CASR

Canadian
American
Strategic
Review

Canadian Defence Procurement  –  February 2004 Streamlining Defence Procurement:   Can  NDHQ  deliver ? Recommendations to former Minister of National Defence, John McCallum, by his Select Advisory Group (on Administrative Efficiencies)     —  Part 1 [Edited for brevity and clarity.  Illustrations of examples shown in sidebar.] [Ed:  Thanks to the efforts of the former   Minister   of   National   Defence, John McCallum, NDHQ now has a budget of $13 billion per  year.   Minister   McCallum managed  to  convince  Finance Minister John Manley to provide $800 million in his  2003  budget, on the assurance that McCallum would find the other $200 million through 'administrative efficiencies'  (cutting waste)  within  the  Department  of National  Defence.  In  order  to  root  out  this  waste,  and  to  find   the  savings required,  Minister  McCallum  assembled  his  own  'advisory group'.  The  group closely studied National  Defence Headquarters (NDHQ) for  almost  six  months. Their  report  to  Minister   McCallum  listed  major  inefficiences  within  NDHQ. These involve  management structure,  procurement practices,  and  other  areas requiring  'transformation'. The excerpts of interest here are those dealing mainly with problems in decision-making and procurement practices.] Problems with the Decision-Making Structures and Procedures within NDHQ NDHQ's present 'governance' structures do not allow the maintenance of a long- term, overarching strategic focus. Burdened with these old-fashioned structures, NDHQ cannot achieve the necessary depth and breadth required to be truly efficient at the tasks that matter most in the 21st century. Like so many other large, complex organizations, NDHQ is ripe for 'transformation'. The following problems stood out as the organizational attributes most in need of change. • Corporate decision-making is often more transactional [meetings, memos] rather than strategic [big picture, long-term planning]. • Decision-making relies heavily on time-consuming consensus building. • Each study must be thoroughly digested as it works its way through an extensive network of committees. • These unchanging procedures result in a counter-productive 'culture' exhibiting little flexibility or any capacity for rapid action or reaction. • NDHQ's approach to risk is undifferentiated and its 'risk tolerance' is too low. • Strategic planning tends to be based on a 'bottom up' as opposed to 'top down' approach. Need for Strategic Planning and Budget-Setting Priorities A 'top down' strategic plan would identify future force structure and military capability requirements. The current 'bottom up' approach results in the initiation of several weapons systems projects simultaneously. One or all of these projects may be utterly unaffordable under the planned spending levels. This wasteful procedure creates a climate of internal vying for limited resources. [Most insiders know that, for the Army, the immediate enemies become the Air Force and the Navy. Foreign foes fade into the background.] As a result, NDHQ procurement exists within an atmosphere of ongoing crisis due to inadequacies in management, leadership, and the abillity to set budget priorities. Among senior management at NDHQ, there are relatively high rates of  'churn' – disruptive turnover rates of the most highly trained personnel. This leaves the Canadian Forces (CF) with many General or Flag Officers (as well as senior non- commissioned members) who have too little time to work at the strategic level before retirement. They do not have a chance to develop the depth and breadth of experience required to become truly effective strategic planners. These managers cannot contribute adequately to institutional leadership which is so desperately needed at the most senior levels. Unfortunately, these inadequacies also apply to some areas of the civilian executive as well. Recommended Improvements to Strategic Planning and Management Fundamental improvements to NDHQ's  'strategic management'  will result in very significant efficiencies. While this result cannot be easily quantified, it includes the potential for large-scale savings – in dollars, personnel and time. The changes proposed in this report will also result in increased strategic focus. [Emphasis added.] Focus will translate into enhanced decision-making power. If the national-level management of NDHQ is transformed in accordance with the spirit and specifics of this report, significant efficiencies and savings will accrue. • Greatly increased unity of effort and improved decision-making processes will result in the elimination of unnecessary work, and will increase productivity and value-for-money for all NDHQ expenditures. • A reduced requirement for personnel involved at Defence Headquarters would enable savings, in both military and civilian personnel costs, to be re-invested in combat capability. • Shortened procurement times will eliminate unnecessary overhead and carrying costs. Badly needed equipment would get into service more quickly. In the long run, the greater efficiency in procurement practices would lower total purchase costs. [More specifics on procurement practices to follow.] >  Continue  to  Part 2