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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 2 [Edited for brevity and clarity.  Illustrations of examples shown in sidebars.] Problems with NDHQ Procurement Practices Present procurement practices are universally viewed as being too slow and cumbersome. It is a process that does not respond well to the needs of the CF. • Acquisition of major military systems takes too long. The average time is over 15 years for major capital equipment procurement. • There is substantial duplication of effort and functional overlap between DND and the Public Works and Government Services Canada (PWGSC). • DND's internal approval process involves excessive, unnecessary review and an undifferentiated approach to risk management. • Capital projects are not always closed in a timely fashion. • Excess inventories of contractor-held spare parts result in unnecessary management and holding fees. • There is no senior management awareness of the costs associated with supporting surplus systems and no systematic review of the disposal process. • NDHQ often pays more than is necessary for IT [Information Technology – hardware and software] because purchases are made without a full awareness of the total requirements of either the Department or the Canadian Forces. • The total value of projects approved for inclusion in the long-term 'Capital Plan' often far exceeds available funding. Projects included in these 'Capital Plans' (often with little or no likelihood of approval) continue, year after year, to consume staff resources and administrative overhead.   [ See the CADRE Sidebar for an example.] Initiatives already underway within the Department of National Defence Numerous initiatives are already underway within DND in the area of acquisition reform. NDHQ plans to: • Develop and implement procurement strategies which maximize the potential of private industry to provide goods and services in the areas of training, site support, in-service support, etc. • Cooperate with allies in the acquisition of matériel, which increases interoperability while reducing the time and cost of procurement. • Enhance the application of the 'commercial off-the-shelf' (COTS) policy [when specific military components are unnecessary – see the mil-COTS Sidebar]. • Standardize matériel acquisition (and support services) for easy reference in a 'desktop' application. Priorities for Further Changes to NDHQ Project Approval Process NDHQ's internal process for 'defining requirements' and approving capital projects takes too long, involves too many authorities and committees, occupies too much senior management time for little added value, and fails to distinguish between processes on the basis of risk and complexity. These aspects of the procurement process are wholly within the purview of NDHQ to revise and can, therefore, be readily addressed as a priority. The 'bottom up' process for initiating and approving projects leads to a capital program that lacks vision and priority, and exceeds the resources approved by the Minister of Finance.  A 'top down' process would be driven by strategic needs and considerations, with a greater likelihood of [the projects] having ongoing relevance [to the needs of the CF] and support [from other government ministers and the Canadian public at large]. As well, [NDHQ must overcome the] tendency to approve capital projects based primarily on equipment costs, rather than a full consideration of all facets of the capability and life-cycle costs of the projects, including training, infrastructure and human resources (HR). The Advisory Group was encouraged to learn that the Treasury Board's 'Procurement Reform Initiative' is addressing other aspects of the procurement process that impede or slow down the acquisition of goods and services. Their work addresses constraints imposed by trade agreements, the role of the Canadian International Trade Tribunal, and the simplification of contracting regulations. This initiative also encourages greater use of 'acquisition cards' for low-cost, simple requirements. <  Go  Back  to  Part 1 >  Continue  to  Part 3