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Wednesday, March 30, 2016

Audit says DND waste in the Millions

Written by David Pugliese, published in The Ottawa Citizen, March 30, 2016

Is the Department of National Defence wasting millions on parts for equipment that could be obsolete or that it plans to dispose of?

That’s the suggestion put forward in a newly released audit.

The 2015 document contends that DND doesn’t know how many private contractors it’s paying to repair its equipment. The situation, critics allege, was cultivated by deep cuts to full-time federal staff by the previous Conservative government.

While contesting some of the suggestions in the report — especially the notion of spending millions on obsolete parts — DND says it’s trying to improve, based on the recommendations. The Defence Department doesn’t know how many private contractors it is paying to repair vehicles and other army equipment, while at the same time it spends millions of dollars buying parts for equipment that could be obsolete or it plans to dispose of, according to a newly released audit.

The June 2015 evaluation by the Department of National Defence’s auditors suggested overall productivity for the organization that repairs and maintains land equipment and systems has been significantly reduced. But it is unclear why.

The auditors noted that private contractors are playing a significant role in maintenance management activities, jobs once held by military personnel and DND civilian workers.

“The number of contractors is not tracked,” the evaluation concluded. “The lack of availability of actual worker numbers is problematic,” it added. “Accessing the productivity of employees without this key data is not possible.”

The organization has 952 DND employees, 273 military personnel and an unknown number of contractors. It is responsible for maintaining and repairing thousands of pieces of equipment.

The DND says it is following up on the evaluation’s recommendations and will try to determine the number of contractors it has as well as establish management performance indicators by early next year.

But in its response to the auditors, DND officials dismissed concerns that parts are being purchased for equipment that could be obsolete. They countered that a majority of the purchases were legitimate. In some cases, large numbers of parts had to be bought to cover the life of specific equipment.

Defence union president John MacLennan said he wasn’t surprised by the warnings about private contractors. The Conservative government tried to save money by cutting full-time federal staff, he noted.

“What happened was that public servants were forced to leave and management brought in the contractors,” said MacLennan, president of the Union of National Defence Employees. “But it got out of control and you have the situation they find themselves in today.

“They cut vehicle mechanics, they cut maintenance people,” he said. “It was mismanagement, for sure.”

Since there are numerous contracts and subcontracts, it is difficult to figure out exactly how many private contractors are on the payroll, he added.

The government has promised to reduce spending on consultants and contractors. It wants to cut around $170 million annually.

Earlier this year, Postmedia News obtained a report prepared for DND that outlined plans to have private companies play more of a role in the maintenance of military equipment. But the report, produced by consulting firm KPMG, pointed out that there was a lack of accountability governing the plan. In addition, federal public servants were resistant.

The DND has already started a number of pilot projects on what it is calling its “Sustainment Initiative” and hopes to launch the program in June. Initially, most of the work is aimed at maintenance of ships but public service unions are worried the program will be expanded to include other equipment.

“Risks and issues are not well understood or clearly reported,” the KPMG report noted. “No consensus exists on progress to date and chances of success.

“The Sustainment Initiative has not utilized a number of fundamental program management components necessary for the success of such a large and complex initiative,” the KPMG report added.

On the positive side, the KPMG report points out that the initiative has strong support from DND leadership and industry.

But those involved in the initiative have also raised concerns there is a lack of a formal schedule or a detailed plan.

“There is a lack of a clear understanding of how decisions are made, or on what timeline results are expected,” the KPMG report added.