The Defence Budget [superthread]

[The Bread Guy]

One needs a program to streamline and reduce policies and procedures which runs in combination with an integrated staff reduction plan.

Figure out what will be done differently, or not be done anymore, THEN figure out how many folks you need - what a concept!

 

[Edward Campbell]

This report, reproduced under the Fair Dealing provisions of the Copyright Act from the Halifax Chronicle Herald, illustrates, I think, the divide between the political centre (PCO/Treasury/Finance) and DND/CF about which I have written several times:

http://thechronicleherald.ca/canada/153665-pm-told-mackay-to-cut-more-defence-administration-letter-shows

PM told MacKay to cut more defence administration, letter shows

October 24, 2012

BY MURRAY BREWSTER THE CANADIAN PRESS

A leaked letter shows the prime minister told Defence Minister Peter MacKay last spring that his initial budget proposals did not cut deep enough on the administrative side of National Defence.

The three-page letter — dated June 15, 2012, and obtained by The Canadian Press — was written to provide ``guidance'' to MacKay and General Walt Natynczyk as the Conservatives embarked on a rewrite of their marquee defence policy.

The document sheds light on the divide between Stephen Harper's office, determined to wrestle the deficit to the ground, and a defence establishment resolved to protect the budget gains of the last five years.

Harper's missive sets out what cuts he was prepared to accept, what wouldn't work, and even suggests National Defence unload some of its surplus property.

``It is important that we reduce the current overhead in regular force military and civilian personnel, and in those activities that do not directly contribute to operational readiness,'' he wrote.

A spokesman for MacKay said the government doesn't comment on leaked documents and remains focused on getting the military the resources and equipment it needs.

Harper's letter to MacKay underscored that the days of ever-increasing defence spending are over, a new reality first announced in the March 29 budget and in a myriad of other public statements.

``We need to acknowledge that, given the current fiscal climate, there can be no expectation that the defence budget will grow in the next few years,'' he wrote.

``As a result, it will be imperative that we make every effort to ensure that each dollar currently devoted to defence is targeted towards enhancing our operational capabilities.''

The fact Harper had to spell out everything speaks to the kind of resistance his government seems to be facing from defence, said University of Ottawa defence expert Phil Lagasse.

``I think it suggests there's an appreciation on the part of the prime minister that the defence establishment has a tendency to try and do things its own way, and that it has been resistant to political direction in recent years,'' he said.

``Does that reflect poorly on the defence minister? Perhaps not as a person, but certainly it seems to suggest that the prime minister is somewhat concerned about his defence minister's ability to properly implement his preferences and his direction.''

In 2008, as part of the first defence strategy, the Conservatives promised stable and predictable funding increases to the military over 20 years. While it still provides increases to the operational budget, those hikes are more than offset by planned cuts that one defence researcher estimated a few weeks ago could total $2.5 billion a year by 2014.

Defence has been wrestling with how to implement the government's strategic review and the deficit reduction plan, but proposals about what to cut have been a closely guarded secret.

It's clear from Harper's letter that MacKay's first round of proposals last spring did not pass muster.

``As we begin our review of the (Canada First Defence Strategy) I ask you start by making the detailed completion of your Department's Deficit Reduction Action Plan (DRAP) your first priority,'' the prime minister wrote.

``Thus far, your DRAP proposals have not sufficiently addressed corporate and institutional support and services.''

The letter estimated that almost $11 billion out of a total Defence budget of $20 billion was swallowed by both civilian and military administration.

Harper urged MacKay to consult more with a cabinet committee that's steering the government-wide series of cuts, and to talk more with his office.

He also laid down red lines about what not to cut.

``You should work closely with the next iteration of the Strategic and Operational Review Committee, as well as central agencies and my office, and present detailed proposals that critically examine corporate and institutional overhead with a view to avoiding budgetary reductions that impact on operational capabilities, the part-time reserves, training within Canada, and the promotion and protection of our national sovereignty,'' said the letter, which was copied to Treasury Board President Tony Clement and Public Works Minister Rona Ambrose.

In a paper for Carleton University's Centre for Security and Defence Studies, defence expert Dave Perry warned that the cuts planned by the Harper government can't help but take a bite out of ``readiness'' because of the way the Defence Department manages its budget and the military's unwillingness to give up capabilities, such as ships, tanks or planes.

As the letter suggests, Harper remains convinced the savings can be had in the bureaucracy in much the same way retired lieutenant-general Andrew Leslie suggested in a landmark report last year.

``You will need to demonstrate that all internal efficiencies have been identified and pursued, in addition to those in the 2011 Transformation Report,'' Harper wrote.

``This should include: critically examining the corporate and institutional overhead with a view to reducing duplication and consolidating on both the military and civilian sides; considering options to reduce DND's real estate holdings while remaining cognizant of government priorities.''

The letter indicates a firm belief by the Prime Minister's Office that general Leslie was correct in urging significant cuts of overhead, said Lagasse.

But Lagasse says he remains skeptical that Harper and Leslie are right.

``The programs they have in place exist for a reason. They're not all fat and they're not all pork. You will eventually need those very things you're being asked to cut,'' Lagasse said.

I think Philippe Lagasse has correctly defined one of the symptoms of the problem: the Minister of National Defence becomes a captive of a well entrenched bureaucracy and that minister surrounds himself with young political aids rather than with good policy people. The top levels of DND and the CF are filled with smart, tough people - they easily roll over young ministerial staffers, especially when mind numbing spreadsheets are used.

I disagree with Lagasse and Dave Perry: there is room, in my view, to make significant cuts to overhead and do no harm to, perhaps even enhance, readiness. Too much HQ effort, at too high rank levels is devoted to inter-agency politics rather than on preparing for combat operations; the Treasury Board, for example, has a legitimate role in all government spending, it is not an enemy and ought not to be seen as such by NDHQ at high bureaucratic and military levels. Sadly, and more difficult to change: even more effort is wasted on federal government mandated busy work and social engineering. But I reiterate what I have said before: a 5% cut to the defence budget can be and should be absorbed, completely, within the top two levels of command and control; no cuts need be or should be made to combat, support and service support organizations although some procurement may have to be stretched, due in part to necessary changes in he procurement superstructure.

But: PM Harper has to tackle the dysfunctional government procurement system - especially in so far as it mismanages defence procurement.

 

[GAP]

I think Philippe Lagasse has correctly defined one of the symptoms of the problem: the Minister of National Defence becomes a captive of a well entrenched bureaucracy and that minister surrounds himself with young political aids rather than with good policy people. The top levels of DND and the CF are filled with smart, tough people - they easily roll over young ministerial staffers, especially when mind numbing spreadsheets are used.

I disagree with Lagasse and Dave Perry: there is room, in my view, to make significant cuts to overhead and do no harm to, perhaps even enhance, readiness. Too much HQ effort, at too high rank levels is devoted to inter-agency politics rather than on preparing for combat operations; the Treasury Board, for example, has a legitimate role in all government spending, it is not an enemy and ought not to be seen as such by NDHQ at high bureaucratic and military levels. Sadly, and more difficult to change: even more effort is wasted on federal government mandated busy work and social engineering. But I reiterate what I have said before: a 5% cut to the defence budget can be and should be absorbed, completely, within the top two levels of command and control; no cuts need be or should be made to combat, support and service support organizations although some procurement may have to be stretched, due in part to necessary changes in he procurement superstructure.

But: PM Harper has to tackle the dysfunctional government procurement system - especially in so far as it mismanages defence procurement.

Now send that to each treasury board member....

 

[Infanteer]

I disagree with Lagasse and Dave Perry: there is room, in my view, to make significant cuts to overhead and do no harm to, perhaps even enhance, readiness. Too much HQ effort, at too high rank levels is devoted to inter-agency politics rather than on preparing for combat operations; the Treasury Board, for example, has a legitimate role in all government spending, it is not an enemy and ought not to be seen as such by NDHQ at high bureaucratic and military levels. Sadly, and more difficult to change: even more effort is wasted on federal government mandated busy work and social engineering. But I reiterate what I have said before: a 5% cut to the defence budget can be and should be absorbed, completely, within the top two levels of command and control; no cuts need be or should be made to combat, support and service support organizations although some procurement may have to be stretched, due in part to necessary changes in he procurement superstructure.

Agreed.  One only has to get into the line-by-line weeds of spending, often at the L3 or L4 level, to see how much nickel-and-diming occurs for things that do not contribute to operational effectiveness....

 

[dapaterson]

Agreed.  One only has to get into the line-by-line weeds of spending, often at the L3 or L4 level, to see how much nickel-and-diming occurs for things that do not contribute to operational effectiveness....

In 1997, the MND decreed that all officers need a degree.  That has been accepted as dogmatic truth ever since.

At the same time, in the same document, the MND decreed that there should be less than 65 General/Flag Officers.  That has been widely ignored.

Perhaps we should put as much effort into trimming the GOFO ranks (and the related SOs, EAs and other staff that they attract) as we do into getting tactical level officers university degrees.

 

[McG]

I disagree with Lagasse and Dave Perry: there is room, in my view, to make significant cuts to overhead and do no harm to, perhaps even enhance, readiness.

I concur.  We have covered, many times, areas to save resources while enhancing effectiveness.  These have been in the areas of superfluous HQs, unnecessary bases, over ranked positions, over-inflated staff establishments, mandated busy-work, retention of micro vehicle fleets, and frivolous cosmetic buttons & bows changes.  That is a fairly generic list with specific examples available to be found in various threads.

 

[plagasse]

Just a quick note about my last quote in the story. Most here take me to mean that no overhead should be cut. That's not my view. I'm simply pointing out that overhead cuts should be done with care and caution. There's no point cutting parts of DND or the CF's C2 that will be recreated sometime in the future. Similarly, it would be unwise to cut areas, such as the policy group or DRDC, that do useful work. Finally, it will serve no real purpose to let certain people go only to hire contractors or consultants to replace them. There are savings to be made, but I worry that the Leslie report was a bit too cavalier.

PL

 

[The Bread Guy]

Just a quick note about my last quote in the story. Most here take me to mean that no overhead should be cut. That's not my view. I'm simply pointing out that overhead cuts should be done with care and caution. There's no point cutting parts of DND or the CF's C2 that will be recreated sometime in the future. Similarly, it would be unwise to cut areas, such as the policy group or DRDC, that do useful work. Finally, it will serve no real purpose to let certain people go only to hire contractors or consultants to replace them. There are savings to be made, but I worry that the Leslie report was a bit too cavalier.

PL

Thanks for jumping in with some more info - always good to hear these things "straight from the horse's mouth", so to speak, and allowing a bit of exchange/dialogue.

 

[McG]

Just a quick note about my last quote in the story. Most here take me to mean that no overhead should be cut. That's not my view. I'm simply pointing out that overhead cuts should be done with care and caution. There's no point cutting parts of DND or the CF's C2 that will be recreated sometime in the future. Similarly, it would be unwise to cut areas, such as the policy group or DRDC, that do useful work. Finally, it will serve no real purpose to let certain people go only to hire contractors or consultants to replace them.

I think many here can appreciate where you are coming from.  There are too many examples of muscle being cut to save fat, and there are also too many examples of cuts to a specific budget without care to the fact that the taxpayer will be paying more to retain the same effect through a different funding path. 

 

[Edward Campbell]

Just a quick note about my last quote in the story. Most here take me to mean that no overhead should be cut. That's not my view. I'm simply pointing out that overhead cuts should be done with care and caution. There's no point cutting parts of DND or the CF's C2 that will be recreated sometime in the future. Similarly, it would be unwise to cut areas, such as the policy group or DRDC, that do useful work. Finally, it will serve no real purpose to let certain people go only to hire contractors or consultants to replace them. There are savings to be made, but I worry that the Leslie report was a bit too cavalier.

PL

Thanks for jumping in with some more info - always good to hear these things "straight from the horse's mouth", so to speak, and allowing a bit of exchange/dialogue.

Indeed, and welcome Prof Lagassé.

I'm not so sure LGen Lesie was all that cavalier: HQs have grown in both number and size since Gen Hillier took over. The fault cannot all be laid at the feet of senior officers but:

1. We seem, to me, to be in thrall of US military organizations. In my opinion the US DoD and the US armed services are not well organized for either operations or administration, and they certainly offer a poor model for small countries;

2. The very worst aspect of American military organization and one which is fundamentally wrong is command/staff relationships. The US staffs are too big, too rich (in rank) and lacking in responsibility - the US military took the worst of the Franco-Prussian staff systems and left the good bits behind. We adopted the US command/staff model and we need to get away from it if for no other reason than it breeds fat;

3. We pay too much attention to public relations, which is sexy, and too little to combat service support (administration and logistics) which is dull and difficult.

But, the main failings, in my opinion, lie with senior civil servants who could have and should have reined in the worst aspects of military management years and years ago. I blame the Clerk and the DM DND for not saying "enough!" circa 2006 when HQ bloat was evident.

To you main points:

1. We certainly do need a robust - able to withstand the shocks of war in FM Wavell's words - effective and efficient C2 system. I (and others) do not advocate wholesale slash and burn but I, for my part, want fewer HQs (accepting that some of those that remain will be large) in which the principle staff officers, beginning with the CDS if I can have my Xmas wish early, are all one rank lower than today, while commanders in the fleet and field forces remain the same or, in the case of brigade group commanders, are one rank higher;*

2. I agree with you re: both ADM (Pol) and DRDC. I have no brief for how the DM organizes his HQ and I believe that R&D is, currently, too low in the pecking order;

3. Contractors are excellent for surges but we cannot rely upon them. For one thing the contracting world's main source of the experts we need for a surge is the CF, if we cut functions and rely upon contractors we cannot train the next generations of contractors.

So, I suspect we are in violent agreement, except, perhaps for my desire for fewer, lower ranked military HQs.

__________
* I hold firm to a principle I have advocated often in these pages: the principle staff officer in any HQ must be outranked by the subordinate commanders. Thus in a corps HQ (where the commander is a LGen and the subordinate (Div) commanders are MGens) the principle Ops and Adm/Log staff officers should be BGens; in Divs (where the subordinate commanders are Cols but should be BGens) the principle staff officers should be Cols, and in brigades, where the principle subordinate commanders are LCols the principle Ops and Adm/Log staff officers should be Majs.

 

[plagasse]

I very much agree on the commands. Reducing them was the right call. And there's much more reform needed.

In terms of the PR piece, and battles with central agencies, there's a risk there. Admittedly it doesn't do much for frontlines or operations. But it is an important part of the larger political game, especially now that the Afghan campaign is coming to an end. Eliminating that capacity may be costly in the longer term.

I also agree that civilian officials and central agencies should have been far more careful startling in 2006. My guess is that the political environment wasn't favourable to that kind of intervention. Nor is it necessarily easy now, given the divergent incentives of the centre and DND/CF.

My larger concern is the capital program. As the centre focuses on overhead and NDHQ tries to find savings in operational readiness, both are ignoring the fact that the major fleets can't be replaced within the existing budget. Everyone seems content to pretend that everything will be just fine.

 

[Edward Campbell]

I very much agree on the commands. Reducing them was the right call. And there's much more reform needed.

In terms of the PR piece, and battles with central agencies, there's a risk there. Admittedly it doesn't do much for frontlines or operations. But it is an important part of the larger political game, especially now that the Afghan campaign is coming to an end. Eliminating that capacity may be costly in the longer term. Good point; I haven't given enough weight to the political realities.

I also agree that civilian officials and central agencies should have been far more careful startling in 2006. My guess is that the political environment wasn't favourable to that kind of intervention. Nor is it necessarily easy now, given the divergent incentives of the centre and DND/CF.

My larger concern is the capital program. As the centre focuses on overhead and NDHQ tries to find savings in operational readiness, both are ignoring the fact that the major fleets can't be replaced within the existing budget. Everyone seems content to pretend that everything will be just fine. Agreed. Somehow the whole government has to come to grips with the need to have an efficient and effective procurment system that, simultaneously, allows politicians to exercise their own control. I'm not sure how to square that circle.

 

[plagasse]

Dave Perry asked me to post the following on his behalf:

"I don’t for a minute think that the DND/CF is perfectly efficient.  There are a number of efficiency improvements that can and should be made.  What I seriously question, however, is 1) Is defence actually inefficient to the tune of $2 billion? and  2) Assuming that it is, is there any realistic prospect of enacting that many improvements, given normal bureaucratic imperatives?

If the answer to either of those questions is no (which I certainly think is the case) the Canadian military is facing the prospect of real cuts to its readiness.”

 

[PPCLI Guy]

Reductions in readiness WILL occur as a result of reduced O+M budgets, but only if we insist on doing things exactly as we are doing them now.  I know of one major formation that is facing a 40% reduction to its O+M (essentially training, and hence readiness) budget next fiscal year that will NOT suffer any significant reduction in readiness, simply by changing the way in which they train.

If inputs are reduced but outputs are expected to remain the same, then it is the process that must change.  In many cases, there is room for significant adjustments to process - this will allow us to retain current levels of output (readiness) with reductions in inputs (resources).

 

[GAP]

Is the  current levels of output (readiness) what we require?

Does it need to be higher or lower or of a slightly different focus?

:dunno:

 

[cupper]

1. We seem, to me, to be in thrall of US military organizations. In my opinion the US DoD and the US armed services are not well organized for either operations or administration, and they certainly offer a poor model for small countries;

2. The very worst aspect of American military organization and one which is fundamentally wrong is command/staff relationships. The US staffs are too big, too rich (in rank) and lacking in responsibility - the US military took the worst of the Franco-Prussian staff systems and left the good bits behind. We adopted the US command/staff model and we need to get away from it if for no other reason than it breeds fat;

Fortunately we have not inherited the associated pork barrel vote buying that the US Congress seems to have made the US military into over the decades since the end of WWII. A lot of the bloat and waste that they are now faced with cutting is a direct result of lobbying efforts and political vote buying. The Defense Industry was smart in setting up factories through out  the Congressional map in order to make sure that the Members give their goods and services place of primacy when budget items are considered. As a result, many programs that were duplicates of existing programs, or unwanted or unneeded items just kept getting funding.

Shutting bases in a congressional district is the political equivalent of suicide. As is cancelling a weapons development program. Or reducing the numbers of units in a state.

That's not to say that politics does not play a role in decisions in Canada as well. I was working and living on base with the CE Section in Cornwallis the year before the closure decision was finalized. I saw both sides playing out.

 

[dapaterson]

Fortunately we have not inherited the associated pork barrel vote buying that the US Congress seems to have made the US military into over the decades since the end of WWII.

Canada has similar problems.  I recall a mid 90s OAG report describing how we purchased aircraft spares from Canadian providers, who merely drop-shipped them from the US plants at a 50% or more mark-up.

The C7 is a slightly Canadianized M-16, for a more than slightly increased unit cost.  Similarly, the LSVW was nothing if not a regional economic award; and the less we say about CF-18 maintenance and Griffon acquisition, the better.  Discussions of Canadian ship-building lead one down the path of asking why we must buy from less efficient Canadian shipyards.

As long as DND has multi-billion dollar procurement budgets, it will attract political attention, and varying levels of pork.

 

[cupper]

All valid points. But with the US system, as a politician, you are chained to the need to get reelected, and therefore vote for that which will achieve reelection, rather than vote for the option that is best in economic and policy consideration.

In Canada, the political question is not as self serving for the defense industry. For instance, ship building contracts for the most part go to one of three regions. You send the contract to one region knowing that it is possibly going to piss off the voters in the region that got screwed over.

As for buying equipment overseas as in all of your examples, although it makes economic sense, would be difficult to sell to the voters. And when you consider that most major equipment suppliers are subsidiaries of American firms it becomes a moot point anyway.

 

[Edward Campbell]

All valid points. But with the US system, as a politician, you are chained to the need to get reelected, and therefore vote for that which will achieve reelection, rather than vote for the option that is best in economic and policy consideration.

In Canada, the political question is not as self serving for the defense industry. For instance, ship building contracts for the most part go to one of three regions. You send the contract to one region knowing that it is possibly going to piss off the voters in the region that got screwed over.

As for buying equipment overseas as in all of your examples, although it makes economic sense, would be difficult to sell to the voters. And when you consider that most major equipment suppliers are subsidiaries of American firms it becomes a moot point anyway.

Unless you consider the CPF or TRUMP (Tribal Class Update and Modernization Programme) projects back in the 1980s when we, intentionally, split contracts so that a second rate - in one case unqualified - yard would get ¼ of the contract value. Or consider the impact on efficiency by refusing to even consider allowing NDHQ to concentrate in one location on Moodie Drive in Ottawa. I'm with dapaterson.

 

[Edward Campbell]

Reductions in readiness WILL occur as a result of reduced O+M budgets, but only if we insist on doing things exactly as we are doing them now.  I know of one major formation that is facing a 40% reduction to its O+M (essentially training, and hence readiness) budget next fiscal year that will NOT suffer any significant reduction in readiness, simply by changing the way in which they train.

If inputs are reduced but outputs are expected to remain the same, then it is the process that must change.  In many cases, there is room for significant adjustments to process - this will allow us to retain current levels of output (readiness) with reductions in inputs (resources).

:goodpost:

Resource scarcity is nothing new, the whole Hellyer thing, in the 1960s and beyond, was rooted in resource issues. Mr. Hellyer didn't set out to screw everything up; he was, seriously and honestly, intent on finding ways to make the DND and the RCN, CA and RCAF function in more efficient and cost effective ways.

Many of Minister Hellyer's ideas were given impetus by a fellow named J Grant Glassco, whose Royal Commission on Government Organization, which reported in 1962/63, did excellent work but which sideswiped DND and the RCN, CA and RCAF by noting the large number of committees required to get things done and contrasting that with the joint or unified organizations the Committee had seen in the USA.