Military's procurement paralysis may see big changes

CBC News has learned the Conservative government intends to reform Canada's troubled system of military procurement and could announce its plans as early as next month's speech from the throne.

Those plans could see the formation of a new agency under a single minister to manage all military procurement, or a secretariat of bureaucrats from each of the departments currently involved in sourcing Canada's military equipment.

The decision to change the procurement process follows years of criticism of the government's handling of several massive military purchases worth tens of billions of dollars.

It's also been stung by the still-severe troubles with the nearly three-decade-old program to replace Canada's aging Sea King ship-borne helicopters.

The litany of bad news and criticism of procurement, alongside the apparent public perception of boondoggle and breakdown, seem now to have pushed the government into action.

Keith Beardsley, a veteran Conservative and former deputy chief of staff to Prime Minister Stephen Harper, says the government is feeling political pressure on the file.

Support for the military is a key Conservative political value and an essential part of its appeal to some supporters. But the current messy, sluggish nature of procurement has blocked the government from credibly claiming success on re-equipping the forces and at the same time being effective managers.

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"It is a management issue," Beardsley says, "because you have to deliver. Your reputation is based on how do you manage the economy, how you manage taxpayer dollars and you are constantly being attacked, pushed back by, 'what's wrong with this program, what's wrong with this particular item, this helicopter, this fighter aircraft,' whatever the case might be."

The hullabaloo over the F-35 fighter jet proved to be politically damaging to the Conservatives, although not lethal, and the government struggled to find a way out of that crisis. In the end, it damaged the government's reputation as a careful steward of taxpayers' dollars.

Earlier this month CBC News reported that, after waiting five years for the delivery of new helicopters to replace Canada's 50-year-old Sea Kings, the government has decided to look at other options.

Those options include the possibility of cancelling its multibillion-dollar contract with manufacturer Sikorsky in favour of perhaps pursuing a sole-source or "directed" purchase of one of its competitors: the AW 101, a descendant of the EH 101 helicopter once sought by Canada and cancelled in 1993 by then prime minister Jean Chrétien.

Although there's plenty of blame to go around, the Conservative government has managed the program since 2006.

That's a problem, says Beardsley.

"The [Conservative voter] base begins to wonder, and Canadians in general begin to wonder, what's your competence level if you can't get something simple? They see buying a piece of equipment like you go buy a car," Beardsley says.

And procurement problems don't just plague the air force. An Army program to buy new trucks officially stalled because of a dispute between departments over costs.

It's this program, unencumbered by regional or electoral politics, that perhaps best represents how bad things have become.

3 minutes to deadline

The program to buy new trucks was announced by former Conservative defence minister Gordon O'Connor in 2006. The government's deadline for proposals for 1,500 combat-ready logistics trucks was July 11, 2012.

But just three minutes before the deadline, Public Works killed the process.

The military had provided a cost estimate of about $800 million. But as the proposals started to come in, it appeared the price was going to be hundreds of millions more.

The military manager of procurement at the time was Associate Deputy Minister (Materiel) Dan Ross.

Ross, now retired, told the CBC News every department involved in the weekly procurement meetings was briefed on those higher costs. 

Nevertheless, he said, bureaucrats at Public Works insisted the program be cancelled, lest a minister be "surprised" by the higher price tag.

"It'll be at least three years before those trucks are delivered," Ross said.

Single agency or secretariat?

CBC News has learned officials presented ministers with two distinct options for reform.

The first is to wipe out the current bureaucratic muddle in favour of a new defence procurement agency, with a single minister accountable for the whole process.

Currently, procurement is managed by three ministers — Defence, Public Works and Industry — with oversight from three more so-called central agencies: the department of Finance, the Treasury Board and the prime minister's own Privy Council Office.

This option is popular among many of Canada's allies and is the preferred option inside the defence department.

You have to take some of the cooks out of the kitchen.- Dan Ross, former associate deputy minister (materiel)

The second and seemingly most likely option involves creating a permanent committee of senior bureaucrats from each of the procurement departments to work together to swiftly manage major purchases and programs.

This model was first used to manage a thoroughly stalled process to build new ships for the navy and coast guard. It removed ministers from decision-making. 

There is a third option: muscle through and try to get something significant finished before the next election, expected in 2015.

The first model, a single agency, is preferred by two former military procurement managers.

Alan Williams, the associate deputy minister (materiel) at the Department of National Defence until 2005, included the idea in his book, Reinventing Canadian Defence Procurement.

His successor, Dan Ross, is also a supporter of the idea.

"You have to take some of the cooks out of the kitchen," Ross says. "You need to do the business professionally with one minister, one deputy minister, one organization that is built to do the job."

Ross also suggests a committee of eminent Canadians be appointed to help review the military's requirements for big ticket items, like the F-35 fighter jet program, for instance, before the government starts its procurement. The committee would be able to transparently assess whether the military is cooking its requirements to favour a certain item or outcome, as it was accused of doing with the F-35.