CASR

Defence
Budget & 
Procurement
Practices 

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O A G
Report
Fall '09
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DND Vehicle Procurement Projects – Auditor General's Report – November 2009 2009 Fall Report of the Auditor General of Canada –  Chapter 5 Acquiring Military Vehicles  for Use  in Afghanistan  –  LAV RWS The Auditor General's report on military vehicle acquisitions reviews  DND's procure- ment of four different vehicle types – the RG-31 Armoured Patrol Vehicle, the AHSVS heavy truck,  the Leopard 2 Tank Replacement Project, and  the LAV RWS project  to convert surplus LAV TUA hulls to ISCs. Here we cover those LAV RWS conversions. The Auditor General's  report  on the LAV RWS or Light Armoured Vehicle - Remote Weapon Station  explains the long delays in a seemingly simple conversion process. More complicated than DND planners had realized, converting 33 surplus  LAV TUA ran two years over time, will deliver only 18 LAV RWS into the field, and costs double. As with their audit of the Tank Replacement Project, the OAG assigned blame in LAV RWS delays to DND's failure to allow for training demands. As a result, 15 LAV RWS will need to stay in Canada for familiarization training purposes. Thus, no more than 18 of the 33 LAV RWS conversions can be deployed to Afghanistan to take pressure off of the Bison and turreted LAV III fleets. The OAG also criticised DND for its failure to reveal relevant information to Government while implying that  DND misled  Treasury Board in its rationale for LAV RWS – ie: that it was a replacement for G-Wagon/Bison. Note that at the time of  the release of  this OAG report, the first LAV RWS had yet to deploy to Afghanistan as planned. The first vehicles are now operational in Kandahar. A summary of the OAG's Fall 2009 Report on the LAV RWS Project  follows: Acquiring Military Vehicles for Use in Afghanistan  –  the LAV RWS Project The LAV RWS project planning underestimated training requirements When the LAV RWS project was approved, DND did not know the number of vehicles that would ultimately be available for operations in Afghanistan, as training require- ments had not been adequately taken into account. Project planning documents show that DND initially believed that because the new vehicle was so similar to the LAV III, troops would need only minimal additional training. The planning documents did not indicate how many LAV RWS,  if any,  would be required for training. Two years later it became clear to DND that a higher degree of training was needed. Consequently, of the 33 vehicles being built, 15 will be kept in Canada for training. The original project schedule stated that the LAV RWS would be ready for use in Afghanistan by February 2008. However, there have been delays. Compared to the three other projects we audited, LAV RWS is taking the longest to deliver. As of June 2009, this project has yet to provide vehicles to Afghanistan. DND now plans to field the LAV RWS sometime later in 2009. We found that the delay is the result of the complexity of this project. This has had an impact on the Canadian Forces' training plans and armoured vehicle fleet management for the mission in Afghanistan. [ OAG's General Recommendations for the LAV-RWS Project ] Recommendation.  When National Defence plans urgent acquisitions, DND should rigorously assess training requirements to ensure that there are a sufficient number of vehicles to meet training needs without reducing the number dedicated for operations. National Defence's response. Agreed. In an effort to mitigate the risks associated with the aggressive processing of an unforecasted operational requirement, the Land Staff has embraced a revised strategy across two broad fronts designed to more effectively address key project linkages such as training. First, abbreviated Capability Develop- ment assessments better define what is required to build, generate, employ, and sus- tain any given capability. With respect to training, the Directorate of Army Training, as well as Corps Schools/Centres of Excellence, play an increasing role in ascertaining what is required to train personnel for an emerging capability. [ Second ] , Army staffs closely shepherd training stocks once an unforecasted operational requirement capa- bility is fielded. This typically involves a synchronized cycle whereby equipment and/ or personnel are moved to facilitate the enhanced training of a unit or units for increased readiness in preparation for operations. Oversight by the Treasury Board of Canada Secretariat ... For the LAV RWS project, when National Defence informed the Secretariat that there would be delays and when it sought a second project approval for an additional $55 million, thus doubling the total cost of the vehicles to more than $100 million, the Secretariat did not challenge the Department as to whether this project remained the best option to deliver the needed capabilities and could still be considered urgent. National Defence did not disclose all relevant information The LAV RWS project is another case where, in our opinion, DND did not provide in its documents to the Secretariat and the government all the relevant information for informed decision making. The purpose of the project was to acquire 33 vehicles called the Light Armoured Vehicle Remote Weapon Station (LAV RWS), a variant of DND's existing fleet of LAV IIIs. The project was to equip 33 LAV III chassis, already owned by DND, with a remote weapon system (RWS), instead of a turret, thereby reducing its weight by several thousand pounds and allowing for more armour protection. In October 2006, the government approved the purchase of 33 LAV RWS vehicles at a cost of $55 million. We found that  the Department did not inform the government  that it would  later return for additional funding for custom armour kits. National Defence told us that the entire amount  and scope of  the project was not  included in the first proposal because the details were not sufficiently developed at that time. In March 2007, the government approved $55 million more for custom armour kits and in April 2007 an additional $8 million for add-on armour. During the audit, we found that the reason National Defence decided to proceed with this project was different from what it told the government. DND told govern- ment that it needed to replace two vehicles: the inadequately protected G-Wagon and the Bison vehicle used for the...transport of troops. However, documents from DND senior management meetings consistently show that the [RWS] project was approved in order to build a better LAV, starting with development of a prototype. National Defence also told the government that an options analysis showed that the LAV RWS was the best option to replace the G-Wagon and the Bison vehicles. However, we found that this was not the case. The Canadian Forces' options anal- ysis for the Bison replacement recommended several options and the LAV RWS was not one of the preferred options. Furthermore, no analysis of the G-Wagon replacement had been prepared at that time. When National Defence requested an additional $55 million in the spring of 2007, it did not disclose the total cost, which would now be in excess of $100 million. It also failed to inform the government of the status of the project in relation to the money approved in October 2006. At the time of this second government decision, little progress had been made on the LAV RWS project, which was supposed to be fully complete by February 2008. Now, it appears that the vehicles will be available in Afghanistan only sometime in 2009. National Defence informed us that the original project plans were unrealistic and did not adequately consider how complex the project was. Recommendation.  DND should review its processes to ensure that all relevant inform- ation is included in its requests to the Treasury Board for project approvals. National Defence's response. Agreed. As noted in this report, DND's project approval process is consistent with Treasury Board direction and policy. That being said, the process is being reviewed to ensure that it can better accommodate the possible need to deal with urgent operational requirements. DND will be carefully examining lessons learned from the projects included in this report, in conjunction with an analysis of the current project approval guidance, to ensure that relevant information is not excluded when project approvals are being fast-tracked for urgent projects. Conclusion In order to use new equipment, there must be adequate training. In one project, DND underestimated the need for vehicles that could be used for training. This means that the number of vehicles available for operations will be significantly reduced. While our audit found that three projects slipped behind schedule, we recognize that the timelines were ambitious. We found that some projects, such as the RG-31, which was in production, can be quickly delivered to where they are needed. Other projects, such as LAV RWS that involve development work, require more time to plan. When this need for planning time is not respected, the project may fall short in meeting oper- ational needs and also suffer cost overruns. In our opinion, given the significant dev- elopment work in the LAV RWS project, it should have been managed more rigorously in accordance with National Defence's Project Approval Guide. It is important that Treasury Board ministers have the information they need to make good decisions. While we found that the Treasury Board of Canada Secretariat exer- cised its challenge function, we also found that it missed some important issues relat- ed to these projects. As well, DND did not disclose all relevant information.