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Monday, December 7, 2015

Canadian Defence Review - What Needs to be Reviewed

During the Speech from the Throne last Friday, Justin Trudeau's Liberal Majority Government had little to say on Defence - the few short sentences mentioned little to no specifics.

Here is the text relating to the CAF from the Throne Speech:

"...To contribute to greater peace throughout the world, the Government will renew Canada's commitment to United Nations peacekeeping operations, and will continue to work with its allies in the fight against terrorism.

To keep Canadians safe and be ready to respond when needed, the Government will launch an open and transparent process to review existing defence capabilities, and will invest in building a leaner, more agile, better-equipped military."

What does that all mean? 

We know that during the 2015 Federal Election the Liberals promised to withdraw from the Aireal Bombing Campaign against ISIS; scrap the F-35 Purchase; ensure the Navy got the Vessels it needs; and return to more Peacekeeping missions. Only one of these things was mentioned in the Throne Speech. As Rona Ambrose, the Leader of the Official Opposition pointed out following the reading, the Speech doesn't even mention ISIS. 

Let's take a look a a few things within the CAF that need a review; 

1. The Budget

Under the previous Liberal Government of Jean Chretien - the CAF called the 1990s the "Decade of Darkness." This is not all that far off from what is was. The Chretien Government cut defence spending 25% from $12 billion in 1993 to $9.4B in 1998; cut troop levels from 74,000 to below 60,000; while at the same time deploying CAF members on almost every UN Peacekeeping mission that came up. 

Some of these Missions were highly required; and were laden with heavy burdens for the CAF. One of these missions was the 2000-03 deployment to Ethiopia and Eritrea. Under OP ECLIPSE and OP ADDITION, CAF equipment was hit by a great tole of wear and tare. 

During the same time, Canada deployed to Afghanistan in 2002 - which led to a stretching of CAF personnel, when retention within the CAF became a huge problem.  All while the CAF was facing a nearly $15 billion equipment shortfall. 

This all helped the 2006 Conservative victory with their "Stand Up for Canada" campaign, followed by their Canada First Defence Strategy  (CFDS) in 2008. The Conservatives made jokes about the Liberal Parties management of the CAF; heavily called them out on deploying the CAF to arid (desert-like) climates in temperate (forest) camouflage.  The Conservatives also vowed to move beyond the operational "Tokenism" of peacekeeping, and allow Canada to make a substantial contribution to international security. 

Was the Conservative's decade all that much better? If we take a closer look; the period from 2006-2009 can almost be called "Golden Years" for the CAF. In 2006 the Conservatives quickly announced $17 Billion worth of procurement projects. The CAF would be shopping for: 
  • 3 Joint Support Ships; 
  • 6-8 Arctic Offshore Patrol Ships;
  • 4 C-17 Strategic Lift Aircraft; and 
  • 17 C-130 Tactical Transport Aircarft 
These were just to start the revitalization of the CAF. The Government at the time also announced  an increase to $14.5 Billion. 

Then came the CFDS - which outlined a 20-year funding formula that would increase defence spending 2% from 2008 until 2028. In real terms, the Budget would increase from $18 Billion (2008) to $30 Billion (*2028 Projection) - an increase of $490 Billion over two decades; of which nearly $50 billion would be for equipment acquisitions. The Government would increase the regular force back to over 70,000 and increase the reserves to 30,000. 

Added to the list of procurements for the CAF were: 
  • 65 "Next-Generation" Fighter Jets to replace the CF-18s; 
  • 100 Leopard-II Tanks;
  • 17 Fixed-Wing Search and Rescue Aircraft to replace the Buffalo aircraft; 
  • 15 Canadian Surface Combatant (CSC) Warships to revitalize the Royal Canadian Navy;
  • 10 to 12 Maritime Patrol Aircaft; and
  • A fleet (100+) close combat armored vehicles.   
Up until 2010-2011 the Conservative Government largely followed the CFDS - the budget had increased nearly 24%. The CAF had received: 
  • 3 C-17 Aircraft; 
  • Dozens of new C-130's;
  • Numerous new or leased tanks;
  • Numerous M-777 howitzers; and
  • purchased Chinook Strategic Lift Helicopters 
While these successes seem all well and good - the other procurement plans; particularly the replacement of the entire Naval fleet was on hold. This was partly because of cost overruns in the planning, and development stage of the National Ship Building Plan (NSBP) - it was largely the fault of Afghanistan that everything else was put on hold.

With the Afghan War (2001-2014) the army rightly became the priority; meaning a vast majority of procurement funds were being diverted into its needs. $1.3 Billion was used for the Leopard II tanks; the Parliamentary Budget put the total coast of Afghanistan at $18 Billion through 2011.

At the closing of the stimulous spending in the 2012 Budget, 1/5 of all savings were to come from Defence; and by 2014, 1/4 of all savings came out of Defence. This effectively made CFDS unusable.

From its height in 2011, Defence spending was at $22 Billion, but by 2013, that had dropped to $19 Billion; and when adjusted for inflation it was approimatly the same as it was in 2005 before the Conservatives took power. As a percentage of GDP, it stood at 1.1% (the same level as it was during the "Decade of Darkness")

With these cuts, most projects are underfunded - and on the rails of collapse. The CSC Ships are at least $15 Billion short - and the Navy is estimating it will only get 8 Vessels instead of the needed 15. As a stopgap measure, the CAF is spending $4.2 Billion on upgrades to the Halifax-class frigates to keep them operational until the CSC Fleet is ready (between 2025-2035); another $1.2 Billion to upgrade its current light armored vehicles; and $100 million on a second round of upgrades to the 77 CF-18's still flying; and will spend $500 million to lease a retrofitted boxship that will be made into an interim auxiliary oil replenishment ship (iAOR).

So a major review of the overall Defence budget is required. The Liberal Government has said it will withdraw from the JSF F-35 program which was going to cost nearly $16 Billion for 65 Fighters (including life cycle management costs) and find a cheaper alternative, while moving the saved funds into the CSC Fleet program. The FWSAR aircraft contract has not yet been awarded, and neither has the Maritime Patrol Aircraft contracts. The Liberals will need to be willing to put enough money into Defence to restore the CAF to pre-Afghan War equipment readiness levels. The CAF gained a great deal of experience in Afghanistan, but its equipment got worn out and needs to be replaced.

A Defence review must show that Defence needs more Money; as the Parliamentary Budget Officer believes that just on Procurement, the CAF is short between $33-$42 Billion (November 2015 figures).

"This gap must be addressed if the government hopes to recapitalize the CAF, maintain the current force structure, and ensure defence sustainability. This paper will explore some of the short- and long-term challenges currently facing the CAF, from capability gaps to recapitalization, and assess some of the Liberal promises to fix these problems. It concludes with some thoughts on the need to recalibrate defence resource allocations." (McDonough)
defence_chart1
From Maclean's Magazine Defence Issue during the 2015 Election. 

2. Procurement 

Procurement has largely been a joke in the CAF for many years, plagued by an over complex bureaucracy - projects have been started, and cancelled multiple time costing taxpayers millions of dollars. The Procurement process needs to be simplified while ensuring the correct and needed equipment is purchased in a timely manner at an appropriate cost.

Here is a list of current projects and their overruns:

  • Arctic Off Shore Patrol Ships - Cost: $3.1 Billion for 6 to 8 Ships, the first delivery was expected in 2013 - it is now not expected until 2021; with the final ship in 2025. In all likely hood, only 6 will be built. 
  • Maritime Patrol Aircraft - Cost: $7 Bullion for 10 to 12 Aircraft. Delivery was supposed to take place in 2020 - but current fiscal restraints has the contract date not until 2025, with delivery taking place between 2026 and 2035. Instead the RCAF is spending $2 Billion to upgrade its 14 CP-140 Aurora's. 
  • Canadian Surface Combatant Fleet - Cost: $29 Billion (Estimated to be at least $14 Billion short). Original first delivery date was between 2016 and 2017; especially for the Joint Support Ships (AORs) but all dates now between 2021 and 2035. (This includes the JSS Contracts)
  • CF-18 Replacement Program - Cost $17 Billion (Estimate based on F-35 Purchase). Fleet was supposed to be replaced by 2017. CF-18s currently undergoing 2nd Life extension plan to keep the fleet flying until at least 2020, with delivery of new aircraft not expected until between 2025 and 2035. 
  • Close Combat Vehicles - Cost: $2.1 Billion - Project Cancelled in 2013 due to Financial Restraints. 
  • FWSAR Aircraft - Cost: $1.4 Billion - Original Delivery Date was 2014-2015. There has been no contract awarded, it is expected in early 2016, with delivery between 2021 and 2025. 
  •  UAV Program - Cost: $1.5 Billion - Original Delivery Date was 2011 - now not expected until between 2021 and 2025. 
  • LAV III Life Extension Program - Cost: $1.2 Billion - Expected completion 2018. 
  • Maritime Helicopter Program - Cost: $5.7 Billion - Replacement of the Sea King Helicopters. Program was started in 2004, with delivery in 2008. Was later cancelled and restarted. Now deliveries started in 2015 but full operational status not expected until 2018, and final delivery in 2020. 
  • Medium Support Vehicles (1,500 Military Pattern Trucks) - Cost: $1.2 Billion. The Program has been cancelled twice since 2006. Original delivery was set between 2008 and 2010. Contract was due in 2015 and delivery between 2017 and 2018. 
  • Medium Heavy Lift Helicopters - Cost: $4.9 Billion. 15 of 16 Planned were purchased; but 5 years later than originally scheduled. Last was delivered in 2014. 
  • Tactical Armoured Patrol Vehicle - Cost: $708 Million for 500 vehicles. Contract was awarded in 2012 with deliveries expected in 2014. Problems with the design of the vehicle has post postponed deliveries until at least 2016. 
A Defence review must show that Defence to simplify the procurement process, and increase the amount of currency available for these projects. As delays run longer, it is inevitable these programs will cost even more. 


3. Peacekeeping and Staffing Levels

If the Liberal Government plans to return Canada to it's global Peacekeeping Role, both Procurement and the Budget need to be fixed first. The more missions you deploy on, the greater amount of the Defence budget is spent on Deployment costs (higher wages, shipping, and equipment). Equipment breaks in theater, and it is often cheaper to scrap the equipment in theater than ship it home to repair it. The more missions, the more equipment you need to have to deploy in the first place.

So before you can deploy on a greater number of UN mandated missions, you need to resupply and re-arm the CAF; which means more Money. You also need to work on increasing staffing levels, which inevitably, you guessed it - costs more money. The more deployment CAF personnel go on, the higher number of retirements from the CAF - so retention then becomes an issue.

These are the three things that I believe need a review in the Canadian Defence World. What do you think?

Sources: 

Collins, Jeffrey F. "Reviving and Revising the Canada First Defence Strategy." (November 2014) http://www.c2cjournal.ca/2014/11/reviving-and-revising-the-canada-first-defence-strategy/#

Maclean's Magazine: "Election Issues 2015:  A Maclean's Primer on Defence Spending" (August, 2 2015) http://www.macleans.ca/politics/ottawa/defence-primer/ 

McDonough, David. "Procurement Challenges for the New Liberal Government." CDA Institute Vimy Paper November 2015.  http://www.cdainstitute.ca/images/Analysis/McDonough_Analysis_November_2015.pdf 

Perry, David. "The Growing Gap Between Defence End and Means." CDA Institute Vimy Paper June 2014. https://www.cdainstitute.ca/images/PerryBudgetJune2014.pdf