Milestones Along the Road to a new Defence Procurement Strategy

It has been clear for years that Canada needed a defence industrial and exports strategy coupled with improvements to the process of defence procurement for two important ­reasons: to bolster Canada’s sovereignty and national security interests, and to maximize high value economic activity in Canada from defence spending at home and abroad. Doing so would bring Canada into line with the practices of its NATO allies and most other advanced industrial countries.

Policy pronouncements in this respect have been frequent, especially noteworthy being last November’s Global Markets Action Plan, which set out the basis for a more activist trade agenda including for the defence and security sector, and February’s announcement of a Defence Procurement Strategy (DPS), a multi-faceted approach that included, among the many initiatives, a welcome commitment to publishing a defence acquisitions guide in June 2014, thereby increasing procurement predicta­bility for industry and the Government.

This relatively happy situation did not occur ‘just because’, and it may be helpful to the discussion about how to implement the DPS to recall the milestone moments and the evolution of mutually reinforcing objectives along the way.

In 2008, the Government released the Canada First Defence Strategy (CFDS), which committed to a $240 billion re-capitalization of the Canadian Armed Forces (CAF) over the next 20 years. The CFDS indicated that this “comprehensive plan will be implemented in concert with a new long-term procurement strategy designed to benefit Canadian industry while building commercial capacity in relevant knowledge and technology industries”.

In 2009, the Ministers of Industry, National Defence, and Public Works and Government Services Canada commissioned CADSI (the Canadian Association of Defence and Security Industries) to provide advice on military procurement, which culminated in its report, Canada’s Defence Industry: A Vital Partner Supporting Canada’s Economic and National Interests.

In 2010, through the Throne Speech and Budget, the government announced investments in Arctic surveillance, satellite technology and R&D capacity, and improvements to airport security and air cargo inspection. In addition, and arguably the announcement with the most impact, was the National Shipbuilding Procurement Strategy (NSPS), an initiative to recapitalize the Royal Canadian Navy and Coast Guard fleets by building ships in Canada and sequencing them to ensure a sustainable Canadian shipbuilding and marine industry. This was an important step in the direction of a defence industrial strategy.

Budget 2011 committed the government to “develop a defence procurement strategy, in consultation with industry, to maximize job creation, support Canadian manufacturing capabilities and innovation, and bolster economic growth in Canada”.

In the fall of 2012, Tom Jenkins was appointed Special Advisor to the Minister of Public Works and Government Services. Subsequently, an expert panel led by Mr. Jenkins was established to provide advice to the government on leveraging defence spending to advantage Canada through nurturing and developing key industrial capabilities of importance to Canada’s sovereignty, national security and economic interests.

In February 2013, the Jenkins panel issued its report titled Canada First: Leveraging Defence Procurement Through Key Industrial Capabilities. This report identified six interim key industrial capabilities (KICs) and made a series of recommendations to fully leverage KICs to advantage Canada through planned defence procurements.

Budget 2013 endorsed the Jenkins report and committed to working with industry sectors and stakeholders, including CADSI, to identify areas of Canadian competitiveness, as well as trends in global demand and supply in defence-related industries.

Budget 2013 articulated the framework for the defence procurement strategy and stated that going forward all major procurements will include a plan for participation by Canadian industry prior to approving the project. The Budget further committed to “examine how existing policies and programs can be tailored to support a Government-wide strategy while remaining cognizant of Canada’s international trade obligations. In parallel, the Government will reform the current procurement process to improve outcomes. This will include thorough and rigorous option analyses, a challenge function for military requirements, early and frequent industry engagement, and strengthened oversight with the use of third-party expertise”.

In the Spring of 2013, the Minister of Public Works and Government Services Canada held a series of roundtables across the country with Canada’s defence industry to receive views and advice on how to reform defence procurement to advantage Canada and thereby meet the Budget commitments. Continuing through the summer and fall, the Government ­consulted defence industry leaders as the Defence Procurement Strategy was being developed.

In November 2013, the Government released its Global Markets Action Plan, which identified defence and security as a priority sector for trade promotion and economic diplomacy. The GMAP reiterated the government’s commitment to launch a defence procurement strategy with a clear export-oriented component designed to enhance Canada’s export success.

In February 2014, the Government announced measures it will take to implement the Defence Procurement Strategy. Included were the Defence Acquisition Guide, improved challenge and oversight functions in the procurement process, support for domestic industrial objectives as part of bid evaluations, leveraging key industrial capabilities to strengthen Canada’s economic and national security interests, and a new approach to decision-making (including early, regular and formalized engagement with industry). These initiatives signaled a paradigm shift aimed at delivering successful procurement outcomes that advantage Canada.

Later that month, Minister Finley announced the establishment of an arms-length, third-party interim Defence Analytics Institute to better inform future procurement and support the review and validation of the KICs. The imperative of having a sophisticated understanding of the defence industrial base and how it aligns, or can be grown to align with CAF capital priorities, is key to an effective leveraging policy. I know that FrontLine readers look forward to the early findings and recommendations of the interim board.

The road to this point was never linear, and certainly there were a fair share of bumps, turns and detours along the way. But after years of not having a roadmap and thus no real sense of purpose or direction for defence industrial policy in this country, finally there is a solid policy ­foundation on which to chart our course forward.

Defence Analytics Institute
Interim Board
Tom Jenkins, Chairman for OpenText Corporation, appointed as Chair of the interim Defence Analytics Institute.
Tim Page, President of the Canadian Association of Defence and Security Industries (CADSI).
Christyn Cianfarani, Director, Gov’t ­Programs, Research and Development and Intellectual Property at CAE Inc.
Iain Christie, Executive Vice-President of the Aerospace Industries Association of Canada (AIAC).
Peter Gartenburg, Vice-President, Ottawa Operations, L-3 Communications.
Dr. Craig Stone, Director of Academics and Associate Dean of Arts at the Canadian Forces College.
Dr. David Bercuson, Director of the University of Calgary’s Centre for Military and Strategic Studies.
Dr. Janice Stein, Director of the Munk School of Global Affairs at the University of Toronto.
Dr. Louis Bélanger, Professor of Political Science at Université Laval and Director of the Quebec Institute for Advanced International Studies.

Janet Thorsteinson served for more than 30 years in the Canadian public service, and is currently the Vice-President, Policy and Government Relations with the Canadian Association of Defence and Security Industries.
© FrontLine Magazines 2014