February 13, 2019 | Local, Aerospace
An Ontario Senator says defence procurement needs better oversight and an improved process if it is to avoid the problems affecting the government's efforts to replace the Royal Canadian Air Force (RCAF) CF-188 fighter jet fleet.
“The fiasco of fighter jet replacement is the best example of a procurement system that is cumbersome, bureaucratic and beset by political interference,” Senator Nicole Eaton wrote in an article originally published in The Hill Times.
“Unless ministers start to devote close attention to the management of major projects, or until the process is overhauled, Canadians can continue to expect poor outcomes and wasted taxpayer dollars.”
Eaton is a member of the Senate National Finance Committee, which launched a study last fall into the processes and financial aspects of defence procurement. It held its first hearing on Oct. 30 and expects to conclude later this year.
In her article, the senator critiqued the process by which Conservative and Liberal governments have struggled to replace the aging CF-188 Hornets, noting that while both Canada and Australia are members of the U.S.-led Joint Strike Fighter program to develop the F-35, Australia received its first two operational F-35s in December while Canada, as part of an interim measure, is poised to take delivery of the first of 25 “well-used” Australian F-18s.
“As we take possession of Australia's scrap, Canada is in the early stages of a minimum five-year-long process to pick a replacement for the F-18, which will be more than 50 years old before it is retired in the 2030s,” she wrote.
The current government bears blame for creating some of the problems with the fighter file, she wrote, but “military procurement has bedeviled successive governments, Liberal and Conservative alike.”
She attributed part of the problem to political interference for both partisan advantage and regional turf protection, but said the main reason for “paralysis in military procurement in Canada is it is too cumbersome and bureaucratic. Process is paramount and results are secondary.
“There are layers of committees, depending on the size of the project, with membership from Public Services and Procurement Canada, National Defence, and Innovation, Science and Economic Development,” she wrote.
“The consensus-based decision-making process on which these committees operate is supposed to avoid a big mistake — no doubt an appealing quality for a risk-averse bureaucracy, but the downside is the system is not conducive to fast action. Simply put, the buck stops nowhere.”
Eaton suggested that bureaucratic morass has resulted in an inability to spend allotted project budgets, an indication the government could struggle to fulfil the commitments laid out in its 2017 defence policy, Strong, Secure, Engaged (SSE).
“In the last fiscal year, the policy projected capital spending of $6.1 billion, yet only $3.7 billion was spent. This year, $6.55 billion is called for under SSE, but total appropriations to date amount to $4 billion,” she noted. “Given this poor track record, the idea that military spending can be cranked up by 70 per cent over 10 years, as envisioned in Strong, Secure, Engaged, looks increasingly fanciful.
At the Finance committee's first hearing on the procurement system, Patrick Finn, assistant deputy minister, Materiel at the Department of National Defence, and André Fillion, assistant deputy minister for defence and marine procurement at Public Services and Procurement Canada, faced a barrage of questions on ongoing participation in the F-35 program, the authorities and mandates of interdepartmental committees involved in military procurement, and about the challenge of balancing military requirements with equipment costs and opportunities for Canadian industry.
“Buying a fighter plane isn't like buying a compact car, and the role of the government is very important. We had to adapt our method of supply to the context of fighter jets,” Fillion told the senators.
He said a draft RFP released in late October “was the result of many months of consultation on all five potential options (to replace the CF-188s).
“There has been a lot of back and forth over the last several months to make sure that what we are asking meets the requirements of the Air Force and ensures that we do not inadvertently limit the competition. I feel very confident that what we've put together is fair, open and transparent to all the potential suppliers.”
Finn said the government had met with and learned lessons from allies who had conducted similar fighter replacement programs. He also dismissed some of the concerns about acquiring used Australian aircraft to fill a gap while the government proceeds with the replacement project.
“In our opinion, Canada has the best expertise related to this type of aircraft. Some companies in Montreal do maintenance for the United States and other countries because they have the necessary knowledge,” he said.
“This aircraft will really increase our fleet, and it is not the number of aircraft that counts; it is rather the hours of use in the future. We are looking for an aircraft that will remain in service for another 14 years. What is needed is enough hours on the structural side. We will be able to use these aircraft until the entire fleet is no longer in service.”
https://www.skiesmag.com/news/senator-critiques-defence-procurement-process
October 1, 2021 | Local, Aerospace, Naval, Land, C4ISR, Security
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January 18, 2019 | Local, Naval
by Jeffrey F. Collins CGAI Fellow Executive Summary While both Canada and Australia share similar constitutional frameworks and imperial histories, they are also no stranger to procurement challenges. Cost overruns, delays, regionalism, and protracted intellectual property disputes have all been part of major defence acquisition projects in recent decades. This Policy Paper analyzes the largest and most expensive procurement projects undertaken by either country, Canada's $73 billion (estimated) National Shipbuilding Strategy (NSS), launched in 2010, and Australia's A$90 billion Naval Shipbuilding Plan (NSP), launched in 2017. Each project represents an attempt to implement a rational, multi-decade approach to naval acquisition. Driven by a desire to overcome previous boom-and-bust cycles, the NSS and NSP aim to create a sustainable shipbuilding sector capable of meeting the immediate and future naval demands of Ottawa and Canberra. Neither country has attempted a shipbuilding plan on this scale before. The NSS and NSP are still in their early stages but some common themes have emerged. On implementation challenges, old problems persist. For one, the rational approach to naval shipbuilding is not devoid of procurement politics and regionalism. Determining which province or state will be home to billions in contracts over many years remains a zero-sum game no matter how arms-length the process of yard selection. Cost increases also remain a reality. Building domestically can carry a 30 per cent to 40 per cent premium. Project delays increase this premium, something Canada has already experienced when initial NSS acquisition costs, pegged at $37.7 billion nearly a decade ago, jumped to an estimated $73 billion today. Australia's delays in securing an agreement with France's Naval Group on its $A50 billion future submarine project could mean additional cost increases. In this context, schedule is king and avoiding cost increases requires keeping to planned shipbuilding schedules. Failure to do so opens production gaps and necessitates going with alternative options including building overseas (Australia) or converting commercial vessels for naval and coast guard use (Canada). Prolonged cost sensitivities raise the consideration of trade-offs on committing more money to continuous shipbuilding at the expense of acquiring other military capabilities. Canada, for instance, will need to make decisions at some point on whether to spend billions on replacing the North Warning System in the country's North. Australia will have to grapple with an Indo-Pacific region proliferating with relatively cheaper but lethal anti-ship missiles. In this context, money spent on surface combatants may be perhaps better spent on other capabilities. None of this is to say that progress has not occurred in either the NSS or NSP. Ships are getting built, including Arctic Offshore Patrol Ships in Canada, and Offshore Patrol Vessels in Australia. In 2018, both countries selected the British Type-26 as their preferred design for a new generation of surface combatants. It is very possible that these respective strategies will achieve their goals of bypassing the boom-and-bust eras, but ongoing challenges serve as a reminder that even with the best-laid plans, naval shipbuilding is a complicated affair. 1 https://www.cgai.ca/overcoming_boom_and_bust_analyzing_national_shipbuilding_plans_in_canada_and_australia
November 7, 2018 | Local, Aerospace
By Lee Berthiaume The long effort to replace Canada's aging fighter jets took another surprise twist on Tuesday, as multiple sources revealed that French fighter-jet maker Dassault is pulling out of the multibillion-dollar competition. The decision comes just over a week after the federal government published the military's requirements for a replacement for Canada's CF-18s as well as a draft process by which a winning supplier will be chosen. Dassault had repeatedly pitched its Rafale aircraft to Canada over the years as successive governments in Ottawa have wrestled with selecting a new fighter jet. Dassault's pitch included significant promises, including that it would assemble the planes in Canada. But sources tell The Canadian Press that Dassault's decision to withdraw was related to the fact France is not a member of the Five Eyes intelligence-sharing network, which counts the U.S., Britain, Australia, New Zealand and Canada as members. The five members have very specific requirements for how their equipment works together. The French government, which had been closely working with Dassault as the most recent iteration of Canada's fighter-replacement program has inched along over the past year, was preparing to notify Ottawa of the company's withdrawal. The move leaves four companies — U.S. aerospace giants Lockheed Martin and Boeing, European competitor Airbus and Swedish firm Saab — competing for the $19-billion contract to replace Canada's 76 CF-18s with 88 new fighters. A contract isn't expected to be awarded until 2021 or 2022, with delivery of the first new aircraft slated for 2025. In the meantime, the government is planning to upgrade its CF-18s and buy 25 used fighters from Australia as a stopgap. Dassault faced several significant challenges in meeting Canada's requirements for a new fighter, said defence analyst David Perry of the Canadian Global Affairs Institute, and while they weren't insurmountable, they would have cost time and money. Those challenges included meeting those Five-Eyes intelligence-sharing requirements, which Perry said put Dassault at a distinct disadvantage in the competition when compared to Lockheed Martin, Boeing and, to a certain degree, Airbus. "For any of the non-American companies, solving the Five-Eyes interoperability issues is going to be challenging," he said, noting that the U.S. in particular is very sensitive about data-sharing. "And it costs companies a lot of money to mount and pursue bids. So if they think at this point in time that it's not a realistic prospect, then pulling out is pretty understandable." That could explain why Dassault never established a strong presence in Canada during the many years when it was trying to sell the Rafale as a replacement for the CF-18, he added. The CF-18s are about 35 years old. Canada's attempts to buy a new fighter jet have dragged on for nearly a decade after the previous Conservative government announced in 2010 that Canada would buy 65 F-35s without a competition, with the first to be delivered in 2015. But the Tories pushed the reset button in 2012 after the auditor general raised questions about the program and National Defence revealed the jets would cost $46 billion over their lifetimes. After campaigning on a promise not to buy the F-35s, the Trudeau Liberals announced in November 2016 they would take their time with a competition to replace the CF-18s, and buy 18 "interim" Boeing Super Hornets without a competition because Canada needed more fighter jets badly. But then Boeing's trade dispute with Canadian rival Bombardier saw the Liberals scrap their plan to buy Super Hornets and instead begin talks to buy 18 used fighter jets from Australia. A contract for those used planes is expected in the coming weeks. The formal competition to replace the CF-18s is scheduled to begin next spring. https://www.nationalobserver.com/2018/11/07/news/french-firm-dassault-pulls-out-fighter-jet-competition-sources