Ottawa to curb military’s role in procurement after costly delays

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The Conservative government is reducing the Department of National Defence's influence in steering big-ticket military purchases after a string of delays and cost overruns in acquiring hardware for the Canadian Armed Forces.

In a significant overhaul of how Ottawa buys military equipment, National Defence Minister Rob Nicholson and Public Works Minister Diane Finley are announcing Wednesday morning that big military acquisitions will from now on be managed by a Defence Procurement Secretariat that reports to the Department of Public Works and is governed by senior civil servants across a range of departments.

There will be a new political oversight as well: a working group of ministers from Public Works, Defence, Industry Canada and Treasury Board will take a more hands-on role.

The dysfunctional record of military procurement in the last eight years – from light-armored combat vehicles to joint support ships to F-35 fighters – has hurt the Conservatives' carefully cultivated reputation as prudent stewards of the public purse.

Also, Wednesday, Mrs. Finley and Mr. Nicholson will announce they're going to require that military suppliers provide more high-value industrial spinoff work for Canadian companies and well-paying jobs. The government is dissatisfied with the industrial regional benefits it received for several big purchases of military aircraft.

Major military purchases in Canada have frequently lacked what critics call a single point of accountability because as many as three or four government departments play a part in selecting what to buy – decisions that are sometimes made in isolation from one another.

National Defence currently has particularly strong influence because it first draws up specifications for what features it needs in equipment – which can result in the department effectively picking a supplier before a competition is held.

This will change with what is unofficially called the "super secretariat," a term the government does not embrace but which captures the concentration of decision-making taking place.

Defence officials will still have a central role in deciding what to buy for the Canadian Armed Forces, but other departments and outside advisers will now have the ability to properly question what is being requested.

For instance, as one person who was familiar with the Wednesday announcement said, if the request is for a "Cadillac and you actually need a Corolla" then the system needs someone who "has the authority to ask why do you need this Cadillac?"

The secretariat, overseen by deputy ministers from Public Works, Defence, Industry Canada and Treasury Board, will rely on independent advisers, "fairness monitors" and arm's-length audits to try to keep military purchases from going off the rails.

The government has already placed two troubled procurements under the management of secretariats at Public Works: fighter jets and fixed-wing search-and-rescue aircraft.

The model was first used to manage the shipyard selection process for more than $30-billion of public shipbuilding, a decision that was hailed by many as a success.

Mr. Nicholson, who took over the defence portfolio in July, represents a change in thinking on procurement, a government source says. His predecessor, Peter MacKay, resisted the new secretariat as a restriction on Defence's autonomy, but Mr. Nicholson has been far more receptive to changing the way big-ticket defence purchasing is undertaken.

Part of the focus Wednesday will be on using defence spending to develop a competitive advantage in certain technologies.

The Conservatives are trying to craft a defence industrial policy for Canada that harnesses military and security budgets in the service of jobs and economic growth.

Foreign companies play a large role in supplying Canada's military needs, yet in the past 30 years, this country has shied away from using defence policy to promote and build domestic industries.