Procurement of Capabilities

Description

Procure advanced capabilities to maintain an advantage over potential adversaries and to keep pace with allies, while fully leveraging defence innovation and technology. Streamlined and flexible procurement arrangements ensure Defence is equipped to conduct missions.

Planning highlights

Effective defence procurement is vital to ensuring the Canadian Armed Forces (CAF) is equipped and ready to fulfill the important missions required to protect and defend Canada and Canadians. It begins with integrated, comprehensive and focused analyses that shape the development or refinement of CAF capabilities. The department will ensure subsequent procurement is set up for success through rigorous and timely consideration in the project approval process.

The department will collaborate with the North American Aerospace Defense Command (NORAD) to advise on the requisite capabilities and areas of investments required to effectively execute the continental defence missions as it pertains to Strong, Secure, Engaged: Canada's Defence Policy initiatives 109 and 111, North Warning System renewal and NORAD Modernization.

Reforms were previously introduced and implemented to both streamline and accelerate defence procurement. Examples of these reforms include the five-year extension of the Risk Based Defence Procurement Pilot until the end of March 2025. These reforms build on recent measures to improve procurement across the government, reducing complexity and redundancy. These efficiency measures will help us improve our processes towards timely delivery of projects and capabilities.

NORAD Modernization Objectives: Canada and the United States are moving forward with investments to modernize NORAD’s capabilities, and there is a requirement to synchronize binational, bilateral and unilateral investments. Starting at the highest level, in the Roadmap for a Renewed United States-Canada Partnership announced in February 2021, it was agreed to expand cooperation on continental defence and in the Arctic, including by modernizing NORAD. The recently signed Joint Statement on NORAD Modernization articulated both nations commitment to NORAD Modernization.

This Joint Statement is intended to guide collaborative efforts to modernize NORAD over the coming years. This work is guided by a common understanding of NORAD modernization, which refers to the shared commitment to: modernize, improve, and better integrate the capabilities required for NORAD to maintain persistent awareness and understanding of potential threats to North America in the aerospace and maritime domains; to deter acts of aggression against North America; to respond to aerospace threats quickly and decisively when required; and to provide maritime warning consistent with the NORAD Agreement.

NORAD modernization efforts at NORAD Headquarters are focused on identifying the capabilities and investments required to effectively execute the NORAD mission sets of Aerospace Warning, Aerospace Control and Maritime Warning within the broader defence, security and safety of North America. Advocacy for current and future requirements is necessary to influence and inform the Department of National Defence (DND) and the United States Department of Defense acquisition processes. This advocacy better positions the DND/CAF and Department of Defense to deliver the capabilities required to regain the competitive military advantage over our adversaries. 

A number of Strong, Secure, Engaged initiatives, specifically 109 (North Warning System Replacement) and 111 (NORAD Modernization), have yet to be fully defined and funded. Given the magnitude and scope of these initiatives, significant collaborative work remains to ensure the DND/CAF delivers relevant, interoperable capabilities that contribute to the collective defence of North America. The CAF proposed investments, build towards modernizing NORAD (in accordance with Strong, Secure, Engaged initiatives 109 and 111) provide the starting point for Canadian capability contributions to NORAD Modernization, inform the broader Government of Canada continental defence policy development and provide the basis for development of discrete investment options to address specific priority areas or Commander, North American Aerospace Defense Command focus areas. The Joint Statement prioritizes the following investment areas:

  • Situational awareness;
  • Modernized command and control systems;
  • Capabilities to deter and, if necessary, defeat evolving aerospace threats to North America; and
  • Research, Development, and Innovation.

Defence Intergovernmental Affairs is engaging Indigenous women’s organizations and Elders as partners in the work to strengthen domestic and continental defence and to modernize NORAD. This presents a unique opportunity to work collaboratively and adopt a new approach that will engage Indigenous Peoples as partners rather than stakeholders, build trust and advance reconciliation.

Gender-based analysis plus (GBA Plus)

In order to ensure effective defence procurement, the department will continue to build Defence Team capacity to conduct GBA Plus, to apply GBA Plus findings and conclusions to decision-making for equipment acquisition and materiel support activities, and to integrate them into the requirements and/or evaluation criteria of Requests for Proposals. In addition, Public Services and Procurement Canada (PSPC), supported by the Treasury Board of Canada Secretariat (TBS), is developing a policy suite with respect to social procurement that intends to reduce barriers for underrepresented groups. DND will monitor these developments and make changes to support Government of Canada objectives.

More information on GBA Plus can be found in the “GBA Plus Supplementary Information Table” under the Supplementary information tables section of this report.

United Nations’ 2030 Agenda for Sustainable Development and the United Nations Sustainable Development Goals (SDGs)

As directed by Strong, Secure, Engaged initiative 100 and the Defence Energy and Environment Strategy, Defence procurement will continue to adhere to Canadian environmental standards and integrate energy and environmental considerations into procurement decision-making. In support of Government of Canada’s net-zero emissions by 2050 objective, procurement of new defence capabilities will conform to the Greening Government Strategy by pursuing energy and operational efficiency. The environmental and energy considerations in defence procurement support the United Nations’ 2030 Agenda for Sustainable Development and the United Nations Sustainable Development Goal #13 Climate Action; and the GBA Plus in decision-making for equipment acquisition and materiel support activities supports the United Nations Sustainable Development Goal #5 Gender Equality.

Experimentation

DND worked with PSPC and TBS to develop an innovative approach to contract approval. This Risk Based Defence Procurement Pilot approach allows for an accelerated procurement process for low-risk procurements. The Pilot approach has been extended until the end of March 2025 to provide PSPC and DND with additional opportunities in support of streamlining defence procurement. 

Additional defence-related experimentation activities are outlined in this report under Core Responsibility 4 – Future Force Design.

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Key Corporate Risk(s)

There are many risks associated with the Procurement of Capabilities Core Responsibility. Three of the Key Corporate Risks are articulated below:

Materiel Procurement – There is a risk that DND/CAF may have difficulty procuring materiel capabilities at the right level to support operations.

Information Technology Procurement – There is a risk that DND/CAF may have difficulty procuring information technology capabilities at the right level to support operations.

Materiel Maintenance – There is a risk that DND/CAF may have difficulty maintaining its materiel capabilities at the right level to support operations.

The risks above can affect the department’s ability to achieve the Departmental Results of this the Procurement of Capabilities Core Responsibility.

As the Defence Departmental Results Framework reflects a chain of delivery from conceiving of the required armed forces, to developing them and then executing operations, the activities to mitigate the risks to the Procurement of Capabilities Core Responsibility can also be found in other Core Responsibilities which deliver building blocks that enable the results of Procurement of Capabilities.

Departmental Result 5.1 – Defence procurement is streamlined

Streamlined and flexible procurement arrangements help ensure DND is ready and equipped to conduct missions. Assessing the project process time helps measure the success of newly introduced processes. Below are a two initiatives to ensure defence procurement is streamlined:

  • The Risk Based Defence Procurement Pilot approach was extended to the end of March 2025. This pilot establishes a risk-based contract approval process for low-risk defence procurement, where the financial value exceeds PSPC’s existing limits. This extension will provide PSPC and DND with additional opportunities in support of streamlining defence procurement; and
  • Increase the transparency and timeliness of communication with defence industry associations, including meetings with Canadian industry through a Defence Industry Advisory Group and other forums to enhance public access to information on Defence procurement activities. The Defence Industry Advisory Group is an important vehicle for discussing critical issues that affect the broad segments of the Canadian defence industrial base, such as NORAD modernization, the impacts of greening government on defence procurements, economic security and supply chain resiliency. In addition, DND officials will participate in several major industry events throughout FY 2022-23, such as CANSEC and the CAF Outlooks, to keep industry informed of defence investment plans and the progress of defence projects, as well as to engage industry representatives on their concerns and challenges. Industry engagement will include in-person activities, where public health conditions permit, and will leverage virtual engagement platforms to facilitate communication with the Canadian defence industry.

Planned results

Departmental Results Departmental Result Indicators Target Date to achieve target 2018–19 Actual results 2019–20 Actual results 2020–21 Actual results
5.1 Defence procurement is streamlined % of projects that meet the approved project development and approval timelines (low risk and low complexity projects)

100%

 

31 March 2023 Result not available
New indicator as of 2018-19
Results not available
New indicator as of 2018-19

67%*

% of goods and services contracts that are awarded within established performance targets

100%

 

31 March 2023 100% 100% 92%**

Notes:

* Initiatives such as the Tailored Project Approval Process (formerly known as Project Approval Process Renewal) continued to result in reduced approval process times, specifically in the later phases of the projects, eliminating the requirement for multiple Expenditure Authority approvals by the Minister of National Defence.

** Target not met due to factors such as COVID. In the early phase of the pandemic connectivity to work remotely was limited. Access points were shared among many users, ultimately having an impact on the department’s ability to execute procurement within the set timelines. The priority was given to those requirements in direct support to Operation LASER (or COVID-19 efforts).

Financial, human resources and performance information for the Department of National Defence and the Canadian Armed Forces’ Program Inventory is available in the GC InfoBase.

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Departmental Result 5.2 – Defence equipment acquisition is well-managed

To manage the lengthy acquisition process required to develop and implement complex projects, the department will continue to grow and professionalize the procurement workforce. Key focuses for FY 2022‑23 will include:

  • Maintain the efforts of the Professionalization Working Group, promoting access to specialized training;
  • Continue the development of a competency-based approach to project management organization seeking to align and right-fit competencies with the roles within a project management organization;
  • Continue to qualify project managers for major crown projects and align the program with TBS direction on project management through the Project Management Competency Development Program; and
  • Enhance project performance by means of professionalizing project management teams through the continued roll-out of three-point schedule estimating techniques, earned value management and negotiations training.

Key equipment acquisition projects in FY 2022-23, as outlined in the Plans at a glance, include:

Armoured Combat Support Vehicle

The Armoured Combat Support Vehicle project will fulfill a variety of combat support roles: Troop/Cargo transport, Ambulance (shown in the photo above), Command Post, Electronic Warfare, Engineer, Fitter/Cargo, Maintenance and Recovery, and Mobile Repair.

Planned results

Departmental Results Departmental Result Indicators Target Date to achieve target 2018–19 Actual results 2019–20 Actual results 2020–21 Actual results
5.2 Defence equipment acquisition is well-managed % of capital equipment projects that remain in most recent approved scope 100% 31 March 2023 100% 100% 94.12%*
% of capital equipment projects that remain on most recent approved schedule 100% 31 March 2023 81.25%

100%

94.12%*
% of capital equipment projects that remain within most recent approved expenditure authority 100% 31 March 2023 100% 100% 94.12%*

Notes:

* Of the 17 capital equipment projects, 16 achieved the target. However, the Cormorant Mid-Life Upgrade Project has had some challenges during FY 2020-21 and will be looking into alternate solutions to meet its needs. These challenges have affected the Project’s scope, schedule, and expenditure authority.

Financial, human resources and performance information for the Department of National Defence and the Canadian Armed Forces’ Program Inventory is available in the GC InfoBase.

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Departmental Result 5.3 – Defence information technology acquisition is well-managed

DND will continue to deliver on key information management, information technology and space projects as outlined in SSE. Key focuses for FY 2022-23 will include:

  • Stabilize and optimize third line and support for critical Command and Control (C2) applications and systems;
  • Act as the departmental representatives for a wide range of in-service strategic/non-tactical computer information system and strategic communication services;
  • Provide assured and timely in-service support to assigned critical/high-priority strategic and operational joint capabilities and services;
  • Implement an integrated capability management approach with relevant capital projects and project delivery activities in the domains of space, cyber and joint capabilities; and
  • Collaborate with other capability delivery organizations, within and outside of DND to ensure maximized business and operational benefits.

DND will deliver full operational capability for the following projects and initiatives in FY 2022-23:

  • Juniper Green; and
  • Enterprise Modernization Initiative, Material Identification.

DND will continue to adopt project management practices to expedite delivery and to retain agility and flexibility in the fast-evolving information technology capability delivery domain. This effort will include:

  • Early engagement with industry and delivery partners;
  • Close engagement with PSPC and Innovation, Science and Economic Development Canada to streamline our processes; and
  • Close engagement with TBS/the Office of Chief Information Officer to ensure alignment with Government of Canada Digital policy, architecture and standards.

Planned results

Departmental Results Departmental Result Indicators Target Date to achieve target 2018–19 Actual results 2019–20 Actual results 2020–21 Actual results
5.3 Defence information technology acquisition is well-managed % of information technology projects that remain in approved scope 100% 31 March 2023 94%

100%

100%
% of information technology projects that remain on approved schedule  100% 31 March 2023 88% 94%

76%*
% of information technology projects that remain within approved expenditure authority  100% 31 March 2023 100% 100% 100%

Notes:

* Early in this reporting period, COVID-19 impacted the ability of projects to stay on their approved schedules. Projects were able to get back on track after only a few months, once business processes were established and personnel became accustomed to working in a distributed environment.

Financial, human resources and performance information for the Department of National Defence and the Canadian Armed Forces’ Program Inventory is available in the GC InfoBase.

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Departmental Result 5.4 – Supplies are available and well-managed

In FY 2022-23 the department will enhance materiel accountability by implementing modern, effective inventory controls, supply chain management and inventory valuation, such as:

  • Develop and implement a Defence Supply Chain Performance Management Framework that informs decision-making around the areas of materiel readiness, compliance and optimized cost and that helps prioritize supply chain practitioner work in supporting the CAF;
  • Continue to modernize the business processes for substantive and enduring materiel management improvements. The development of an information technology solution to conducting disposal business processes is being explored to increase Defence’s analytic ability to manage and monitor disposal activities and decrease the level of effort required by materiel managers and materiel custodians when identifying materiel disposal; and
  • Work to further improve governance effectiveness, to improve the execution of supply chain functions in support of training and operations.

Planned results

Departmental Results Departmental Result Indicators Target Date to achieve target 2018–19 Actual results 2019–20 Actual results 2020–21 Actual results
5.4 Supplies are available and well-managed % of stock that is unavailable to meet forecasted demand At most 5.28% 31 March 2023 5.72% 7.61% 7.36%
% of stock disposed that was identified as surplus At least 23% 31 March 2023 Results not available 
New indicator as of 2020-21*
Results not available 
New indicator as of 2020-21*
33.4%
% of stock where Warehouse replenishment settings require review to achieve better materiel positioning and timely customer satisfaction At most 3.28% 31 March 2023 Results not available.
New indicator as of 2022-23.
Results not available.
New indicator as of 2022-23.
Results not available.
New indicator as of 2022-23.

Notes:

* Result not available. For additional context, see the Department of National Defence and the Canadian Armed Forces’ 2018–19 Departmental Results Report.

Financial, human resources and performance information for the Department of National Defence and the Canadian Armed Forces’ Program Inventory is available in the GC InfoBase.

Planned budgetary spending for Procurement of Capabilities

2022-23 budgetary spending (as indicated in Main Estimates) 2022–23 planned spending 2023–24 planned spending 2024–25 planned spending
4,792,013,007 4,792,013,007 5,127,882,945 3,894,787,550

Financial, human resources and performance information for the Department of National Defence and the Canadian Armed Forces’ Program Inventory is available in the GC InfoBase.

Planned human resources for Procurement of Capabilities

2022–23 planned full-time equivalents 2023–24 planned full-time equivalents 2024–25 planned full-time equivalents
2,429 2,419 2,427

Financial, human resources and performance information for the Department of National Defence and the Canadian Armed Forces’ Program Inventory is available in the GC InfoBase.

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