Peter Boag is the President and CEO of the Aerospace Industries Association of Canada (AIAC).
AIAC Viewpoint Do it Right for Canada By Peter Boag
FrontLine Defence, On-line January 2006
One of the casualties of the Federal governmentxs long campaign to balance its annual budget was the Canadian military. A decade of substantially lower spending reduced the Canadian Forces in size, strength and flexibility. Fortunately, the Government has begun to reverse the process through an infusion of much-needed funds. Unfortunately, the consequences of past delay and deferred investment remain with us, and will stay with us for years to come. The challenge facing the Government is clear: to xdo right by the Canadian Forcesx in the short term through an expeditious and efficient re-equipment process, but to xdo it rightx through an open and fair procurement process that xgets it right for Canadax in the long run by achieving an optimal return on investment for Canadian taxpayers as a whole.
Throughout the decade of deficit reduction, a vocal supporter of a renewed Canadian military capability was the aerospace sector. The industryxs message has been constant and consistent; and remains so today.
Canada needs a new and better approach to defence procurement before itxs too late. Contract competitions start too late and take too long.
Delay distorts the result. The longer acquisitions are delayed and existing equipment is degraded, the more DNDxs (understandable) desire for immediate possession outweighs such important factors as advancing Canadian technology and manufacturing excellence and obtaining best overall value over the complete lifecycle of the equipment.
The result is a systemic bias in favour of readily-available xoff the shelfx equipment, usually from a foreign source, and often at the expense of Canadian based-supply. Unlike other nations, Canada generally forfeits the opportunity to lever its defence procurement power to stimulate domestic innovation and technology development and commercialization, and the long-term industrial and economic benefits that result. This drives Canadian firms to relocate to other countries, especially the United States, to compete for foreign defence procurement opportunities. The implications of this breed of xoff-shoringx for Canadaxs technology and industrial base are significant. For in a dual-use technology world, moving your defence market capability from Canada, generally means that the civil capability will soon follow.
This off-the-shelf approach is usually biased to a specific piece of equipment. Procurement xcompetitionsx are increasingly pre-determined through precise and sometimes artificial specifications that favour a preferred solution, further limiting industryxs ability to propose innovative, cost-effective solutions that meet Canadian Forces mission, function and performance requirements.
These behaviors significantly limit Canadaxs ability to achieve maximum return from its defence procurement investment. They short change the Canadian Forces, Canadian industry, and Canadian taxpayers.
Last April, then-Industry Minister Emerson announced the formation of a Canadian Aerospace Partnership (CAP) involving the federal government, key aerospace provinces and representatives of industry, labour and academe. The mandate of CAP is to formulate an effective Canadian aerospace strategy in light of prevailing global challenges and opportunities. Since that time, industry representatives have been working diligently and in good faith with their public sector partners to devise realistic and practical approaches to various issues affecting both civil and military aviation markets, including a reformed domestic defence procurement process.
Key recommendations of the CAP Procurement Working Group have included: · Greater involvement of elected representatives and senior officials early in the process to provide political oversight and broad policy direction; · Open and early consultation between the Government and private sector ? active and regular two-way dialogue early in the process, not just late in the day; · Timely procurements, so the desire for early delivery does not overwhelm longer term considerations within the scoring criteria; · Exercising Canadaxs negotiated rights under international trade agreements to select between compliant bids not just on the narrow grounds of price, but the broader and total benefits to Canada; and · Using the Governmentxs procurement power in a more strategic manner to build on existing Canadian technology capability in ways that promote international competitiveness and future export opportunities. This would include the adoption of xmission basedx, performance-specifications in Statement of Requirements and a greater appetite for risk/reward sharing.
The past under-funding of the Canadian Forces was wrong and short-sighted. The upcoming purchase of rotary and fixed wing military aircraft is long overdue. Procurement decisions taken in 2006 will have profound long-term implications for many Canadian-based firms located in many parts of the country. It would be wrong to proceed with the acquisition of these aircraft in a way that further erodes public confidence in the integrity and intelligence of federal government procurement policies and practices. Instead, the Government needs to think things through and get the process right from the outset, weighing all relevant public policy considerations so it optimizes the benefits not only for the Canadian Forces, but Canadians writ large. Then, the Government needs to act quickly and professionally, in the process disproving the cynical and erroneous notion that the quality of a decision somehow depends on the quantity of time taken to reach it.
The Canadian aerospace industry stands ready to work with the Government to formulate a more effective and strategic approach to military procurement that would enhance Canadaxs national security while advancing Canadax international competitiveness and technology development. Letxs learn from past mistakes. In the future, letxs xdo it rightx and xget it rightx for the Canadian Forces and for Canada.
