Canadian Military/Defence procurement process (Mega Thread)
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Seems like a good choice, lots of experience outside of how we do things, so fresh ideas hopefully.
J
jollyjacktar
Guest
Can't get any worse, unless PWGSC takes over the world...PuckChaser said:
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New government not being very open and transparent:
Canadian Defence Procurement: Semi-Secret Cabinet Committee Confusion
https://cgai3ds.wordpress.com/2016/02/24/mark-collins-canadian-defence-procurement-semi-secret-cabinet-committee-confusion/
Mark
Ottawa
Canadian Defence Procurement: Semi-Secret Cabinet Committee Confusion
https://cgai3ds.wordpress.com/2016/02/24/mark-collins-canadian-defence-procurement-semi-secret-cabinet-committee-confusion/
Mark
Ottawa
This report by Murray Brewster of the Canadian Press, reproduced under the Fair Dealing provision of the Copyright Act, highlights some major shortcomings in the DND procurement system.
Ottawa’s contract policies ‘perverse’ encourage industry gouging: leaked report
By Murray Brewster, The Canadian Press — Mar 13 2016
OTTAWA — A major independent study of federal government contract pricing and policies has warned that the current system provides "perverse incentives" for industry doing business with Ottawa to hike their costs, particularly in military equipment deals.
The report written by the research firm PricewaterhouseCoopers — a copy of which was leaked to The Canadian Press — also says that both Public Services and Procurement and National Defence don't have the in-house staff and expertise to understand technical matters that contribute to higher project costs.
The 32-page draft study, dated Nov. 17, 2015, was ordered by the former Conservative government, but delivered to the Trudeau Liberals, who promised in last fall's election to fix the broken procurement system to ensure the military gets the equipment it needs.
The eye-popping cost of ships, planes, and tanks has been the subject of a political debate, notably over the F-35 stealth fighter, but also more recently with the navy's planned frigate replacements.
Researchers at the multi-national audit firm were asked to examine how government policies, procedures and legislation contributed to the enormous price tags.
One of the key findings was that the structure of the contracting regime "provides perverse incentives for industry to increase costs" — particularly in sole-source deals — and there is "limited expertise in government" to review industrial processes and validate the increases.
"Neither (procurement services) nor DND has a sufficient knowledge base of subject matter experts that understand the 'Should-Cost' of a project, nor does either have the ability to understand the production process or other technical matters which are important drivers of cost and risk," said the study, which compared Canada's system with Britain, Australia and the U.S.
The report notes that there is a particular shortage of "military industrial specialists" and this "constrains Canada's ability to validate the reasonableness" of the costs claimed by contractors.
It warns that the country's global competitiveness in the defence sector is at risk, and that companies actually benefit by jacking up their prices.
"Profit is proportionate to cost under most of the basis of payment options — if the profit percentage is fixed, increased costs result increased profits," said the report, which added the government "does not have mechanism to counteract these perverse incentives."
The findings are significant because billions of dollars are about to be spent on the national shipbuilding program. The previous Conservative government set up a special relationship with two of the country's shipyards — Seaspan in Vancouver and Halifax-based Irving Shipbuilding Inc.
In exchange for directing federal contracts exclusively to both companies, procurement services pledged there would be strict oversight to ensure that taxpayers were not being overcharged.
Public Services and Procurement Canada did not respond to a request for comment.
Dave Perry, an analyst from the Canadian Global Affairs Institute, has studied military procurement woes from the defence department's perspective and found much the same.
He says the new report further "highlights the human capacity shortfall" of a system that was "gutted during program review in the 1990s and never recovered."
Perry and fellow defence analyst George Petrolekas, a retired colonel, wrote a groundbreaking report for the Conference of Defence Association Institute and the MacDonald-Laurier Institute in January 2015 that concluded, among other things, that brain drain and red-tape were responsible for the dysfunctional procurement system at National Defence.
Whereas the PricewaterhouseCoopers report looks at projects looks after they're launched, Perry and Petrolekas focused on the front-end planning at defence that's required on complex military equipment deals.
They assigned much of the blame to staffing cuts by both Liberal and Conservative governments in the acquisitions branch at National Defence.
In the early 1990s, there were 9,000 staff dedicated to buying military equipment. There were just over 4,300 by 2009 and those people were responsible for pushing through double the number of projects.
"Set against this significantly increased workload, there is simply not enough capacity in the acquisition workforce to manage it,'' said assessment by Perry and Petrolekas.
The Liberals, with both reports in hand, have an opportunity to start fresh, said Perry.
"We should move to treat defence procurement as its own specialty within government, and staff it accordingly," he said.
Ottawa’s contract policies ‘perverse’ encourage industry gouging: leaked report
By Murray Brewster, The Canadian Press — Mar 13 2016
OTTAWA — A major independent study of federal government contract pricing and policies has warned that the current system provides "perverse incentives" for industry doing business with Ottawa to hike their costs, particularly in military equipment deals.
The report written by the research firm PricewaterhouseCoopers — a copy of which was leaked to The Canadian Press — also says that both Public Services and Procurement and National Defence don't have the in-house staff and expertise to understand technical matters that contribute to higher project costs.
The 32-page draft study, dated Nov. 17, 2015, was ordered by the former Conservative government, but delivered to the Trudeau Liberals, who promised in last fall's election to fix the broken procurement system to ensure the military gets the equipment it needs.
The eye-popping cost of ships, planes, and tanks has been the subject of a political debate, notably over the F-35 stealth fighter, but also more recently with the navy's planned frigate replacements.
Researchers at the multi-national audit firm were asked to examine how government policies, procedures and legislation contributed to the enormous price tags.
One of the key findings was that the structure of the contracting regime "provides perverse incentives for industry to increase costs" — particularly in sole-source deals — and there is "limited expertise in government" to review industrial processes and validate the increases.
"Neither (procurement services) nor DND has a sufficient knowledge base of subject matter experts that understand the 'Should-Cost' of a project, nor does either have the ability to understand the production process or other technical matters which are important drivers of cost and risk," said the study, which compared Canada's system with Britain, Australia and the U.S.
The report notes that there is a particular shortage of "military industrial specialists" and this "constrains Canada's ability to validate the reasonableness" of the costs claimed by contractors.
It warns that the country's global competitiveness in the defence sector is at risk, and that companies actually benefit by jacking up their prices.
"Profit is proportionate to cost under most of the basis of payment options — if the profit percentage is fixed, increased costs result increased profits," said the report, which added the government "does not have mechanism to counteract these perverse incentives."
The findings are significant because billions of dollars are about to be spent on the national shipbuilding program. The previous Conservative government set up a special relationship with two of the country's shipyards — Seaspan in Vancouver and Halifax-based Irving Shipbuilding Inc.
In exchange for directing federal contracts exclusively to both companies, procurement services pledged there would be strict oversight to ensure that taxpayers were not being overcharged.
Public Services and Procurement Canada did not respond to a request for comment.
Dave Perry, an analyst from the Canadian Global Affairs Institute, has studied military procurement woes from the defence department's perspective and found much the same.
He says the new report further "highlights the human capacity shortfall" of a system that was "gutted during program review in the 1990s and never recovered."
Perry and fellow defence analyst George Petrolekas, a retired colonel, wrote a groundbreaking report for the Conference of Defence Association Institute and the MacDonald-Laurier Institute in January 2015 that concluded, among other things, that brain drain and red-tape were responsible for the dysfunctional procurement system at National Defence.
Whereas the PricewaterhouseCoopers report looks at projects looks after they're launched, Perry and Petrolekas focused on the front-end planning at defence that's required on complex military equipment deals.
They assigned much of the blame to staffing cuts by both Liberal and Conservative governments in the acquisitions branch at National Defence.
In the early 1990s, there were 9,000 staff dedicated to buying military equipment. There were just over 4,300 by 2009 and those people were responsible for pushing through double the number of projects.
"Set against this significantly increased workload, there is simply not enough capacity in the acquisition workforce to manage it,'' said assessment by Perry and Petrolekas.
The Liberals, with both reports in hand, have an opportunity to start fresh, said Perry.
"We should move to treat defence procurement as its own specialty within government, and staff it accordingly," he said.
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Overheard this weekend. Apparently someone was at a town hall(?) with the new MND, and the issue of "why can't we get things like boots" came up. The answer was there were over 130 steps in the procurement bureaucracy that had to be taken (including those outside DND).
If getting COTs and COTS equivalent items take 138 steps, then getting new ships or aircraft which are essentially bespoke items = "we're doomed" (and BTW, another member actually had a pair of the "new" zipper boots. After 130 steps to ensure they were procured, the zipper failed on the first weekend....The warehouse where he went to get the issued boots was already full of failed pairs of zipper boots where the zippers failed as people were trying them on for size).
The triumph of process over productivity.
If getting COTs and COTS equivalent items take 138 steps, then getting new ships or aircraft which are essentially bespoke items = "we're doomed" (and BTW, another member actually had a pair of the "new" zipper boots. After 130 steps to ensure they were procured, the zipper failed on the first weekend....The warehouse where he went to get the issued boots was already full of failed pairs of zipper boots where the zippers failed as people were trying them on for size).
The triumph of process over productivity.
J
jollyjacktar
Guest
Thucydides said:
Makes me think of the Soviet era of production horror stories.
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Metrics to evaluate the performance of senior ranks in the PS favour process and not productivity. You get more of what you measure.
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Thucydides said:
That fucker should resign. Boots are bare essentials and the troops shouldn't have to pay out of pocket to get them.
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jmt18325 said:
No. But he is now the Minister. He now owns the problem.
Can't blame the Conservatives forever.
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Funny I didn't hear a load of calls for the resignation of the previous DefMin around these parts, then ...SeaKingTacco said:
Sincere question, here: do we even know if the Minister (past or present) "knows" about the problem? It's one thing to say it's been said @ a town hall, or mentioned in public posts on an online forum (where reporters can see the information, but choose not to act on it - probably because they'd never get anyone to speak on the record about being f**cked over), but does anyone here know if there's been official notification to levels that can make a difference that "hey, boots are so hard to come by that some recruits don't get any and have to buy them"?
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Well.....I am now wondering what his advice is on the best Pizza to buy. >
McG
Army.ca Legend
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Gear down big rig. I have heard "that fucker" raise the same observation that there are so many steps in the procurement process and a lack of flexibility to treat simple kit any different from complicated capital. He did it in the context of pointing out one of the problems he has discovered and intends to resolve. Give him time to do something about it.Sheep Dog AT said:
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There you go being reasonable - wherever are we going to be with THAT attitude? ;DMCG said:
J
jollyjacktar
Guest
If we could just finally get PWGSC out of meddling with the process, it would vastly speed up the flash to bang. They, are my true enemy as far as I'm concerned.
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Our project managers don't help either. Writing SORs that rule out everything but one supplier just sets us back further. Write what we need, and rule the crappy ones out in testing.
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