December 12, 2023 | Local, Aerospace
Canadian Army needs to spend $220 million to replace gear donated to Ukraine, says general
Canadian Army will need to spend $220 million to replace equipment donated to Ukraine but replacements could take years.
May 7, 2019 | Local, Aerospace
U.S. threatens to pull F-35 from jet competition over industrial requirements
By Lee Berthiaume, The Canadian Press
OTTAWA — U.S. officials have threatened to pull the F-35 out of the competition to replace the Royal Canadian Air Force's aging CF-18 fighters over the Liberal government's plan to ask bidders to re-invest some of the giant purchase contract in Canadian industry.
The warnings are in two letters sent to the government last year and obtained by defence analyst Richard Shimooka. They were released in a report published Monday by the Macdonald-Laurier Institute think-tank.
They say the requirement is incompatible with Canada's obligations as a member of the group of countries working together to develop the F-35 stealth fighter in the first place.
While the re-investment requirement is standard for most Canadian military procurements, the U.S. officials note Canada agreed not to include it when it signed on as one of nine F-35 partner countries in 2006.
Companies in those countries must instead compete for work associated with the plane — only companies from those countries are eligible, but they're supposed to compete on equal footing. The U.S. officials say conditions on bidders that would privilege Canadian companies will mean the F-35 won't be entered in the race.
The F-35, which is built by Lockheed Martin, had been expected to go up against the Eurofighter Typhoon, Saab Gripen and Boeing Super Hornet for an 88-plane procurement worth about $19 billion. French company Dassault pulled its Rafale from contention late last year.
"In summary, we cannot participate in an offer of the F-35 weapon system where requirements do not align with the F-35 partnership," U.S. Vice-Admiral Mathias Winter, program executive officer for the Pentagon's F-35 office, wrote on Dec. 18. "Such an offer would violate (the F-35 agreement) and place the entire F-35 partnership at risk."
In his letter to Paula Folkes-Dallaire, senior director of the fighter-jet program at Public Services and Procurement Canada, Winter asked for clarity by Jan. 31 as to the government's decision on the re-investment requirements.
Winter's letter followed a similar one from Ellen Lord, the Pentagon's head of military procurement, on Aug. 31, 2018.
In a statement, Public Procurement Minister Carla Qualtrough's spokeswoman said the government has engaged in several rounds of discussions and exchanges with potential bidders, which included providing them with opportunities "to ask questions, raise concerns and provide suggestions.
"Our government has been hard working to address as much of the supplier feedback as possible to ensure a level playing field and a fair and open competition with as many eligible suppliers as possible," added Ashley Michnowski.
"This stage of the process is not yet complete, though is nearing its conclusion and a final (request for proposals) will be issued soon."
The Pentagon's F-35 office did not return requests for comment.
Stephen Harper's Conservatives first announced plans to buy 65 F-35s without a competition in 2010, but backed off that plan over questions about cost and concerns over the Defence Department's tactics in getting government approval for the deal.
During the 2015 federal election campaign, Justin Trudeau's Liberals promised they would immediately launch an open and fair competition to replace the CF-18s, but not buy the F-35.
The Trudeau government has since said the F-35 will be allowed to compete while officials had been expecting to finally launch that competition in the coming weeks.
That the re-investment requirement remains unresolved is both surprising and unsurprising given defence experts have long warned it would be a significant obstacle to running a fair and open competition that includes the F-35.
Canada, which has already contributed roughly $500 million over the past 20 years toward developing the F-35, could in theory quit as a partner country, but would have to pay more for the stealth fighters if the F-35 won the competition.
Canada could also be on the hook for hundreds of millions more in development fees despite quitting the program, while Canadian companies would not be allowed to compete for work related to the aircraft.
In a recent interview, the Department of National Defence's head of military procurement, Patrick Finn, said the government is trying to strike the right balance between military and economic priorities when it comes to the fighter-jet competition.
"The feedback we're seeing from some suppliers some are quite content, some would like to see some more flexibility in other areas," he said.
"So it's making all of that work, respecting (companies') strengths, keeping everybody in the competition and doing it in a way that brings the right capability to the air force for decades to come."
—Follow @leeberthiaume on Twitter
Lee Berthiaume, The Canadian Press
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November 5, 2019 | Local, Aerospace, Naval, Land, C4ISR, Security
A new Defence Procurement Agency – Would it solve anything?
By Brian Mersereau Defence Watch Guest Writer During the recent federal election, the issue of considering a new Defence Procurement Agency or DPA surfaced again. The Liberals made such an organization part of their defence platform this time around as part of their plan to improve military procurement. While positive outcomes could result from a new organizational structure, simply installing one will not in and of itself create an efficient procurement model. It most certainly will not address in any substantive manner why taxpayers pay far too much to acquire the defence capabilities Canada needs to protect our sovereign interests in a world that has become increasingly unstable in recent years. It appears that, in many cases, Canada pays more per unit of capability to satisfy its defence needs than most of its allies. Unfortunately, though quite logically, this phenomenon has effectively shrunk the size of our armed forces as the number of platforms we can afford to acquire continues to dwindle due to high costs. While this approach can create short-term jobs, they are ultimately unsustainable since there is no international market for our higher-priced solutions. This is not the direction in which Canada should be headed. Before Canada decides to move ahead with a new procurement agency, it should assemble a “smart persons” panel or forum to thoroughly review the existing system and establish the mandate and objectives of whatever type of organization results from said review. Such a review group must be composed of people from the public and private sector with significant experience, not skewed with staff whose procurement experience primarily consists of exposure to the Canadian “way”. During this review, the panel must examine various issues which are currently perceived to be an impediment to the efficiency of Canada's procurement system. Based on my own years of experience on both the buy and sell sides of the procurement equation, the following areas merit some serious thought: Organizational Structure The fewer individuals, departments and oversight committees with their fingers in the “procurement pie”, the quicker and more coherently things will get done. Even at today's interest rates, time really is money for all involved in the process. Adding more time to a schedule for another management review quite often has a negative impact. While I understand governance and oversight committees have their place, their overinvolvement can produce negative outcomes if mandates are not absolutely clear and if individuals on these committees have limited experience with respect to the issue at hand. Risk Canada's ongoing method for defence procurement is that it will not assume any risk on their side of a contract. If Canada insists the private sector must accept all risk, the private sector will so oblige – but at a significant price and to the detriment of schedules and timelines. As contract prices necessarily increase, so do governments costs to manage the contract. In reality, the most efficient procurement solution for Canada would see some elements of risk managed by the buyer, rather than entirely borne by the seller. More consideration needs to go into balanced risk-sharing formulas. Process Canada has an extremely hands-on procurement process for major systems during the competitive phase, as well as during the implementation of the contract. Even in this digital age, Canada hamstrings its own progress with the sheer degree of detail and bureaucracy it requires; unbelievably, freight trucks are still required to deliver proposals. It seems as though, on occasion, the buyer thinks it knows more about designing and engineering the defence systems Canada needs than the actual designers and engineers for whom it is a primary occupation. Requirements of little or no consequence are painstakingly spelled out in the greatest of detail. Such an approach has a tremendous impact on the amount of time consumed by both the buyer and seller, again driving up costs and extending schedules. Less “hand holding” by the customer must be seriously considered. Sole Source In the procurement world, “sole source” is often viewed as a dirty phrase. Frequently, Canada attempts to run competitions in scenarios where the chances of achieving any meaningful savings or benefits related to competition are low at best. This takes years and drives costs higher at no measurable gain for the buyer. The parameters of when and under what circumstances Canada should move directly to a sole source should be thoroughly reviewed. Significant resources are being wasted managing nearly meaningless processes. Skills Canada's internal skill set for managing large, complex defence procurements does not appear to be adequate. As a result, it turns more and more often to the expertise of external third parties in order to keep up with large private sector firms at the negotiation table from a knowledge and experience standpoint. While there will always be a need for some third-party expertise, project managing many external suppliers in the negotiation phase – each of whom have their own agendas – only further complicates the already convoluted procurement process. Canada would be much better off with an enhanced internal core staff. If Canada takes the time to review the appropriateness of some form of DPA model, it must cast the net wider and review other critical aspects of the procurement process – or else any organizational changes will inevitably succumb to the systematic inertia of the overall process. A failure to do so means Canada will continue struggling mightily to stand-up the level of defence and security necessary to secure its citizens in an increasingly turbulent world. https://ottawacitizen.com/news/national/defence-watch/a-new-defence-procurement-agency-would-it-solve-anything
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February 24, 2024 | Local, Land
Registration is now open for Canada Army Run 2024
Looking to challenge yourself while making a difference for Canada’s Military community? Look no further than Canada Army Run 2024, presented by BMO.