What’s the future for Canada’s military procurement?

The Conservatives eliminated the associate minister of defence job in Monday's cabinet shuffle and are mulling over their options for how to deal with military procurements worth billions of dollars in the future.

Conservatives scrapped the associate minister of defence post in Monday's shuffle

Former Defence Minister Peter MacKay speaks with the crew of a new Chinook helicopter during an event on June 27 in Ottawa. He was moved to the justice portfolio in Monday's cabinet shuffle and Prime Minister Stephen Harper also eliminated the associate minister of defence position. (Adrian Wyld/Canadian Press)

Two years after it first appointed a minister to solve the problem of an often-messy system of military procurement, the Conservative government blanked the post during the cabinet shuffle Monday, believing it's now close to a permanent solution to one of its most vexing problems.

With tens of billions of dollars worth of military procurement projects either underway or being contemplated, CBC News has learned the government has now settled on two possible outcomes, but neither, at this point, apparently require the service of an associate minister of national defence.

Government sources have suggested there's not much that can be read into the elimination of the post, and the new defence minister indicated he's not too fussed about it. At his first public appearance in his new role Thursday, Rob Nicholson said reform to procurement was underway, but he admitted he knew little about it.

"There's a process in place, and we'll proceed on that basis," he said.

After winning his majority government in 2011, Prime Minister Stephen Harper brought back the associate minister post —which had existed in previous governments — appointing Julian Fantino to the job. Fantino was soon followed by Bernard Valcourt, and then in February by Kerry-Lynne Findlay, making three ministers in just two short years.

The post was positioned beneath then Defence Minister Peter MacKay but allegedly came with a direct line to the prime minister.

Position called unnecessary

Alan Williams, the military's former associate deputy minister (material), responsible for procurement, says the portfolio was unnecessary. "I think they found out that the addition of a minister didn't really help the process and perhaps even harmed it," he said.

Williams said the addition of another minister in the procurement chain could only have burdened the system with bureaucracy.

There's another perspective on the associate minister's utility: that the office was only ever really a political buffer for an embattled Peter MacKay.

Before the 2011 general election, MacKay was regularly under fire over what was termed the "F-35 fiasco." Once Fantino was appointed associate defence minister, he took all questions on the file, leaving MacKay to sit silently in his place on the front bench in the House of Commons.

Interdepartmental tensions

It's unclear how much heavy lifting the associate minister's small staff was able to accomplish, but insiders say the associate minister's role as an honest broker helped it mediate differences between the two key procurement ministers: defence and public works.

There has been an historic, and perhaps necessary, tension between those two departments. Defence's role in procurement is to set the requirement for what it needs. Public Works is responsible for buying an item that does that job. It's also responsible for ensuring procurement rules are followed, and that the procurements are run, as often as possible, as fair and open competitions.

In most cases, the system works well. But when the programs become large and complex, such as with new helicopters, fighter jets, search planes or ships, tensions can sometimes rise along with the price tag. 

Tensions between the two departments escalated, for example, into a serious spat over the purchase of new fixed-wing search planes.

The Fixed-wing Search and Rescue (FWSAR) program was launched in 2002, and funded to the tune of about $1.3 billion. The first of about 15 planes was to be delivered by 2006.  But more than six years later, the government has been unable to even get a bid out to tender.

Last year, after a long delay, the program to buy new planes started moving again, under the strict control of a special secretariat inside the Department of Public Works. It's believed the contract for that plane could now be let sometime this fall.

The secretariat model, featuring interdepartmental teams of bureaucrats and independent third-party experts, was first used in the government's celebrated National Shipbuilding Procurement Strategy to provide the coast guard and navy with tens of billions of dollars of new ships.

It's now also been applied to the government's search for a new fighter jet, following the controversy over the sole-source plan to buy the F-35.

Third-party decisions

CBC News has learned the government is now considering making the secretariat model permanent for all large purchases. This would effectively strip decision-making out of the hands of departmental bureaucrats and their ministers, and instead vest it in the hands of contracted third-party experts. 

Ministers would still be responsible for the procurement, but outsiders would, in effect, decide which contract or purchase provided the best gear and at the best price.  

It would aid in removing politics from procurement and insulate ministers from allegations of regional pork-barrelling.  

The secretariat model is the favourite of senior staff inside the Public Works department, where it's viewed as being easy to achieve because it requires only incremental change and not massive restructuring.  It could also be implemented without legislative change.

But that's not true for the other option on the table: creating a brand new procurement agency to manage all major purchases for the Defence department.

This last option is preferred by military officials, who believe it would give them the best chance to ensure all new military equipment is selected with their preferences in mind.

Officers' clubs in Ottawa are often filled with stories of good procurements going bad only after the bureaucrats at Public Works became involved, of political meddling that sometimes led to bad decision-making, and bad equipment built in a politically important region being foisted on soldiers.

Military types believe the best solution is to have an agency whose raison d'être is providing the defence equipment to the Defence department — not managing contracts.

It's this option that is closest to what Alan Williams prefers: a single point of accountability. "They still have to solve the problem, namely allowing the prime minister to point to one person and say, 'You are that person accountable for defence procurement,'" he said. 

"Right now, the prime minister does not know who to blame or who to laud, with regard to defence procurement." Williams suggests that model also would eliminate the duplication of the same effort in two separate departments.