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 – Leopard 2s 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 will cover the used Leopard 2 TRP. The Auditor General's report on the Tank Replacement Project provides some details  missing  from  the TRP LOI.  The most important  is that  15 Leopard 2A4s were purchased  in a separate project to act as a source of spares.  It is not clear whether the 15 new 'donor' vehicles are in addition to 12 "Logistic Stock Vehicles" for parts mentioned in the LOI. The OAG notes that the earlier-model Leopard C2 tanks  had  to be retained for use in Afghanistan because of flaws in the planning and execution of  the Tank Replacement Project. From the outset of the loaned Leopard 2A6M deployment, the fleet was beset by serviceability problems.  To keep the borrowed German Leopard 2A6Ms operating, CF personnel had to immediately begin cannibalizing this fleet  (including the vehicles earmarked for training ). The end result was reduced availability and training problems. Due to delays in the TRP, DND's plans for returning borrowed Leopard 2A6Ms to the German Bundeswehr were also thwarted. Instead of  using refurbished ex-Dutch tanks for training, DND had to exchange those tanks for the loaned German tanks retained in Afghanistan. Those ex-Dutch tanks will now be refurbished in Germany, brought up to full Leo 2A6M standards, and transferred to the Bundeswehr in lieu of  returned tanks. DND's Tank Replacement Project is now running 2 years behind schedule. No ex- Dutch Leopards upgraded to full 2A6M standard is likely to see Afghan service. The TRP was also to cover 'implements' for the Leopard 2s  – meaning mine-rollers, ploughs, and  bulldozer blades. In the end, that responsibility was shifted  to another project  –  the Force Mobility Enhancement. Auditors noted  that  the Tank Replacement Project  proceeded quickly by comparison with non-urgent requirement procurement projects. Their recommendation was that all DND vehicle procurement projects should allow for training requirements without any need to cut back the number of same-type vehicles available for deployment overseas. DND agreed  but  there is little reassurance in their  bureaucratic response to the OAG. A summary of the OAG's Fall 2009 Report on the Tank Replacement Project  follows: Acquiring Military Vehicles for Use in Afghanistan  –  Tank Replacement Project Leopard 2 Tank Date of project approval: March 2007 Approved cost: $650 million The first goal was to lease 20 Leopard 2 tanks and two special-purpose armoured vehicles from Germany in order to meet the urgent need to replace the Leopard 1 tanks that had been deployed to Afghanistan [ ie: uparmoured CF Leopard C2s ]. The second goal was to purchase 100 Leopard 2 tanks [2A4s and 2A6s], including special-purpose armoured vehicles [ARVs/AEVs] from the Netherlands, to provide immediate training vehicles for troops in Canada and a longer-term tank capability. Twenty [ Leopard 2A6M]  tanks were borrowed (not leased as originally approved by the government )  from Germany.  These arrived in Afghanistan ... in late 2007. One hundred [Leopard 2A4s/2A6s] were purchased [from the Netherlands]. Under a separate authority,  National Defence purchased an additional 15 used [ Leopard 2A4 ] tanks that it intends to use for spare parts.  The project is still in progress... Project Timeline     Time from government approval to date first vehicle was available for use in Afghanistan    –    Leopard 2 Tank    –   7 months The Tank Replacement Project did not meet all of the most urgent needs The Tank Replacement Project [is in] two parts. The first part was the most urgent. It was to borrow 20 Leopard 2 tanks and 2 [armoured recovery vehicles] from Germany to replace all the old Leopard 1 [C2] tanks being used ... in Afghanistan. The second part was intended to equip the Army with a fleet of up to 82 Leopard 2 tanks and 18 special purpose armoured vehicles. The Leopard 2 is a modern tank that provides the Canadian Forces in Afghanistan with a high level of  protection  from land mines and improvised explosive devises (IEDs).  It also has a powerful direct fire capability. Based on [DND's] assessments, the borrowed Leopard 2 tanks have been deployed to Afghanistan and are saving lives. However, we found that the tanks have not replaced all of the older Leopards in Afghanistan because the Leopard 2 tanks cannot be fitted with [DND's] land mine ploughs, bulldozer blades, and mine rollers.  These implements are essential to overcome obstacles and mitigate the threat posed by IEDs. As a result, the mission in Afghanistan continues to [employ] several of the [old] Leopard tanks. In early 2008, [DND] began work to find a way of  fitting  mine rollers  to the borrowed Leopard 2 tanks. We were informed that work on this issue is ongoing.  [ Ed: Leopard 2A6Ms in Afghanistan are now being fitted with the mine rollers and other FME gear.] Our audit found that soon after deployment, a portion of  the new [ Leopard 2A6M ] tank fleet could not be used due to equipment failure.  This problem was compounded by a shortage of  parts.  While normally considered a last resort,  Task Force Afghani- stan almost immediately began taking parts from tanks on site in Afghanistan and from tanks that  National Defence had bought  for troop training in Canada  in order to make the necessary repairs. Despite these challenges, the Canadian Expeditionary Command informed us that it is satisfied with the level of serviceability of this equipment. The stated goal of  the Tank Replacement Project was  to have all  the borrowed tanks ready for use in Afghanistan by the end of July 2007. We found that National Defence was unable to meet this goal and  it was not until the end of  August 2007 that the first four tanks and two special-purpose armoured vehicles were delivered to Afghanistan. Not until  mid-October 2007  was the  Canadian Expeditionary Command satisfied  that everything was in place to permit their use. Most of  the remaining tanks became avail- able for operations in Afghanistan by the end of December 2007. The Canadian Exped- itionary Command informed us that, despite an urgent need to have tanks available by July 2007,  it was not aware of  any negative impact on operations  when this goal was not met. One reasons for this was [an ability] to continue using the old Leopard tanks. It should  be noted  that, while there had  been slippages in the project, senior officials recognized from the outset that the schedule was ambitious and acknowledged that an extraordinary amount of  work [ was ] accomplished in a short period ... by all involved. One [reasons given by DND to support ]  its bid to purchase 100 Leopard 2 tanks from the Netherlands was to have 20 of these tanks immediately available to train soldiers in Canada, [these ex-Dutch tanks being] similar to the borrowed tanks used  by the CF  in Afghanistan.  [ Instead ],  these training tanks  will remain in Europe to be swapped for the borrowed German tanks that would otherwise have been ... returned to Germany by September 2009. [ The ex-Dutch tanks must ]  be modified to the same specifications as the borrowed tanks [however] since [those ex-Dutch tanks] have been cannibalized for spare parts, those parts [must] be replaced while [A6M] modifications are taking place. These actions will provide Canada with Leopard 2 tanks for use in operations until the recently purchased tanks are upgraded. However, as a result, Canadian soldiers [must be] sent to train with the German army,  creating additional costs and inefficiencies. In addition, because of a cap on funding for upgrading the [purchased] Leopard 2 tanks, National Defence will not be able to upgrade all [of  the ex-Dutch] tanks to the desired level. The result is that  the training fleet will consist of a different model of  tank than the deployment fleet  –  a situation that the Canadian Forces considers less than ideal. We found that National Defence now expects to be able to fully employ the purchased tanks almost  two years later  than originally planned. This is due, among other things, to delays in conducting a feasibility study  to help plan the upgrades to the new tanks. Documentation obtained from  Public Works and  Government Services Canada shows that PW&GSC issued and then cancelled a request for proposal, thus preventing DND from entering into a contract with the Original Equipment Manufacturer [Rheinmetall is the Leopard 2 OEM] to gather the information required for planning the modifications. The reason documented by PWGSC was that  [ reissuing that RFP ] would prevent the OEM from gaining any advantage in subsequent contracting  processes related  to the tanks.  National Defence also informed us  that PWGSC prevented  it  from  contacting the OEM. As noted earlier, [TRP] will not be installing implements on the tanks. A new [FME] project has begun, which will include the requirement to deliver this capability... [ OAG's General Recommendations for the Leopard 2 / Tank Replacement Project ] Recommendation.  When National Defence plans urgent acquisitions,  it should rigor- ously assess the 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 a given capability.  With respect to training,  the Directorate of  Army Training, as well as Corps Schools/Centres of Excellence, play [a] role in ascertaining [requirements for training] personnel for [new equipment].  [ Second ],  Army staffs closely shepherd training stocks once an unforecasted operational requirement [equipment] 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... Conclusion Unlike non-urgent acquisitions, ... the Leopard 2  Tank Replacement Project [... was ...] procured and delivered quickly and, in the opinion of  National Defence,... contributed to the safeguarding of  Canadian soldiers in Afghanistan... [DND] should examine its Project Approval Guide to determine how acquisitions can be managed so that urgently needed equipment can be acquired in a timely manner while respecting accepted project management principles. We found that document- ation required for ... urgent projects was not produced in a manner that complies with the Department's own Guide. In order to use new equipment, there must be adequate training. [In this 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.