Defence deputy minister to start sweeping procurement-rules review this summer

By EMILY HAWS

Department of National Defence deputy minister Jody Thomas says she'll work through the summer to review how the Canadian government buys defence equipment, with a view to paring down the procurement process to get projects out the door quicker.

That could even mean more use of sole-source contracts, when it doesn't make sense to hold a competition.

She says the department wants to ensure the money outlined in Strong, Secure, Engaged—the government's 20-year defence policy unveiled last year—is spent.

The department took flak earlier earlier this year for not having the capacity to push procurement projects outlined in the plan through the system at the expected pace.

Speaking at a June 7 conference organized by the Canadian Global Affairs Institute think-tank in Ottawa on the first anniversary of the defence policy, Ms. Thomas suggested switching up the rules around sole-source contracting. She discussed the idea on a panel with other top DND executives Gordon Venner and Bill Matthews, moderated by CGAI defence procurement expert David Perry.

“I think what we want to do and what is expected of us is to have an honest conversation,” Ms. Thomas told the audience. “Where we know there's one supplier in the world that is compliant, Five Eyes-compliant, NORAD-compliant, whatever compliancy we need—to run a competition [in that case] where there is no hope of multiple bidders wastes [everyone's] time; it's kind of disingenuous and dishonest,” she said, referring to security alliances of which Canada is a member.

“We have to talk to ministers about that, and ministers are open to that conversation.”

Mr. Perry said in a separate interview that the change in process would be a big deal, but it would only happen if the government decides its priority is to spend money. The department is trying to determine a better balance between spending and oversight, he said, but it needs to keep in mind that the “objective is to spend money, not follow a thousand steps and do multiple dozens of reviews.”

Sometimes government officials try overly hard to make the bid process competitive, said Mr. Perry, so they end up sending to Treasury Board for review some bids that clearly don't meet requirements. This leaves Treasury Board officials with only one compliant bidder, which in turn leads these keepers of the public purse to ask more questions and perhaps conduct reviews.

For example, the government is looking at buying one or more tanker aircraft, and is narrowing down the list of eligible companies, said Mr. Perry. There are basically only two companies that sell tankers, Airbus and Boeing, he said.

“You set it up so that everyone has a chance, but that doesn't actually mean that you can actually have a really competitive environment that have at least two bids that actually meet all of the mandatory things you need to meet to submit a bid,” he said.

Depending on the extent the rules shift, they may require approval from not just Defence Minister Harjit Sajjan (Vancouver South, B.C.), but Treasury Board and the larger cabinet, he added.

Conservative MP James Bezan (Selkirk-Interlake-Eastman, Man.) and NDP MP Randall Garrison (Esquimalt-Saanich-Sooke, B.C.), defence critics for their respective parties, said they support streamlining the procurement process, but Mr. Bezan said the Liberals just need to be more decisive. Industry representatives are also supportive, with the Canadian Association of Defence and Security Industries (CADSI) calling the move “refreshing” in an emailed statement.

DND is trying to increase its procurement workforce, said Ms. Thomas, adding that the procurement process is the same regardless of whether the contract is worth $1-million or $1-billion. Ms. Thomas, who has been in her role since October, said the rules were put in place after the department received criticism from the auditor general.

“We've been risk-averse and we've been criticized, so a deputy's normal reaction to criticism or recommendations from the auditor general is to put process in place,” she said. “I absolutely understand that; we need to make sure it's appropriate to the complexity of the project.”

She said she's going to work through the summer to analyze the number of steps in the procurement process to determine the value they serve and where they can be reduced.

Ms. Thomas said she will create “sort of a lean methodology of the number of hands something has to touch, how long do we spend in project definition, [and] how long we spend in options analysis.”

Byrne Furlong, a spokesperson for the defence minister, said in an emailed statement the review will accelerate approvals and delivery.

“Ensuring our Canadian Armed Forces [are] well-equipped to deliver on what Canada requires of them is a significant undertaking,” she said, adding the government is committed to doing so.

New defence policy ups procurement spending

Earlier this year, Mr. Perry authored a report suggesting the procurement plans laid out in Strong, Secure, Engaged could be threatened by long-standing process problems. The new policy would see procurement ramp up from about $3.5-billion to $4-billion annually, in 2018-19 dollars, to $12-billion.

Defence procurement budgets were cut from about 1990 until the mid-2000s, he said. Now Prime Minister Justin Trudeau (Papineau, Que.) is trying to play catch-up, but there's a bottlenecking of purchases. The government both doesn't have enough people to approve the projects, nor the quality of experience to work the larger, more technical jobs, Mr. Perry said in a previous interview.

There are five critical steps to procuring defence equipment which spans from identification to close-out. Most work is done by DND to determine what it needs, said Mr. Perry, but the actual competition is run by Public Services and Procurement Canada (PSPC). The change in rules Ms. Thomas is contemplating would only apply to DND, she said, as that's her jurisdiction.

CADSI president Christyn Cianfarani said, to her knowledge, a review in such a systematic way hasn't been done for some time. She said she sees the move as positive, allowing the government to properly balance risk and acquisition.

“With the launch of SSE and the Investment Plan, the deputy minister's call to review the system is timely,” she said. “In this critical period of recapitalization, we simply cannot expect to move four times the volume of procurement through the same old procurement system.”

When asked about the sole-sourcing of contracts, Ms. Cianfarani said competition is just one tool to meet policy objectives. She wants more sole-sourcing to Canadian firms and more Canadian-only competitions between companies with similar capabilities, price, and proven roots in Canada.

Liberals just need to decide, says Conservative critic

Mr. Bezan said sole-source contracting is almost impossible to do when the country isn't at war because one must argue it's in the best interest of national security and the taxpayer.

The Liberals need to be more decisive on what equipment they want to buy, he added, saying they are risk-averse.

“Fighter jets is a good example. They have punted the close of the competition—making the decision—until 2021,” he said. “Most countries run these competitions in around a year, and this was launched three to four months ago ... they should be able to close this off and make a decision within six to nine months.”

The Conservative government before it tried and failed to procure fighter jets for several years too, incurring political controversy along the way, with accusations of conducting a flawed process of the purchase of billions of dollars.

Mr. Garrison said the NDP welcomes efficiencies in the procurement process that benefit the armed forces and support Canadian industry, as well as meet DND targets.

https://www.hilltimes.com/2018/06/13/defence-deputy-minister-begin-reviewing-procurement-rules-summer/147489