FrontLine Defence

Tim Page is the President of the Canadian Defence and Security Industries Association (CADSI).

CADSI Viewpoint
Defence Procurements: Best Value for Canada

By Timothy Page

FrontLine Defence, vol. 3 no.1
January 2006

With the December excitement over the federal government’s decision to move forward with the purchase of new transport planes, one reality should remain absolutely clear as we begin the new year - there is anything but indifference from industry as to what the government is trying to achieve and how it is going about its business. The fact is that Canada’s defence and security industries care about the military getting what it needs, and we care that they get it as quickly as possible. We also care that the wider interests of the country, including economic, trade, technology and industrial growth are not undervalued in the process.

It is in that context that CADSI, the Canadian Association for Defence and Security Industries (formerly CDIA), believes that Canada’s management of major capital procurements could be better and, if it were, the military would be able to procure its new kit requirements more efficiently and effectively. At the same time, Canada would also be able to significantly improve its ability to leverage whole of government benefits that are meaningful and meet the strategic national objectives of the government. CADSI members recognize that, as a middle power with relatively limited defence dollars and a traditional reliance on foreign sources for major defence equipment platforms, Canada has to be more aggressive and strategic in both its acquisition strategies and program execution.

We believe that while the CF is capable of fighting its own battles the battle should not only be the CF’s to wage. Consequently, we have been trying to build bridges among all parts and levels of the federal government and between government and industry to achieve the best outcome possible. We believe best outcomes will be achieved through open communication with Canadian industry and transparent processes that produce strategic, whole of government objectives that stakeholders can support.

In short, CADSI believes that what is good for the Canadian military can also be good for the Canadian economy if it is well thought out and better managed.

Today’s defence and security industries contribute $7 billion in annual revenues to the domestic economy and employ 70,000 Canadians.

Sustaining and growing these numbers into the future in Canada will be directly influenced by how the government conducts major defence procurements today. To that end, CADSI supports:

a military force equipped to meet the mission objectives established for it by the government;
a government that is thinking and acting strategically to leverage net real and sustainable benefits for Canada from defence procurements, including benefits to Canada’s defence and security industries; and,
a procurement process that is fair, transparent and defined by performance based criteria.

We believe that these objectives are not mutually exclusive. Every country with an industrial base and strategic political leadership exercises their option to leverage benefits to their own country from defence procurements. We acknowledge that pursuit of these objectives is more difficult in a climate of political uncertainty and extremely high stakes for both the military and for Canadian industry.

CADSI suggests the following:

establish a clear Cabinet level strategic framework and policy objectives to be pursued for major defence acquisitions before the procurement process is launched;
engage Canadian industry from the earliest planning and concept phases of CF requirement definition to ensure the customer is aware of Canadian capabilities and viable options;
streamline the defence procurement process based on a fair and transparent process governed by performance-based, mission-focused criteria;
retain an independent, external fairness advisor to supplement internal expertise to ensure best process and best results from defence and security procurements.

Let me elaborate on these three points:

Establish clear political direction
To achieve best results on a government wide basis, there is a need for a Cabinet level, whole of government strategic consideration of how to leverage best value from defence procurements.

Canada (unlike France, the U.K., the U.S., Denmark, Norway, Australia, or others), has not been seen to leverage meaningful benefit to its economic, technology, trade and industrial interests. If it were to do so, it would identify specific sectors and technologies in Canada’s economic and industrial base that are deemed to be in Canada’s long-term strategic domestic security interests and where Canada has a real opportunity to be globally competitive. And it would ensure that those interests are successfully secured by negotiating direct domestic content requirements into the chosen platform and by securing indirect benefits that are meaningful and value-added to the Canadian economy and Canada’s international competitiveness. The first step is to ensure that Canada establishes clear strategic objectives it wishes to secure from defence procurements.

Engage industry early in the process
Industry has long expressed concern over the multi-year, internal, non-consultative process engaged in by CF project teams as they develop “performance” criteria for specific procurements that become defined more by the desired platform than by the desired mission outcome.

Producing a mutually agreed definition of a true performance based competitive procurement process that does not result in a pre-determined outcome would be a good first step. Engaging industry at the earliest stage of project concept and inviting industry innovation to provide the Canadian Forces with mission-consistent solutions would be a second positive step forward. Enhancing CF and industry technology cooperation and increasing CF outreach opportunities to Canadian industry would be further positive steps to a stronger CF understanding of Canadian capabilities.

Retain an independent, external advisor
The introduction of an independent, external advisor on defence procurements would be a good way to bridge current communication challenges between industry and the CF as it relates to defence procurement. It would be beneficial to the Canadian Forces because it would allow the CF to refer concerns over the process to an independent fairness advisor whose job would be to ensure fairness, transparency and an opportunity for all viable product or service options to be considered. The role of an external advisor would be appreciated by industry which would feel that there were adequate checks and balances in the procurement system to ensure that pre-determined choices would not be the outcome of major defence procurements.

These ideas are intended as constructive suggestions to expedite and facilitate procurement, provide the military with its required new equipment while at the same time, and without compromise, maximize Canadian economic, trade and industrial opportunities that should naturally flow from major defence procurements.

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