no1/
[25] Auger, The Evolution of Defence Procurement in Canada, 12.
[26] Bland and Rempel, “A Vigilant Parliament,” 49.
[27] Bland and Rempel, “A Vigilant Parliament,” 47.
[28] Edward M. Iacobucci and Michael J. Trebilcock, “The Role of Crown Corporations in the Canadian Economy: An Analytical Framework,” SPP Research Paper 5, no. 9 (March 2012): 10.
[29] Auger, The Evolution of Defence Procurement in Canada, 4.; Canadian Commercial Corporation, while still in operation, presently focuses on providing “foreign contracting expertise”. Canadian Commercial Corporation, https://www.ccc.ca/en/about-ccc/
[30] Defence Construction Canada, https://www.dcc-cdc.gc.ca/english/homepage/
[31] Elizabeth Thompson, “Crown Corporation at Risk of Procurement Fraud, Says Auditor General,” CBC (May 2, 2017), retrieved from https://www.cbc.ca/news/politics/defence-contracting-procurement-ag-1.4094302
[32] Nossal, “Charlie Foxtrot,” 33.
[33] Auger, The Evolution of Defence Procurement in Canada.
[34] Davies, “Why Defence Procurement So Often Goes Wrong.”; Major R.D. Dove, “Strategic Foresight in Canadian Forces Force Development of Armour Capabilities: Pursuing the Horizon?” Canadian Forces College, JCSP 38 (2012), retrieved from https://www.cfc.forces.gc.ca/259/290/298/286/dove.pdf
[35] Mike Lapointe, “Removing Politics from Defence Procurement ‘Unreasonable,’ Says Expert, As Senate Committee Suggests Deeper Dive,” The Hill Times, (June 26, 2019), retrieved from https://www.hilltimes.com/2019/06/26/removing-politics-from-defence-procurement-unreasonable-says-expert-as-senate-committee-indicates-need-for-deeper-dive/205675
[36] Lapointe, “Removing Politics from Defence Procurement.”
[37] Chris Thatcher, “New Defence Procurement Agency Would be Disruptive, Costly,” SKIES (February 20, 2020), retrieved from https://www.skiesmag.com/news/new-defence-procurement-agency-would-be-disruptive-costly/
[38] Thatcher, “New Defence Procurement Agency Would be Disruptive, Costly.”
[39] Lapointe, “Removing Politics from Defence Procurement.”
[40] Lapointe, “Removing Politics from Defence Procurement.”

 

 

7 Shares:
You May Also Like