Time To Wake Up On Procurement

November 1, 2005 by David J. Bercuson

Of all the interesting, dramatic, exciting, aspects of defence policy and military operations, none is more dull than procurement. The very word seems to induce boredom.

Military historians and defence policy analysts are well aware of the somnolent qualities of procurement study. In any well-stocked bookstore today there will be tomes on great military leaders, decisive battles, the evolution of strategy and tactics, intelligence, the art of war, military leadership, even supplies, logistics, and communications. But nothing on procurement.

This lack of public interest may explain why the procurement process in Canada seems to have gone completely off the rails. In a recent talk the president of the Conference of Defence Associations, former chief of defence staff Paul Manson, revealed that procurement times in Canada today often stretch over more than a decade. And that’s leaving aside the almost 20 year anomaly of the Maritime Helicopter contract.

Although it can hardly be said that the average Canadian taxpayer is paying closer attention to the procurement process today than, say 10 years ago, others–the press, the government, policy analysts–have recently put procurement squarely in their sights. Part of the reason for this ramped-up attention is that it is now admitted even by the government that much of the kit of the Canadian Forces is near, or even past, its “use by” date. The Maritime Helicopter marathon (not nearly complete even now), the Upholder submarine affair, the two-year lag on a new fixed wing search and rescue aircraft, and other cases have brought procurement increasingly into the public eye.

Procurement is also be- coming a hot topic because of the expense of modern military equipment.

Fighter aircraft in World War II could be purchased for a few tens of thousands of dollars each. An F/A-22 Raptor now costs tens of millions of dollars each. Refits of old equipment today can be even costlier than the original cost of the stuff when it was new. And although the high price does reflect much greater capability, it is also the product of the oligopoly conditions that now dominate the modern arms industry.

Then there is politics.

In Canada political considerations have long played a key role in the procurement process. Her Majesty’s Canadian Ship Bonaventure, the last Canadian aircraft carrier, was built in the United Kingdom and acquired by Canada in part to maintain Canada-UK defence ties at a time when Canada was starting to turn to the United States for many military requirements. The CF-105 Avro Arrow was to be a made-in-Canada aircraft to boost Canadian military aircraft technology and provide Canadian jobs. Similar motives produced the made-in-Canada Halifax-class frigates.

Regionalism and industrial offsets are other major factors complicating the procurement process. Jobs must be kept in Canada, whether in Kelowna for new army trucks or Quebec for jeeps. There is no evidence that good old corruption in the form of kickbacks affects procurement in Canada, it is more a matter of a process that has been corrupted by carrying too much baggage.

A piece of kit isn’t just something that soldiers use. It is a means of creating jobs, stimulating economic development in underdeveloped regions, currying favour with voters, cementing ties with other countries.

Canada isn’t the only country to be experiencing acute procurement problems right now. Britain, the U.S., and Australia just to name close allies, are also spending too much, getting too little, and dealing with lengthy delays in the delivery process. That F/A 22 Raptor fighter, for example, that will now cost the United States Air Force more than three times its projected price is also more than ten years behind schedule.

Defence Minister Bill Graham has set procurement reform as a major departmental objective. He is strongly supported by General Rick Hillier, the chief of defence staff. But reform won’t be easy. It is completely unrealistic for anyone to believe that costs will drop dramatically no matter what reforms are introduced. Modern military hardware is simply very complex, made by a small number of highly specialized manufacturers, and sold into a limited market. No one can suspend the laws of economics.

What can be done is to reduce the incredibly long time it takes from first blush to delivery. That in itself will shave costs, but more importantly it will re-introduce some sanity into military planning by ensuring that as the Canadian Forces transform, they will have the kit they need when they need it.

Some very basic assumptions must underlie procurement reform.

First, treat military hardware for what it is–weaponry–and stop loading it up with non-military imperatives.

Second, buy the product with the greatest value no matter where it is sold.

Third, don’t customize anything unless there is a dire necessity.

Fourth, wherever possible, buy off other countries’ production lines.

Fifth, create real incentives inside the Department of National Defence and the Canadian Forces for serving members to specialize in procurement and stay in it if they want to. We need to build memory and expertise.

Finally, accept that no decision is risk free. Mistakes will be made. Try to minimize the chances of wasting taxpayer dollars, but remember that no weapon ever made actually made economic sense. Weapons are not tools. They are not consumer goods. They are designed to destroy, not to build. They don’t provide pleasure or give sustenance.

Every weapon built is a waste of human talent and capital. A necessary one as long as war lasts, but a waste nonetheless. Don’t apologize for it; just get on with it.

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