Colin Parkinson
Army.ca Myth
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The money for the fairy dust he is sprinkling has to come from somewhere.
The Defence Budget [superthread]
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https://www.opencanada.org/features/forget-more-defence-dollars-canada-needs-fix-its-procurement-process/
Forget more defence dollars — Canada needs to fix its procurement process - 23 Feb 18
If the new budget touches on defence, it must consider increasing the number of staff and calibre of experts that take care of procuring military equipment, argues Steve Saideman.
On February 27, the Liberals table their next budget. Whatever it says about defence spending, it is probably best to be skeptical.
When Stephen Harper was prime minister, there seemed to be annual announcements that the budget of the Department of National Defence was going to be under-spent by billions of dollars. While there was much suspicion that this was part of an effort to reach a balanced budget, the fact that the Trudeau government may be forced to make similar announcements — which may very well happen when this year’s budget is released — suggests something is broken besides campaign promises.
Indeed, when the Defence Policy Review, Strong, Secure, Engaged, was released in 2017 with promises of much greater defence spending, there was much criticism, as people anticipated that the Liberals had no intention of actually fulfilling those promises.
It turns out that there is a feature in Canadian defence that is enduring, regardless of the party in power: it is hard to spend large amounts of defence dollars.
This seems counter-intuitive, since most defence projects are expensive, and increasingly so, as defence costs inflate faster than most of the economy. Yet it is precisely that the big projects require complex processes to make the decisions, issue the contracts and then build the weapons systems that make it so easy for spending to slip from one year to the next.
Simply put, Canada does not have enough procurement specialists to do all of the work, as prior defence cuts have meant expertise is lagging when it comes to how to estimate costs quickly, how to develop clear requirements for contracts, and how to write contracts. On top of that, there is a cumbersome bureaucracy involving multiple ministers which means diffuse accountability — no single minister is accountable because several partially are. This means that decisions get delayed, which in turn means that money goes unspent.
The National Shipbuilding Strategy illustrates these problems quite well. It seemed simple. The shipyards were chosen years ago (in 2011) — Irving in Halifax for the frigates and the arctic offshore patrol vessels and Seaspan in Vancouver for the support ships. While that was the big political decision, it did not mean that designs of ships were chosen or subcontractors determined for various parts of the project. Picking ship designs is a complicated process, since the design that wins may influence which subcontractors get more or less of the work, and also because the Navy values flexibility, which means that tradeoffs may be deferred. Moreover, delays increase the costs in a variety of ways, so as governments change and tweak the requirements, deferring decisions causes the budgets to grow.
"No single minister is accountable because several partially are. This means that decisions get delayed, which in turn means that money goes unspent."
To be clear, while it often seems like the defence contractors are at the mercy of capricious politicians and delayed by the understaffing of procurement officials, they also can make everything more complicated. Currently, the highest-ranking officer in the Royal Canadian Navy, Vice Admiral Mark Norman, is suspended due to unproven claims he was embroiled in the rivalry the Irving shipbuilding company has with the Davie shipyards. The story is complex, but the ruthless desire by Irving to get every potential project made it more difficult to produce interim ships to supply the Navy at sea. In short, everyone involved is mismanaging defence procurement.
The F-35 story is very similar but “benefits” from more politicization. No major party can oppose the shipbuilding effort, nor can they be too critical, since it involves thousands of clearly identified jobs — and voters. The effort to replace the current fighter planes has been fraught from the outset, as politicians have attacked competing parties over decisions and non-decisions alike. Whatever “offsets” there might be that lead to high tech jobs in Canada, they are not so clearly tied to particularly communities, like ships in Halifax and Vancouver. This means that the various parties can politicize and threaten to cancel all they want.
To what effect? The Royal Canadian Navy simply cannot do as much as it once could. It cannot send as many ships to sea since the RCN has fewer ships. Because Canada is not at war, this does not endanger Canadian security — the absence of a few ships will not lead to our invasion. But it may mean that Canada cannot keep all of its commitments to its allies, that it cannot always show up when it is expected to do so. Politically, it is problematic; Canada was able to assure US President Donald Trump last year that while we may not spend two percent of GDP on defence anytime in the near future, Canada was going to be increasing its defence spending. But stories of deferring spending may cause Trump to overreact, as he will not read beyond the headline to realize that news is the result of procurement problems.
Politically, of all the promises Justin Trudeau made, the broken commitments on the defence file will probably cost him the least. Unless one works for a defence contractor, most people do not vote based on defence spending. The Conservatives can try to argue that they are more serious about national defence, but their lousy record of procurement is recent enough that they probably do not want to focus on it. The New Democratic Party will never try to outflank the Liberal Party to its right. So, the political consequences are probably minimal.
The most serious cost involved is that older equipment might endanger Canadian soldiers, sailors and aviators. They may not be able to perform their assigned missions to the best of their ability because their equipment may not function as well as it should, or as well as the equipment of their adversaries. So, while a navy reliant on leased supply ships or on an interim vessel might seem like a joke, this is not really a laughing matter.
When it comes to the realities of the modern military, the risks are significant and the consequences can be fatal. Getting better at procurement, something that Strong, Secure, and Engaged promised to do, is not just about saving money and preventing the government from being embarrassed. It is what we owe the people who risk their lives for Canada at home and abroad.
So, whatever promises are made in this budget, the focus should be on whether it includes significant improvements, including increased staffing, of Canada’s defence procurement specialists. Alas, these people don't just appear from thin air — they require training and experience. The question remains whether the new budget will create incentives and processes that begin to reverse the shortfalls. All we can be certain of is that if the procurement process is not fixed, more dollars will be pushed further into the future, and so will the ships, planes and other kit that the Canadian Armed Forces need.
Forget more defence dollars — Canada needs to fix its procurement process - 23 Feb 18
If the new budget touches on defence, it must consider increasing the number of staff and calibre of experts that take care of procuring military equipment, argues Steve Saideman.
On February 27, the Liberals table their next budget. Whatever it says about defence spending, it is probably best to be skeptical.
When Stephen Harper was prime minister, there seemed to be annual announcements that the budget of the Department of National Defence was going to be under-spent by billions of dollars. While there was much suspicion that this was part of an effort to reach a balanced budget, the fact that the Trudeau government may be forced to make similar announcements — which may very well happen when this year’s budget is released — suggests something is broken besides campaign promises.
Indeed, when the Defence Policy Review, Strong, Secure, Engaged, was released in 2017 with promises of much greater defence spending, there was much criticism, as people anticipated that the Liberals had no intention of actually fulfilling those promises.
It turns out that there is a feature in Canadian defence that is enduring, regardless of the party in power: it is hard to spend large amounts of defence dollars.
This seems counter-intuitive, since most defence projects are expensive, and increasingly so, as defence costs inflate faster than most of the economy. Yet it is precisely that the big projects require complex processes to make the decisions, issue the contracts and then build the weapons systems that make it so easy for spending to slip from one year to the next.
Simply put, Canada does not have enough procurement specialists to do all of the work, as prior defence cuts have meant expertise is lagging when it comes to how to estimate costs quickly, how to develop clear requirements for contracts, and how to write contracts. On top of that, there is a cumbersome bureaucracy involving multiple ministers which means diffuse accountability — no single minister is accountable because several partially are. This means that decisions get delayed, which in turn means that money goes unspent.
The National Shipbuilding Strategy illustrates these problems quite well. It seemed simple. The shipyards were chosen years ago (in 2011) — Irving in Halifax for the frigates and the arctic offshore patrol vessels and Seaspan in Vancouver for the support ships. While that was the big political decision, it did not mean that designs of ships were chosen or subcontractors determined for various parts of the project. Picking ship designs is a complicated process, since the design that wins may influence which subcontractors get more or less of the work, and also because the Navy values flexibility, which means that tradeoffs may be deferred. Moreover, delays increase the costs in a variety of ways, so as governments change and tweak the requirements, deferring decisions causes the budgets to grow.
"No single minister is accountable because several partially are. This means that decisions get delayed, which in turn means that money goes unspent."
To be clear, while it often seems like the defence contractors are at the mercy of capricious politicians and delayed by the understaffing of procurement officials, they also can make everything more complicated. Currently, the highest-ranking officer in the Royal Canadian Navy, Vice Admiral Mark Norman, is suspended due to unproven claims he was embroiled in the rivalry the Irving shipbuilding company has with the Davie shipyards. The story is complex, but the ruthless desire by Irving to get every potential project made it more difficult to produce interim ships to supply the Navy at sea. In short, everyone involved is mismanaging defence procurement.
The F-35 story is very similar but “benefits” from more politicization. No major party can oppose the shipbuilding effort, nor can they be too critical, since it involves thousands of clearly identified jobs — and voters. The effort to replace the current fighter planes has been fraught from the outset, as politicians have attacked competing parties over decisions and non-decisions alike. Whatever “offsets” there might be that lead to high tech jobs in Canada, they are not so clearly tied to particularly communities, like ships in Halifax and Vancouver. This means that the various parties can politicize and threaten to cancel all they want.
To what effect? The Royal Canadian Navy simply cannot do as much as it once could. It cannot send as many ships to sea since the RCN has fewer ships. Because Canada is not at war, this does not endanger Canadian security — the absence of a few ships will not lead to our invasion. But it may mean that Canada cannot keep all of its commitments to its allies, that it cannot always show up when it is expected to do so. Politically, it is problematic; Canada was able to assure US President Donald Trump last year that while we may not spend two percent of GDP on defence anytime in the near future, Canada was going to be increasing its defence spending. But stories of deferring spending may cause Trump to overreact, as he will not read beyond the headline to realize that news is the result of procurement problems.
Politically, of all the promises Justin Trudeau made, the broken commitments on the defence file will probably cost him the least. Unless one works for a defence contractor, most people do not vote based on defence spending. The Conservatives can try to argue that they are more serious about national defence, but their lousy record of procurement is recent enough that they probably do not want to focus on it. The New Democratic Party will never try to outflank the Liberal Party to its right. So, the political consequences are probably minimal.
The most serious cost involved is that older equipment might endanger Canadian soldiers, sailors and aviators. They may not be able to perform their assigned missions to the best of their ability because their equipment may not function as well as it should, or as well as the equipment of their adversaries. So, while a navy reliant on leased supply ships or on an interim vessel might seem like a joke, this is not really a laughing matter.
When it comes to the realities of the modern military, the risks are significant and the consequences can be fatal. Getting better at procurement, something that Strong, Secure, and Engaged promised to do, is not just about saving money and preventing the government from being embarrassed. It is what we owe the people who risk their lives for Canada at home and abroad.
So, whatever promises are made in this budget, the focus should be on whether it includes significant improvements, including increased staffing, of Canada’s defence procurement specialists. Alas, these people don't just appear from thin air — they require training and experience. The question remains whether the new budget will create incentives and processes that begin to reverse the shortfalls. All we can be certain of is that if the procurement process is not fixed, more dollars will be pushed further into the future, and so will the ships, planes and other kit that the Canadian Armed Forces need.
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Rifleman62 said:
A very good article, and actually quite objective. IMHO this is not really a "Liberal" or a "Tory" problem: it's a "Govt of Canada" problem, including the DND and CAF. This can't just be blamed on politicians, as much as military people love doing that.
I recently read a history of the ill-fated Bobcat APC project which the Canadian Army launched back in the early 1960's. (IIRC you can see the sole surviving prototype in the RCAC Park at Borden). This sad story had all the sordid earmarks of a typical Canadian defence project, with all the usual suspects (or their contemporary equivalents). One thing was quite clear: the Army created some of its own grief with unrealistic "Cadillac" expectations for the vehicle, some of which were in advance of contemporary AFV technology. I think we may still have problems like this.
Remember that politicians, of any stripe, are usually opportunists. If defence spending doesn't offer any attractive opportunities for them, it will not have much priority.
Colin Parkinson
Army.ca Myth
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defense procurement in Canada has been broken since 1867, with only a few bright spots along the way.
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pbi said:
Defence procurement, even at the lowest levels, is seemingly designed to make people not procure anything. As an example- the current surplus in 1 CMBG is $4 million, give or take. But, because the PSPC purchasing deadline was in November, the Brigade can't purchase large items that it needs as nothing over $25k can be procured. So, the Bde will just inevitably turn the money in. the units can't even just buy gym equipment as it's over $25k, which gets you a grand sum of 3 treadmills.
If we can't have a system flexible enough to buy gym equipment for infantry battalions (which isn't controversial in any way) than how can we expect to buy vehicles or aircraft with any sort of competency?
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I don't know how long those rules have been inn place but, back a few decades, in the 1980s, we had a thing we called "March Madness" when people ~ it was real people, not nameless organizations ~ believed that if they turned any money back they would get less next year so they bought totally useless crap ... millions and millions of dollars worth of waste.
(Anecdote: it was 1984 and both my boss and I had just arrived in our new jobs; we were walking through the staff area leading to the office suite when he asked "What are all those colourful boxes that are on top of so many closets?" I went to ask and reported to him: "they are Dictaphones, Sir (office recording devices) purchased, this year, so that staff members can dictate their memos for production by the typing pools that were disbanded five years ago.")
Many silly rules are put in place to stop even sillier things from happening.
(Anecdote: it was 1984 and both my boss and I had just arrived in our new jobs; we were walking through the staff area leading to the office suite when he asked "What are all those colourful boxes that are on top of so many closets?" I went to ask and reported to him: "they are Dictaphones, Sir (office recording devices) purchased, this year, so that staff members can dictate their memos for production by the typing pools that were disbanded five years ago.")
Many silly rules are put in place to stop even sillier things from happening.
OldSolduer
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And this March Madness continues or at least it did when I was in.
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I remember all the hate I got at my old job when I started throwing out office furniture to try to give the Coord Bullpen a more professional and organized appearance.
"We can't throw that out, we only bought it three years ago!"
My reply:
1. Nobody uses it
2. It sits in the corner along with all that other stuff you bought collecting dust
3. It's a sunken expense
4. You only bought it to spend money at the end of the fiscal year
The CAF is worse than a lot of hoarders when it comes to keeping useless stuff. I am against big workdesks for a number of reasons, they are disorganized, people fill their drawers with all sorts of useless stuff. They also cause files to get lost. A gigantic table with no drawers is my style. An office can have a centralized file cabinet that can be locked should it be required.
"We can't throw that out, we only bought it three years ago!"
My reply:
1. Nobody uses it
2. It sits in the corner along with all that other stuff you bought collecting dust
3. It's a sunken expense
4. You only bought it to spend money at the end of the fiscal year
The CAF is worse than a lot of hoarders when it comes to keeping useless stuff. I am against big workdesks for a number of reasons, they are disorganized, people fill their drawers with all sorts of useless stuff. They also cause files to get lost. A gigantic table with no drawers is my style. An office can have a centralized file cabinet that can be locked should it be required.
McG
Army.ca Legend
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“March Madness” still exists, but the term is frowned upon and there is an expectation that a little more discipline is applied to the process. Most places maintain lists of opportunity purchase items - things that are needed but for which there is no funding set aside. As the FY progresses and monies go unspent (or costs shift to future years), there is the ability to reallocate money to buy these opportunity items.
In practice, year end money is usually spent on a mix to disciplined and impulse purchases.
In practice, year end money is usually spent on a mix to disciplined and impulse purchases.
J
jollyjacktar
Guest
We don't have it per se in ADM(Mat), they want up to have monies accounted for before end year. Any surplus goes back.
My previous units were getting more responsible in March and not spending on stupid shit.
My previous units were getting more responsible in March and not spending on stupid shit.
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Bird_Gunner45 said:
...perhaps the egg heads in accounting would rather see the infantry run around in circles - much cheaper than buying treadmills. The army isn't allowed to buy very much of anything with the controversial word "tread".
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E.R. Campbell said:I don't know how long those rules have been inn place but, back a few decades, in the 1980s, we had a thing we called "March Madness" when people ~ it was real people, not nameless organizations ~ believed that if they turned any money back they would get less next year so they bought totally useless crap ... millions and millions of dollars worth of waste.
(Anecdote: it was 1984 and both my boss and I had just arrived in our new jobs; we were walking through the staff area leading to the office suite when he asked "What are all those colourful boxes that are on top of so many closets?" I went to ask and reported to him: "they are Dictaphones, Sir (office recording devices) purchased, this year, so that staff members can dictate their memos for production by the typing pools that were disbanded five years ago.")
Many silly rules are put in place to stop even sillier things from happening.
The same attitude exists now, even though we do annual business planning. The regulations though are what drives the need to spend money as they state that all CO's must be within .05% or $3600 on a $641k budget to be considered "successful" which leads to March madness occurring as random things are bought to achieve this magical number. It's supposed to increase our financial stewardship, though the success of this is arguable at best.
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whiskey601 said:
That's the problem though- we really really really wanted to buy treadmills, 1 CMBG agreed to it, and we had the money. The problem is that while we could have purchsed $75k in treadmills the regulations are set up that everything over $25k goes to PSPC, which shut down purchasing in November (except for one 1 CMBG unit that forgot to replace $170k in tooling they sent to Latvia and realized in Dec when they failed an ERV). So, while the money was there, it wasn't something that any Canadian would get upset about if it hit newspapers, and we were going to do all the work to contract, PSPC regulations blocked it as there is no flexibility built in. That's the real problem- how can we expect to buy ships and airplanes in a system that doesn't allow to buy treadmills past month 7 of 12, when all that was required was a signature?
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Bird_Gunner45 said:
Are there standing offers in place? Plenty of ways to spend money effectively, if there's a plan and people willing to work at it.
Of course, the larger question is what was the original plan for the money, and why wasn't it used for that?
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dapaterson said:
There are still standing offers, but none for gym equipment nationally.
For 1 CMBG, the forest fires caused most units to miss autumn training FTXs and Ex IRON RAM was also smaller than predicted as most units couldn't support as much as they wanted due to the forest fires.
In 1 CMBG's fault though is the fact that it spent the first months of the FY acting like the end was nigh with low cost centres, then added to CC's as the situation became apparent. 1 CMBG didn't even put out an operating plan this FY, which is clearly to fault too.
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So work to get SOs in place for next year. Adopt LL from this to do better next time. Develop a plan to spend $20K/ year on the unit gym on a recurring basis.
Lots of ways to get value for money with opportunity funding... and not just by stockpiling dictaphones.
Lots of ways to get value for money with opportunity funding... and not just by stockpiling dictaphones.
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dapaterson said:
the national fitness equipment was supposed to be in place for this FY, which is why Shilo never renewed the old one.
The initial point is not about SO's or spending money, which is easy. It's about a system that is inflexible and inadaptable, which ours is regardless of standing offers.
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Lots of flexibility... but it requires planning ahead. And HHQs that don't wait for months to devolve funding.
The rules have not dramatically changed, yet every year people are surprised by what happens. Is the problem absolutely "the system", or those who make up the organization who don't ever seem to learn, year after year?
The rules have not dramatically changed, yet every year people are surprised by what happens. Is the problem absolutely "the system", or those who make up the organization who don't ever seem to learn, year after year?
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