Sajjan: CF-18 Replacement Still Undecided

By: Ian MacLeod, Ottawa Citizen

OTTAWA — Defence Minister Harjit Sajjan insists government must move “quickly” selecting a new fighter jet, but acknowledged Wednesday the procurement plan remains way up in the air.

“We need to look at options that can bring us the right capability, for the right price and that can suit for Canada. It’s important that we move quickly,” Sajjan told reporters before meeting with defence and aerospace industry executives to discuss the major restructuring of Canada’s military, including replacing the fleet of CF-18 jets. The new defence policy is expected in early 2017.

But Sajjan refused to detail when and how the government will proceed. Asked what he meant by “quickly,” he replied: “I can’t give you a timeline just yet.”

He was equally ambiguous when confronted with the Liberal’s 2015 election promised to scrap the former Conservative government’s planned purchase of 65 F-35 stealth fighters and, “immediately launch an open and transparent competition to replace the CF-18 fighter aircraft.”

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“No decision has been made on procurement,” Sajjan said when asked if government is reneging. “I want to make sure I have all the necessary information, the right data. Once I have all the information, then we’ll go down the path of making a decision.”

The shifting Liberal narrative on a fighter jet replacement reflects an internal government struggle over how to fulfill the election promise without triggering a multi-billion-dollar lawsuit by F-35 builder Lockheed Martin, the U.S. aerospace giant, a senior Defence Department official recently told the Ottawa Citizen.

Prime Minister Justin Trudeau told the House of Commons in June the stealth fighter “does not work, and is far from working.”

Multiple sources have told the Citizen the government is intent on a sole-sourced purchase of Super Hornet fighters from Boeing as an “interim” measure. Sajjan recently visited Australia, which bought 24 of the aircraft about five years ago for $2.5 billion, to replace antiquated F-111 jets until newer F-35s were ready.

“We looked at the situation they were in, they provided us with good information, but we want to make sure we have a much wider perspective,” Sajjan said Wednesday of the trip.

A move to the Super Hornet would close what Sajjan began referring to this spring as a “capability gap” with the 77 CF-18s that are running full throttle to meet with Canada’s commitments to NATO and NORAD’s North American air defence.

We looked at the situation they were in, they provided us with good information, but we want to make sure we have a much wider perspective

“Between our NORAD and NATO commitments and how many jets are serviceable at one time, we cannot meet both those requirements simultaneously. That’s (what I mean) when I talk about capability gap,” he said.

“The Canadian Armed Forces have been risk-managing this problem for some time now and the previous government found it acceptable. I do not, and I want to make sure that we give all the tools necessary not to put the Canadian Armed Forces in a scenario to risk-manage.”

Sajjan then injected a new term into the debate: “(A) capability gap will lead to a capability loss. That’s exactly what’s happening with our navy right now. We require Spain and Chile to assist us with resupplying because we do not have ships right now to resupply us.

“I don’t want to go from a capability gap to a capability loss,” with fighter jets, too, he said.

Taxpayers could be on hook for bill after trade ruling questions $834M army truck contract

By: Lee Berthiaume, National Post 

OTTAWA — In a ruling that could cost taxpayers hundreds of millions of dollars, a federal trade tribunal has raised questions about the government’s handling of a military procurement project to buy desperately needed trucks for the army.

The ruling by the Canadian International Trade Tribunal represents the latest blow to Canada’s troubled military procurement system, which the Liberal government has vowed to fix without offering any details.

The vehicles were intended to replace a large part of the army’s existing truck fleet, which had been purchased during the 1980s and ’90s. Photo: 

In July 2015, the Conservative government announced that Pennsylvania-based Mack Defense, the military arm of the famed big-rig maker, had won a contract valued at more than $834 million to provide the Canadian Army with 1,500 specialized trucks.

The vehicles were intended to replace a large part of the army’s existing truck fleet, which had been purchased during the 1980s and ’90s. Many of those older trucks have been parked or sent to the scrap heap because of their age and to save money on maintenance and repairs.

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But Wisconsin-based Oshkosh Defense, which submitted its own truck design to the competition, challenged the government’s decision to award the contract to Mack Defense. Oshkosh alleged the department responsible for managing government purchases, Public Procurement Canada, had been unfair during design testing.

Late last week, the trade tribunal released a ruling calling on Public Works to re-evaluate Oshkosh’s design. If the results show the company should have won, the ruling says, then the government should compensate Oshkosh “for the profits it would have received had it been properly awarded the contract.”

If for some reason re-testing cannot be done, the government and Oshkosh are urged to negotiate compensation for the company’s “lost opportunity.” If they are unable to reach an agreement within 40 days, they are to go back to the tribunal.

Fortunately for the army, which is expecting the first new trucks to be delivered next year, the tribunal did not call on the government to push the reset button. “The Canadian International Trade Tribunal will not recommend that the contract awarded to Mack Defense LLC be cancelled,” the ruling reads.

Public Procurement Canada did not immediately respond to requests for comment.

Nonetheless, the ruling means taxpayers more than likely will have to foot the bill for the government’s error. It also reiterates the morass with which the entire military procurement system has been embroiled for years.

A large number of projects are facing delays, which has left the military lacking such vital equipment as resupply ships, or struggling to keep ancient equipment such as search-and-rescue planes in the air. Other projects are facing budget shortfalls that could result in fewer aircraft, ships and other pieces of equipment.

In addition, at a time of reduced military spending across the West, defence companies are fighting tooth and nail for every dollar. That includes resorting to legal challenges to try to scuttle the entire process in cases where their products lose.

The Liberal government has promised to fix the system, but has have offered few details on how that will happen. Defence Minister Harjit Sajjan has referred only to the government’s ongoing defence policy review, which isn’t expected to produce any results until next year.

Defence chief Gen. Jonathan Vance similarly dodged questions Tuesday about fixing the system, saying only that the government wants to be “innovative, both in process and in terms of where we put our efforts in the future.” He suggested that “bodes well for the country and for the armed forces.”

In the federal budget in March, the government announced it was pushing off $3.7 billion in planned equipment purchases for the foreseeable future. The government said such a “re-profiling” was necessary to ensure money was available when needed, but others such as retired general Rick Hillier said it was a budget cut.

Canadian Army Reserve Responds to AG Report

DND Press Release
Ottawa – National Defence / Canadian Army

Lieutenant-General Marquis Hainse, Commander of the Canadian Army, issued the following statement today regarding the 2016 Auditor General Spring Report:

“On behalf of the Canadian Army, I thank the Auditor General for his advice and recommendations in his report on the Canadian Army Reserve. I accept this report and will address its recommendations.

“The Canadian Army Reserve is an integrated part of the Canadian Army that contributes to the success of operations at home and abroad. This has been proven across the world most notably in Afghanistan over the last decade and here in Canada as recently as last summer with the forest fires in Saskatchewan. Equally important, the Army Reserve provides a footprint in over one hundred Canadian communities across Canada. Over the next year, the Canadian Armed Forces will consider the personnel pressures that are affecting attrition and retention and develop a plan to keep the Army Reserve strong and healthy. We are now in the process of implementing strategies to reduce a number of challenges identified in the recruiting process to make sure we have the right people for the future.

“Training is fundamental to operational excellence and I appreciate that the Auditor General has recommended areas where we can further improve. We are putting measures in place to continue to ensure that each reservist is prepared for any mission, domestic or international. Any gaps in training will be assessed and resolved before deployment and the completion of Army Reserve training objectives will be confirmed annually. We are also currently developing a plan to address the accessibility of equipment available for Reserve training as identified in the report.

“The Canadian Army takes the stewardship of public resources seriously and continuously works to improve its funding model. The Canadian Army is currently revising the Army Reserve funding model as part of its planned cyclical review process. The recommendations of the Auditor General will serve to inform this review and ensure the funding model is more transparent and accountable to the Government of Canada. The Canadian Army will work to ensure that funding is allocated in an efficient, responsive and timely fashion.

“Finally, I would like to emphasize that the Canadian Army always strives for excellence and we will continue to work at finding solutions to ensure that our soldiers are well trained, well lead and well equipped.”

Fortress Canada: How much of a military do we really need?

Written by: David McDonough and Tony Battista, CDA Institute 

As the Trudeau government pursues its review of Canada’s defence policy, an interesting debate is emerging in defence policy circles — between those who want to pull back from the world and those who think that would be a big mistake.

Sapper Mathieu Riva Maille (front) and Sapper Tommy Cabana (rear) fire a round from an 84mm Carl Gustaf anti-tank recoilless rifle during Exercise RAFALE BLANCHE in Valcartier, Quebec February 4, 2016.

Some have pointed to the safety and security offered by Canada’s geo-strategic location in North America as arguing for a homeland-focused defence policy. Thomas Juneau took up that thread last week, suggesting that the Canadian Armed Forces (CAF) should learn to “do less with less.”

Others have warned against using Canada’s relative security to justify a more modest military. By accepting such a “twisted logic,” as George Petrolekas calls it, we’d ignore not only the military requirements of non-discretionary missions at home and in North America, but also the hard power assets needed to pursue international peace and security.

Both sides make valid points. They also tend to overstate their positions.

It’s true that Canadians enjoy an island of safety in today’s global security environment, insulated from what’s happening in Ukraine, Syria and the South China Sea. This is partly a function of our geographically isolated position in North America; it’s also because we enjoy such a friendly relationship with our only close neighbour, the United States.

Indeed, observers have long been aware of Canada’s “involuntary security guarantee” from the superpower to the south. This guarantee may not be quite so ironclad today as it once was; ballistic missile defence is a good example of a gap in it. But in broad terms, America’s commitment to our defence does represent an important feature of the continental relationship.

Even during the darkest days of the Cold War, the only direct Soviet threat Canada faced was from strategic nuclear bomber and ballistic missile forces. And aside from some early continental efforts to establish a perimeter air defence network, we largely accepted that point of vulnerability — so long as America’s nuclear retaliatory capabilities remained intact.

Yet few would argue today that Canada should have used its relative security in the Cold War to justify either a reduction in its military capabilities or a sole focus on air defence. Instead, Canada found itself supporting the NATO “shield” with air and ground force deployments. We had two good reasons for doing that.

First, Canada’s approach to defence is often determined by our national interests abroad — from continental relations with the United States to trans-Atlantic ties with Europe. The fact that Canada enjoys safety from threats abroad could provide a foundation for Canadian defence policy, maybe even one that ultimately constrains its available strategic options. But it doesn’t have to.

Second, Canada recognizes that certain security developments abroad — while not having an immediate impact on Canadian and North American defence — might pose a more direct threat in the future. Which is why we’ve long preferred a “forward defence” approach in the pursuit of international peace and security.

Rather than resigning ourselves to doing less with less — or having unrealistic expectations about doing more with more — it would be prudent to instead ask if we might be more efficient with what we have.

These are the considerations that have shaped Canada’s defence policy since the Cold War, preventing a return to the isolationist impulses of the interwar period. Without them, it would have been all too easy for us to settle for a constabulary-type force backed by some air defence specialization.

So simply pointing to the conditions of Canada’s geo-strategic position — an observation that dates back at least to Raoul Dandurand’s 1924 claim that “we live in a fireproof house, far from inflammable material” — doesn’t really explain past Canadian defence policy. And using our isolation to chart our future security course would be strategically short-sighted; defence policy is as much about shaping military capabilities decades into the future as it is about deploying the resources we have now.

But it’s also a bad idea to stretch this argument too far. Basic conditions need to be met in the defence of Canada — and it would be difficult to accept “doing less with less” in such non-discretionary missions.

But no one is really arguing that Canada should settle for a reduced CAF unable to fulfil its domestic defence role. The real question is whether such domestic missions may have different — and less demanding — capability requirements than expeditionary operations. Naval ships that patrol coastal and Arctic waters, or aircraft that intercept foreign intruders, may not require the expensive higher-end capabilities needed for international missions.

And it’s not so easy to determine clearly where the needs of North American defence begin and end. There may be significant consequences to policy issues in which Canada has a serious interest — such as trade — if we’re seen by the Americans as a “freeloader”.

Our problem is that the perception is out there already: Canada has long taken advantage of the United States’ “involuntary security guarantees” to take a free ride on defence spending. We tended to allow the United States to absorb most of the cost of our air defence during the Cold War, we were initially reluctant to deploy forces to Europe (and sought to reduce that commitment in a hurry), and we were quick to embrace the so-called “peace dividend” of the post-Cold War period; in fact, it can be argued we sought that dividend in the early 1970s before partly reversing course.

As scholars like Joel Sokolsky have noted, Canada’s first question in military matters tends to be, “How much is just enough?” And we’ve never really faced serious consequences for our free-riding, making it a very hard habit to break.

So rather than resigning ourselves to doing less with less — or having unrealistic expectations about doing more with more — it would be prudent to instead ask if we might be more efficient with what we have. One area that should be explored is the size of our armed forces, and how much we spend on personnel compared to capital.

In a time of fiscal restraint, a fixation on military size can come at the expense of recapitalization requirements and fleet-replacement plans, to the detriment of the CAF. One need only look at regular force size versus spending levels between our key allies: Canada, with its relatively large force size and small defence budget, is an outlier.

One possible solution, of course, is to increase our defence spending. Given our relatively safe location, however, any arguments for a budget boost are likely to fall on deaf ears. The alternative is to right-size our forces to better ensure that the CAF remain multi-purpose and combat-capable — even if certain elements of the CAF (navy, air force, special forces) might benefit disproportionately from such a recalibration.

In that sense, having a smaller military doesn’t automatically mean global irrelevance. Instead, it could actually help safeguard Canada’s ability to continue taking both discretionary and non-discretionary military missions, at home and abroad. And making our military more efficient by recalibrating the force structure — even if that means a smaller regular force — would make the CAF more sustainable.

If Canada is really “back”, it has to be back with substance — and that includes our ability to meet our security and defence commitments in a credible way.

Author: David McDonough and Tony Battista

Dr. David McDonough is research manager and senior editor at the Conference of Defence Associations Institute (CDA Institute), and a Research Fellow at the Centre for Foreign Policy Studies at Dalhousie University. Tony Battista is the chief executive officer of the CDA and CDA Institute. Views expressed here are those of the authors, and do not necessarily reflect those of the CDA Institute. View all posts by David McDonough and Tony Battista

Perry: Our broken military procurement system

Written by David Perry, The National Post 

Every two years, apparently, the Department of Finance announces that Canada’s system for procuring military equipment is under-performing.

The 2016 budget had little to say about defence, but what it did say was depressing. A total of $3.716 billion in funding that was set aside for capital projects is being removed from the fiscal framework over the next five years, and reallocated out into the future. The funding, intended to buy ships, aircraft and vehicles for the military in the short term, has been shoved out into the distant future, to be used between 2021 and 2045.

Sadly, this is a reoccurring theme. The same thing happened in 2012 and again in 2014. In those years, the Harper government similarly pushed that exact same pot of funding into the future. In total, the Tories deferred $6.7 billion in funding pledged for major defence purchases. At the time, there was significant speculation then-prime minister Stephen Harper had done so as part of the effort to balance the budget.

Since Prime Minister Justin Trudeau’s “modest” deficits will total $113 billion over five years, this shifting of procurement funds is certainly not part of an effort to curb spending. Rather, it reflects a system of procuring defence equipment that simply cannot deliver on schedule. The funds can be moved largely because they “cannot be spent due to unforeseen delays in planned projects.” In essence, no matter how badly the equipment is needed, the government just isn’t able to get this money out the door on schedule.

he Budget Plan contains at least a partial explanation why this is. The cumulative military recapitalization plans outlined by the Martin and Harper governments were extremely aggressive. They were intended to procure tens of billions worth of new equipment in a few years. But adhering to that schedule would have required a major expansion of the procurement system’s capacity.

Instead, a procurement workforce that lost a huge amount of capacity during the 1990s grew only marginally during the 2000s, and was then hammered by Harper’s attempts to balance the books. At the same time, longstanding problems defining and communicating military requirements and costing projects persisted, and new, more onerous policies regarding investment planning and managing major projects were introduced, which meant that procuring military equipment took more time and effort. Major problems with the procurement of military helicopters and fighter jets flagged by the auditor general contributed to a loss of trust in the bureaucracy, resulting in new governance regimes that added further steps to the procurement process. As a result, the aggressive schedules proved increasingly unrealistic.

This all drives home the importance of the commitment the budget makes to improving the process for making major defence purchases over the coming year. No matter what form the revised defence policy takes, it will require further, significant spending on military re-capitalization. Turning the available funding into actual military equipment requires sustained attention from the government.

The creation of an ad hoc cabinet committee for major procurement files is a positive indication of a commitment to improve the system. This needs to be matched by increasing the capacity of the system by growing the workforce and increasing its level of expertise. As part of the defence policy review, our true priorities need to be identified and have resources concentrated on moving them forward.

Finally, few areas of government stand to benefit more than defence procurement from the government’s pledge to reorient toward actual outcomes. Inordinate focus is placed at present on complying perfectly with policies interpreted to demand zero risk to the government, rather than the actual acquisition of military equipment.

If this situation doesn’t change, the 2018 budget will be telling the exact same story of a defence procurement system unable to deliver what Canada needs.

National Post

Dave Perry is a senior analyst at the Canadian Global Affairs Institute.

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.