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Ex Cadet Opinion: How the Government can put “Canada First” when re-equipping the CF with the best kit

How the Government can put “Canada First” when re-equipping the CF with the best kit

By: 19803 CHRISTYN CIANFARANI

Canada has a unique once-in-a-century opportunity to create jobs and growth while enhancing its sovereign military capability. The Canada First Defence Strategy (CFDS) sets out a comprehensive plan to re-equip the Canadian Forces over the next generation, with a forecast expenditure of $240-billion from 2008 to 2027. While the amount of the expenditure has been put up for debate recently, what Canada is poised to spend is nevertheless rather exceptional.

As the Canadian Government prepared to embark upon these significant defence procurements in the period ahead, it commissioned advice from Special Advisor Tom Jenkins and an Expert Panel in which I was asked to participate. The government wanted to know how to best leverage procurement for Canada’s economic benefit without compromising the needs of the Canadian Forces in the process. Essentially this is about how Canadians can be more powerful customers at the time of purchase.

This request was timely, not only because of the pending procurements, but also because of the potential impact on Canadian industry of anticipated declines (forecast at 30%) in defence spending in the U.S. and other allied markets. In a nation where defence is an export market, the changes will and are already impacting Canadian firms.

With few exceptions such as the recent decision to build ships in Canada (National Shipbuilding Procurement Strategy – NSPS), the Canadian defence market has historically been open to foreign suppliers in the interests of achieving “value for money” (i.e. lowest cost). This is not the approach taken by many of Canada’s allies who have interpreted value for money more broadly to encompass a sustainable domestic defence industrial base that contributes to both security and economic growth.

Despite many media interpretations of our report since its release to the government on February 12, 2013, the Panel is not advocating a buy Canadian at all cost approach, nor is it suggesting that the needs of the CF should be placed second after the economy. Our recommendations, rather, advised the government that its purchasing power (particularly in a downturn economy) lends itself to having a very strong up-front negotiation position at the start of a procurement. These conditions are ideal for making the best possible purchase of equipment and services while also taking into consideration achieving high-value, intellectual property-driven, Canadian content. The concept of Key Industrial Capabilities (KICs) provides the basis for that focus.

We recommended to the government six sets of KICs where Canada is, or has the potential to be, world-class: Arctic and Maritime Surveillance; Clothing the Soldier; Command and Support; Cyber-Security; Training Systems; and In-Service-Support. Some of these KICs were even suggested to us by our U.S. allies as areas of Canadian excellence.

However, the Panel also recognized that without a whole-of-government strategic approach to procurement that KICs could quickly become inert. To this end, we made many additional recommendations around how to adopt a KICs-centric approach to defence procurement policies, as well as to complementary supply-side support programs. We also suggested significant changes we felt needed to be made to procurement policies, programs and practices to make Canada a much stronger customer.

Important areas for change include forcing prime contractors (oftentimes a foreign original equipment manufacturer – OEM – of the platform we are procuring) to declare up-front in the negotiations “what’s in it for Canada”. This can include transfer of intellectual property so that Canadians can perform the high-tech aspects of in-service support, it can mean Industrial and Regional Benefits (IRBs) that are of a much higher quality (i.e., higher salaries and skillsets), or it even mean that more components of the platforms are manufactured or sourced within Canada. This type of competition prior to purchase will drive up Canadian content and make it a contractual obligation which is not always the case now. Simply put, negotiating hard before buying just makes good business sense.

It is, of course, for government to decide how to implement and manage a KICs-centric defence procurement strategy. In this regard, the Panel had two main observations: first, in order to ensure a cohesive, “whole of government” approach, accountability needs to be clear; and second, in order to ensure evidence-based policy development that measures outcomes, Canada needs an improved defence analytical capacity, ideally through an independent, third-party institute (or network) facilitated by the federal government and industry.

Canada is very fortunate to have this unique opportunity. It is the time to make strategic purchases that not only re-equip our Canadian Forces with top-quality kit that meets its needs, but at the same time create wealth and jobs for the nation.

The actual Panel document can be found Here

19803 Christyn Cianfarani (Class of ’95) is the Director of Research and Development, Government Programs and Intellectual Property at CAE Inc.