The Defence Budget [superthread]

[GR66]

Eighth paragraph: wrong, again! neither the NDP nor the Liberals have any need to enunciate a coherent defence policy. They understand, as do the Conservatives, that, despite all the red T-shirts and yellow ribbons, Canadians, by and large, may "support the troops" but they do not support anything like an adequate or appropriate level of defence spending.

I'm certainly not arguing the truth of this statement, but how much of it is self-fulfilling prophesy by all the political parties?  For decades our politicians (both in government and in opposition) have avoided any serious discussion of the need for combat capable military as a part of a broader foreign policy strategy along with the costs required to obtain these benefits.  If our "leaders" don't make the effort to educate the people then they shouldn't be shocked when the people don't understand the issue.

 

[Good2Golf]

Mr. Ivison and indeed it would seem many "business experienced" Senators don't understand (which may in part be a failing of DND to properly message) the generally inflexible Federal financial structure that the Department must operate within. DND was one of the first Federal Departments to be directed by the Treaury Board to adopt fiscal planning using the 'Accrual Accounting' method, this is to say a multi-year future value based system that most Canadians would understand as a mortgage.  The challenge is that the TB then places significant restrictions on DND (and the other Departments as well) with in-year 'Cash Accounting' policies, in effect 'compartmentalizing' the 'discretionary' portion (things other than Legislated fixed costs like salaries or Federal grants) of the annual cash allocation into fairly rigid structures that are less able to be adjusted in light of notable in-year cost drivers/variances.  Canadians would understand this best as the bank giving them only a portion of their mortgage's cash advance, and even then telling the homeowner how much they could spend, based on the homeowner's planned budget made at the beginning of the mortgage period, on particular elements of the house; 45% to payment of capital, 15% to roof repair, 25% to maintenance and 15% to betterments. Problem was there was a significant snow pack over the winter and there was a huge sprin melt that overwhelmed your foundation drainage system, clogging it completely. You want to effect repairs to the drainage system right away and put some of the betterments off (re-profile the expenditure) until next year. Great idea you think, nope...bank says you can't do that until next year with an amended expenditure plan.

Such is the case with the compartmentalization of monies given to DND. It is not at all like a private business that can allocate the expenditure of its revenues without any of the restrictions that TB places (for the right reason in general, but not providing the substantive flexibilty needed) on in-year expenditures.

Regards
G2G

 

[GnyHwy]

I do have a basic understanding of this, but I always wondered when larger capitol projects like CCV, MSVS get pushed to the right, what happens to the cash?  I realize there may not have been significant money planned to be spent for that capitol project in that fiscal year, but sometimes there would be.  It would seem that this would be a great opportunity to push smaller projects through rather quickly, and sometimes this probably does happen.  But, if the project isn't ready because there is no one doing the paperwork for the smaller projects concurrently and as a contingency plan, it can't happen.  That coupled with the small amount of times per year that you can get approval, coupled with what recently seems as even more oversight for transparency, and you pretty much can't spend squat.   

Your average troop with a handful of years in the Regts doesn't understand this, and I think we do a poor job explaining it to them as well.  Also, as G2G mentions, we may be doing a poor job explaining this deficiency it to our civilian bosses. 

Troops just wonder why they can't have the latest and greatest piece of gear that is out there, and why the hell does it take so long to procure?  But who's going to explain it to them?  The guys that need to be doing the paperwork for the next procurement?

Since we are bent around using the term capability development, perhaps we should develop our capability to develop capabilities.  That is what seems deficient to me.

 

[Eye In The Sky]

Article Link

Ex-top army commander sounds the alarm on defence spending

$475M rise in administrative spending despite 22% army budget cut, says Lt.-Gen. Andrew Leslie


A retired top army commander who penned a controversial report on transforming the military is breaking his silence 18 months after retiring from the ranks.

In an interview airing Saturday on CBC Radio's The House, retired Lt.-Gen. Andrew Leslie said he's been drawn out from the sidelines after seeing a $475-million increase in spending by the Department of National Defence (DND) for professional services, including consultants and contractors, coupled with a 22 per cent cut in the army's budget.

'It's going to result in lower levels of readiness, it's going to mean our troops are not as well trained.'—Retired Lt.-Gen. Andrew Leslie

The Public Accounts show that spending for Professional and Special Services at National Defence went from $2.7 billion in 2009-2010 to $3.2 billion in 2011-2012.

"This has a direct impact on our troops. It's going to result in lower levels of readiness, it's going to mean our troops are not as well trained … It's going to have an impact on part-time reserves, the lifeblood of the army. So I can't watch from the sidelines," Leslie told host Evan Solomon in his first in-depth interview since retiring in Aug. 2011.

Rise comes despite 22% army budget cut

According to Leslie, the vast majority of those professional services include consultants and contractors which he calls "overhead." And this, said the general who oversaw the Canadian army until 2010, runs contrary to the advice he gave DND in his Transformation Report commissioned by the military.

"The strongest recommendation we had was that the corporate services number should be reduced by 10 per cent per year [over three years]. And it's going exactly in the wrong way."

In addition to this increase in spending, Leslie noticed that his successor, Lt.-Gen. Peter Devlin, testified before the Standing Senate Committee on National Security and Defence in early December that his budget had been cut by 22 per cent.

"As you would expect, that has had an effect on people, infrastructure and training," said Devlin, the Commander of the Canadian Army.

"Training has a direct impact on operational capability, a direct impact on the part-time army who are the reserves, and a direct impact on training in Canada. All to the negative," said Leslie.

A 'disconnect'

The prime minister told Defence Minister Peter Mackay, in a letter dated June 15, 2012 and obtained by The Canadian Press, that his proposed budget did not cut deep enough into the administrative side of National Defence.

According to Leslie, "there's an obvious disconnect between what's actually being said in terms of guidance and direction to DND and what's actually happening."

In a separate interview on The House, the vice chief of the defence staff, Vice-Admiral Bruce Donaldson, defended DND's spending on professional and special services.

Donaldson told Solomon that consulting includes a "very broad range of activity" and that in many ways "it's much more economical" to turn certain contracts over to the private sector.

The federal government is said to have identified $530-million in cuts over the next three years to "contracting and in-service support of defence material," according to a written statement by Jay Paxton, a spokesperson for the minister of defence.

 

[ArmyRick]

Sounds like people need to be fired!

 

[dapaterson]

I do have a basic understanding of this, but I always wondered when larger capitol projects like CCV, MSVS get pushed to the right, what happens to the cash?

Sorry I missed this Q earlier.

Short answer:  As always, it depends...

DND/CF has some A-base capital funding - money that is there and is use it or lose it.  For that part of the defence budget, ADM(Mat) and others try to over-program - that is, for every dollar they know they have, they plan on spending more - say $1.10 or so.  That way, as one or two projects slip, there's enough for everyone.  If everything runs on time, they can delay some projects to remain within the allocation.  If too much slippage happens, the money is lost at the end of the fiscal year (called lapsing).  There are limited provisions to carry money forward from one fiscal year to the next.

Many more recent projects, however, get accrual funding.  In that case the funding is assigned to the project.  If the project shifts its timelines, the funding is shifted as well, so it's not lost, just delayed.

There's a great deal that goes on behind the scenes, of course, with staff from ADM(Mat) and ADM(Fin CS) liaising with the Treasury Board Secretariat to keep the numbers straight, but that's a simplified version of how things work.

 

[McG]

Sounds like people need to be fired!

Our stovepipe approach to the budget cutting and our stovepiped HR allocation systems must be at least partially behind this.  Some of the contractor and consultant increase is probably filling holes from civilian and reserve positions that no longer exist … some of this increased spending could have been avoided by reallocating Reg F from lower priority work.  Unfortunately, our ability to level resources with priorities is substantially slower than our ability to hack with a stovepipe.

 

[Monsoon]

Sounds like people need to be fired!

Unfortunately, Andrew Leslie is no longer available for that. However, he does seem happy to sling sh*t from the sidelines using what he must know are misleading figures: if you save $1B in fixed overhead, who cares if your contracting fees to replace the services outsourced increase by less than half that? I have to wonder if he's looking at a transition into politics in an opposition party. God help us all if he ends up as MND.

 

[dapaterson]

God help us all if he ends up as MND.

Not a first for the family...

 

[PuckChaser]

Unfortunately, Andrew Leslie is no longer available for that. However, he does seem happy to sling **** from the sidelines using what he must know are misleading figures: if you save $1B in fixed overhead, who cares if your contracting fees to replace the services outsourced increase by less than half that? I have to wonder if he's looking at a transition into politics in an opposition party. God help us all if he ends up as MND.

It matters when many units are cutting their training down to absolutely the bare minimum that could use $500m a year desperately. Sounds like you have more of a personal axe to grind against Leslie than any of the talking points he's providing.

 

[dapaterson]

Do you know where DND is spending money on contractors?  Do you want them all cut?

For example, most civilian medical professionals you see are contractors.  The Military Family Resource Centres?  They're independent, and payments to support them show up as professional services (contractor) costs.  Companies that make plans for new buildings?  Contractors.  Commissionaires at the gates?  Contractors.  Cost moves?  Brookfield gets a fixed price per move (a contractor), plus the trucking companies that move the HG&E are... you guessed it... contractors.

 

[The Bread Guy]

Unfortunately, Andrew Leslie is no longer available for that. However, he does seem happy to sling **** from the sidelines using what he must know are misleading figures: if you save $1B in fixed overhead, who cares if your contracting fees to replace the services outsourced increase by less than half that? I have to wonder if he's looking at a transition into politics in an opposition party. God help us all if he ends up as MND.

More on his latest utterances.....

A retired top army commander who penned a controversial report on transforming the military is breaking his silence 18 months after retiring from the ranks.

In an interview airing Saturday on CBC Radio's The House, retired Lt.-Gen. Andrew Leslie said he's been drawn out from the sidelines after seeing a $475-million increase in spending by the Department of National Defence (DND) for professional services, including consultants and contractors, coupled with a 22 per cent cut in the army's budget.

The Public Accounts show that spending for Professional and Special Services at National Defence went from $2.7 billion in 2009-2010 to $3.2 billion in 2011-2012.

"This has a direct impact on our troops. It's going to result in lower levels of readiness, it's going to mean our troops are not as well trained … It's going to have an impact on part-time reserves, the lifeblood of the army. So I can't watch from the sidelines," Leslie told host Evan Solomon in his first in-depth interview since retiring in Aug. 2011.

According to Leslie, the vast majority of those professional services include consultants and contractors which he calls "overhead." And this, said the general who oversaw the Canadian army until 2010, runs contrary to the advice he gave DND in his Transformation Report commissioned by the military.

"The strongest recommendation we had was that the corporate services number should be reduced by 10 per cent per year [over three years]. And it's going exactly in the wrong way."

In addition to this increase in spending, Leslie noticed that his successor, Lt.-Gen. Peter Devlin, testified before the Standing Senate Committee on National Security and Defence in early December that his budget had been cut by 22 per cent.

"As you would expect, that has had an effect on people, infrastructure and training," said Devlin, the Commander of the Canadian Army ....

Do you know where DND is spending money on contractors?  Do you want them all cut?

For example, most civilian medical professionals you see are contractors.  The Military Family Resource Centres?  They're independent, and payments to support them show up as professional services (contractor) costs.  Companies that make plans for new buildings?  Contractors.  Commissionaires at the gates?  Contractors.  Cost moves?  Brookfield gets a fixed price per move (a contractor), plus the trucking companies that move the HG&E are... you guessed it... contractors.

Indeed - more from the same CBC.ca piece above:

.... In a separate interview on The House, the vice chief of the defence staff, Vice-Admiral Bruce Donaldson, defended DND's spending on professional and special services.

Donaldson told Solomon that consulting includes a "very broad range of activity" including "medical and mental health services," even "maintenance and repairs."

"A lot of it relates to supporting the men and women in uniform," Donaldson said, adding that in many ways "it's much more economical" to turn certain contracts over to the private sector.

With respect to the army's 22 per cent budget cut, Donaldson said Devlin's testimony before the Senate committee may have been misunderstood.

"Devlin was actually saying that he's been successful in preparing the army for what's next. He's reoriented training in the army to make sure they are operationally ready for the next deployed mission," said Donaldson.

The vice chief of the defence staff said the cuts in the army's budget reflect "the ramp down" from Canada's combat mission in Afghanistan ....

 

[Monsoon]

It matters when many units are cutting their training down to absolutely the bare minimum that could use $500m a year desperately. Sounds like you have more of a personal axe to grind against Leslie than any of the talking points he's providing.

Not at all - as others (including, now, the VCDS) have pointed out, the increase in that one line-item isn't money being "wasted". It's a direct result of certain expensive in-house services being out-sourced. If anything, the reallocation from in-house to contractor of some support services saved the Army reserve budget from being raided harder than it was.

I don't know Leslie personally, but I do know what a disgruntled politician looks like. Perpetuating the rumour that he was ever in the running for CDS is a pretty good example of the reason he was succession-planned out.

 

[Edward Campbell]

Defence Minister Peter MacKay has just announced, in Brussels, that the Canada First Defence Strategy, which includes a long term funding plan that I find weak and, indeed, even destructive, will be revised after the release of the 2013 budget. I expect the outcome will be weaker still until, at least, the national budget is back in surplus.

 

[McG]

Maybe we will find some ideas from this site make their way into the new plan.
A lot are below the strategic radar, but there are a few that would fit nicely into a vision and plan at that level.
http://forums.army.ca/forums/threads/82898/post-1193048.html#msg1193048

 

[The Bread Guy]

Defence Minister Peter MacKay has just announced, in Brussels, that the Canada First Defence Strategy, which includes a long term funding plan that I find weak and, indeed, even destructive, will be revised after the release of the 2013 budget. I expect the outcome will be weaker still until, at least, the national budget is back in surplus.

Got it in one, Mr. C. .....

Canada’s military was put on notice Friday that no stone will go unturned as the Harper government slashes hundreds of millions of dollars in defence spending.

National Defence is facing budget cuts in the order of between $1.1-billion and $2.5-billion over the next three years as the Harper government rewrites its vision for the military.

This has resulted in a behind-the-scenes struggle between different parts of the military over what should be cut and what is absolutely necessary for Canada’s men and women in uniform to continue doing their jobs.

That struggle has occasionally broken into public view, notably in the form of repeated warnings from Prime Minister Stephen Harper last year that National Defence will be required to do its part to cut the federal deficit.

Canada’s new top soldier appears to have gotten the message as he used a major speech at a defence conference in Ottawa on Friday to warn that implementing those budget cuts will be the Canadian Forces’ “centre of gravity” for the foreseeable future.

“There’s a budget to balance and Defence must do its part,” Chief of Defence Staff Gen. Tom Lawson told a crowd of senior military officers, industry representatives and experts. “That is an immutable fact.”

Organizations only undertake significant efforts to make themselves leaner and more efficient “when forced to make substantial cuts, or when they’re motivated by the opportunity to re-invest the savings in themselves,” Lawson said.

This is exactly the situation National Defence is in, he said, given the prime minister’s demand for “more teeth and less tail” by cutting administrative costs and putting the money back into front-line capabilities.

“It will be our centre of gravity for a year, two years, three years to come,” Lawson warned, adding that everything will be examined for savings ....

Postmedia News, 22 Feb 13

 

[Old Sweat]

In my opinion the CF is doing very little to help itself during this period. A short while ago we learned that the PM wanted the forces to reduce its administrative tail and not to reduce operational forces. What part of that is too hard to understand? So, the budgets for the field force including the reserves are being cut, while we continue to maintain a large number of headquarters, whose major function seems to be to provide places for GOFOs to micromanage their subordinate formations and units.


Talk about an addiction to self-licking ice cream cones.  :sarcasm:

 

[The Bread Guy]

Two tidbits:

“THERE’S NO PLACE like home” could become the battle cry of the Canadian military as spending on overseas operations is forecast to take a steep dive.

Internal Defence Department reports show total spending on foreign deployments could drop to just $5 million in the 2014-15 fiscal year from the current anticipated level of $476 million.

The figures are contained in a June 1, 2012 financial report by the Department’s assistant deputy minister of finance.

The report was obtained by The Canadian Press under the Access to Information Act.

Finance Minister Jim Flaherty has vowed to balance the budget by 2015.

The records show that, by then, the government expects it will no longer be paying for the tear-down and clean-up of the Kandahar combat mission, nor the Afghan training mission in Kabul set to end early next year. More significantly, it has not budgeted for any new operations, including a renewal of current peacekeeping missions and no contingency fund is aside.

The internal spending forecast notes that the tables are revised three times a year and officials note the government always has the option of adding money to the budget if cabinet decides to send the military somewhere ....

The Canadian Press, 26 Feb 13

The federal government plans to slash $4.9 billion in discretionary spending in the next year - with the Department of National Defence bearing the brunt of cuts, while departments involved in the Conservatives' law and order agenda are spared.

The plan was unveiled Monday as Treasury Board President Tony Clement tabled the government's main budgetary estimates for 2013-14 in the House of Commons.

The detailed document provides a glimpse into how the government intends to increase or decrease funds for a long list of departments and agencies in the next fiscal year.

In additional to Defence, other departments facing spending reductions include the Department of Foreign Affairs and International Trade, Environment Canada, Transport Canada, the Canadian International Development Agency, Canada Border Services, and Health Canada.

But others will see their budgets go up. They include: Public Safety and Emergency Preparedness Canada, the RCMP, the Security Intelligence Review Committee, Aboriginal Affairs and Northern Development Canada, the National Research Council, Citizenship and Immigration Canada, and Canadian Heritage ....

Postmedia News, 26 Feb 13

2013-14 Main Estimates (400+ page PDF) here, DND's section (6 page PDF via Google Drive) here.

 

[OldSolduer]

So the Conservatives just played the same shell game on us the Liberals did.


They won't be getting my vote the next time.

 

[George Wallace]

So the Conservatives just played the same shell game on us the Liberals did.


They won't be getting my vote the next time.

;D


Are you going to try "Green" next time around?



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