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.

Results

The Department of National Defence (DND) continued to procure advanced capabilities to maintain an operational advantage over potential adversaries and to keep pace with allies, while fully leveraging defence innovation and technology.

Effective defence procurement remained vital to ensuring that the Canadian Armed Forces (CAF) have the necessary range of capabilities required to protect and defend Canada and Canadians. To achieve this goal, it was necessary to reform Canada’s procurement model, reducing complexity and redundancy, in order to ensure the timely delivery of projects. During FY 2020–21, the department:

  • Supported Public Services and Procurement Canada (PSPC) and the Treasury Board Secretariat (TBS) in developing an enhanced logic model focused on performance management and evaluation strategies in support of the Risk‑Based Contracting Pilot; the Materiel Group continued to work with organizations across the department as they prepare for enhanced contracting authorities; and
  • Developed a Capability Requirements and Proposed Investments Summary that highlighted the capability deficiencies that affect North American Aerospace Defense Command (NORAD)’s ability to carry out its assigned missions, and identified potential investments to address current and emerging defence and security challenges; this Summary was also used to define Strong, Secure, Engaged: Canada’s Defence Policy (SSE) Initiatives 109 and 111, North Warning System renewal and NORAD Modernization.

Gender-based analysis plus (GBA Plus)

The Defence Team continued to use GBA Plus to support the diagnosis of potential deficiencies and to improve the design of equipment and services procured for CAF members. Using GBA Plus helped us ensure that we are providing our people with equipment and services that are cost-effective and efficient because the development takes users’ diverse needs into account. For example:

  • When considering equipment design, workstation/console design, workplace layout, maintenance access and ease of maintenance, user interface design, human systems integration and other design requirements, suppliers were asked to use anthropometric data and to gather and use other types of data on the gender, sex and other identity factors of the system’s intended users and maintainers. This allowed us to identify potential for differential impact of system elements on humans based on gender and identity factors; and
  • When identifying requirements for new skills, manuals, training courses, requirements for training facilities, etc., suppliers were asked to apply GBA Plus findings, and undertake research and consultations to understand the potential for differential issues of access, barriers or privileges experienced by those who will be trained in order to inform the training design and requirements.

The Soldier Operational Clothing and Equipment ModernizationEndnote 137 initiative aims to deliver an integrated suite of modernized operational clothing, personal protective equipment, and load carriage equipment that focuses on GBA Plus and improving soldiers’ performance and comfort. In FY 2020–21, the initiative sought to apply an iterative, developmental approach that relies on evergreen requirements that can be updated to leverage the latest advancements in the industry.

Experimentation

PSPC, TBS and DND established a working group and developed options for a risk-based contract approval process for defence procurements where the financial value exceeds PSPC’s existing limits. The Risk‑Based Contracting Pilot was launched in November 2018 and lasted for 18 months was initially set to expire in April 2020. Based on the pilot’s demonstrated success, Treasury Board approval was obtained in June 2020 to extend the pilot for five years to March 2025. The three organizations involved are working to enhance the supporting pilot framework.

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

Key Corporate Risk(s)

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

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

IT Procurement – There was a risk that DND and the CAF may have difficulty procuring information technology capabilities at the right level to support operations.

Materiel Maintenance – There was a risk that DND and the 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 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.

Many of the preventative and mitigating controls for these risks are articulated as activities of each Departmental Result below.

Departmental Result 5.1 – Defence procurement is streamlined

In FY 2020–21, DND was ready and equipped to conduct missions with our streamlined and flexible procurement arrangements and newly introduced processes as follows:

  • Ensuring newly introduced processes allow defence project timelines to be assessed in order to measure success:
    • Over the course of FY 2020–21, the Defence Industry Advisory Group ensured that communication with the defence industry was more transparent and timely in a period of great uncertainty caused by COVID-19. In this context, steps were taken to extend the Defence Industry Advisory Group to include more defence suppliers, and regular updates were provided to the Deputy Minister and the Minister of National Defence regarding the COVID‑19-related challenges faced by the industry.

Results achieved

Departmental results Performance 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 2021 Results not available New indicator as of 2018–19 Results not available 67%Note *
% of goods and services contracts that are awarded within established performance targets 100% 31 March 2021 100% 92% 92%Note **

Departmental Result 5.2 – Defence equipment acquisition is well-managed

  • With the ongoing efforts to professionalize the workforce by promoting access to specialized training and coordinating competency development, the following activities were completed or advanced in FY 2020–21:
    • Developed a high‑level professionalization concept as an academic project with the Telfer School of Business;
    • Conducted an environmental scan of all classifications and communities of practices through the professionalization working group in order to improve understanding of the different needs;
    • Created a materiel management functional community of practice; a plan to professionalize this community is in development;
    • Launched a three-phased organizational transformation project called “Competency-Based Project Management Organization” to transition project management roles to a standardized model; Phase 1: Problem Identification is complete and delivered an organizational assessment that includes an environmental scan;
    • Delivered 37 648 Materiel Acquisition and Support‑related training qualifications;
    • Completed extensive Materiel Acquisition and Support curriculum updates and implemented new content across all communities on more than 20 different courses;
    • Created a new learning and development curriculum for Sponsor Force Generation staff;
    • Increased project management competencies within DND by qualifying 92 new DND project managers for a total of 485 personnel holding a DND project manager qualification;
    • Improved project management acumen by sponsoring six personnel to complete the Master of Business in Complex Project Leadership and 31 personnel achieving the Certificate in Complex Project and Procurement and Leadership; and
    • Improved scheduling practices for project management teams by training 60 project management practitioners in advance scheduling practices. Initiated the third‑party assessment of the Major Capital Project scheduling initiative currently being conducted by KPMG.

Highlights from FY 2020–21 on the department’s major and key equipment projects:

  • The Canadian Surface CombatantEndnote 139: The work to complete the Requirements Reconciliation of the Canadian Surface Combatant project continued. The final administrative action is under way to complete this work in FY 2021–22. The project achieved a successful joint (DND/PSPC) corporate submission to attain the authorities necessary to acquire the required long‑lead items to advance the design in order to support the start of construction in FY 2023–24, and to design and build a Land‑Based Test Facility that is essential to supporting ship design, integration, and construction and acceptance activities. Throughout FY 2020–21, the project made progress on the preliminary design. Completion is targeted for 2022;
  • Arctic and Offshore Patrol ShipsEndnote 140: Construction continued on the second Arctic and Offshore Patrol Ship, the future Her Majesty’s Canadian Ships (HMCS) Margaret Brooke, although required COVID-19 safety protocols did affect progress. Based on the current schedule, the future HMCS Margaret Brooke is expected to be delivered in 2021, noting that timelines remain tentative as the pandemic continues. During FY 2020–21, work continued on the third Arctic and Offshore Patrol Ship, the future HMCS Max Bernays, and work began on the fourth ship, the future HMCS William Hall. Canada took delivery of HMCS Harry DeWolf in July 2020. Canada assumed care and custody of the ship as the final stages of the systems’ installation progressed for the first ten weeks that the ship was being berthed at HMC Dockyard;
  • Fixed Wing Search and Rescue Aircraft Replacement ProjectEndnote 141: Despite ongoing challenges associated with international travel, the Fixed Wing Search and Rescue Aircraft Replacement Project accepted an additional four aircraft in Spain, bringing the total number of aircraft accepted by Canada to five. The first aircraft was delivered to Canada from Spain in 2020. Six of the seven training devices were accepted, after which, aircrew and maintainer training began in the newly constructed CC-295 Training Centre in Comox, British Columbia. Minor construction on the training centre continues. This construction is expected to be complete in 2021;

Fixed Wing Search and Rescue Aircraft Replacement – CC-295

  • Joint Support ShipEndnote 142: The Joint Support Ship project received implementation authorities in February 2020. Supporting contracts were amended to continue activities until the build contract was awarded in June 2020. Shipyard activities were impacted by COVID-19, with production continuing throughout the pandemic. By the end of FY 2020–21, 111 of 123 blocks were under construction for the first Joint Support Ship, the future HMCS Protecteur;
  • Future Fighter Capability ProjectEndnote 143: In May 2020, the Future Fighter Capability Project sought to design and build a new fighter jet facility at 4 Wing Cold Lake, Alberta. This facility will host three fighter squadrons and include space for daily operations, maintenance, and training. In June 2020, Canada also sought to design and build a new fighter jet facility at 3 Wing Bagotville, Quebec. This facility will host two squadrons and will also include space for daily operations, maintenance and training. In July 2020, Canada received bids from all suppliers currently eligible to participate in the future fighter competitive procurement process. Proposals are being rigorously assessed on elements of capability, cost and economic benefits. The evaluation also includes an assessment of bidders’ impact on Canada’s economic interests. In August 2020, a $9.2M design contract for a Fighter Squadron Facility in Cold Lake, Alberta, was awarded, and a similar contract of $12.1M was awarded in September 2020 for a Fighter Squadron Facility in Bagotville, Quebec. These contracts enabled design and site preparation work to begin for infrastructure that is not aircraft specific;
  • Remotely Piloted Aircraft SystemEndnote 144: Throughout FY 2020–21, the project team for the Remotely Piloted Aircraft system engaged the two qualified suppliers through the Review and Refine Requirements process to develop the draft request for proposal. The initial draft request for proposal was issued to qualified suppliers for review and feedback in November 2020; the request for proposal is expected to be issued in FY 2021–22;
  • Medium Support Vehicle SystemsEndnote 145: Deliveries of all equipment to units across Canada for the Medium Support Vehicle System project were completed. A five-year in-service support contract extension was awarded in July 2020. Fleet management responsibilities were transferred from the project to the support organization in summer 2020. Full operational capability was reached in February 2021;

Medium Support Vehicle System Project – Standard Military Pattern Truck

  • Logistics Vehicle ModernizationEndnote 146: The Logistics Vehicle Modernization project released a draft request for proposal in phases to six qualified suppliers. Engagements with qualified suppliers were held at each major release to solicit feedback. The project expects to release the final request for proposal by the third quarter of FY 2021–22;
  • Armoured Combat Support VehiclesEndnote 147: In December 2020, the first Armoured Combat Support Vehicle, a Troop Cargo Vehicle variant, was produced and accepted by Canada. Qualification testing on the first variant commenced in early 2021. Design and production of the second and third variants, Ambulance and Command Post, significantly progressed in FY 2020–21;
  • CP-140 Aurora Incremental Modernization ProjectEndnote 148: The Aurora Incremental Modernization Project Blocks I, II and III are complete and have delivered a modernized CP-140 Intelligence, Surveillance and Reconnaissance, and Anti-Submarine Warfare capability to the Royal Canadian Air Force. Block IV has delivered three modified aircraft (only one of which has a fully capable self‑defence system). Three more aircraft currently undergoing modification; and
  • CH-149 Cormorant Mid-Life Upgrade ProjectEndnote 149: The Cormorant Mid-Life Upgrade Project received a mid-May 2020 contractor proposal, which proved unaffordable. The project began investigating alternate solutions, which delayed the target implementation date. The CH‑149 fleet averaged 99.5 percent Search and Rescue availability at each base during the year and supported aircrew training.

For more information on key equipment projects, please visit the Department of National Defence and the Canadian Armed Forces’ Defence equipment purchases and upgradesEndnote 150 webpage.

Results achieved

Departmental results Performance 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 approved scope 100% 31 March 2021 100% 100% 94.12%Note *
% of capital equipment projects that remain on approved schedule 100% 31 March 2021 81.25% 100% 94.12%Note *
% of capital equipment projects that remain within approved expenditure authority 100% 31 March 2021 100% 100% 94.12%Note *

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

Throughout FY 2020–21, DND continued to deliver on key information management and information technology capital projects as outlined in SSE despite the challenges of COVID-19. Since project reporting controls are in place to inform senior management when projects face challenges, appropriate steps are promptly taken to do what is required to resolve issues. Senior management was able to provide guidance related to COVID-19 challenges to minimize the impact to projects.

The Defence Team continued to adopt project management practices by engaging early with industry and delivery partners, and engaging closely with other government departments despite the challenges of COVID-19. Once business processes and technologies were adapted to the changed circumstances, efforts were able to resume to keep projects on track.

The department continued to work on delivering full operational capability for the following information management projects in FY 2021–22:

  • Secure Iridium Replacement Initiative;
  • Digital Biometrics Collection and Identity Management;
  • Polar Epsilon 2;
  • Defence Cryptographic Modernization Project – Network Encryption Family;
  • Defence Cryptographic Modernization Project – Identification Friend or Foe; and
  • Mercury Global Project.

Results achieved

Departmental results Performance 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 2021 94% 100% 100%
% of information technology projects that remain on approved schedule 100% 31 March 2021 88% 94% 76%Note *
% of information technology projects that remain within approved expenditure authority 100% 31 March 2021 100% 100% 100%

Departmental Result 5.4 – Supplies are available and well-managed

In FY 2020–21 the department enhanced materiel accountability with the following notable achievements:

  • Developed the Defence Supply Chain Performance Measurement Framework which will be rolled-out across National Defence during FY 2021–22. This will inform decision‑making about subjects such as responsiveness, accuracy, cost and equipment readiness; and
  • Advanced a series of integrated initiatives to modernize business processes executed within the Defence Supply Chain. Instructions were published to ensure that vendors apply unique identification marks to high‑value and/or controlled items prior to their introduction to the supply system, and a contract was awarded to mark items held in legacy inventory. This effort will establish a critical mass of markings (similar to bar codes in a store) to support automatic information technology adoption, which will deliver handheld barcode reading technologies to the supply community in 2024. Efforts to remediate data and better integrate business functions within the supply system have also progressed in their design. Together, these initiatives will improve asset visibility and enhance the supply chain’s ability to respond to threats and emergencies.

National Procurement is the term given to DND Corporate accounts aligned with the in-service sustainment and disposal of aerospace, land and maritime equipment, as well as ammunition and common use materiel, such as uniforms and test equipment. In-service sustainment includes maintenance, engineering support, engineering changes and inventory replenishment. The department’s materiel group is responsible for executing the National Procurement Program, which was over $3.245B in FY 2020–21.

The department’s materiel group continued to provide equipment support to maritime, land and aerospace equipment, as well as ammunition and common use materiel, such as uniforms and test equipment. Equipment support includes the maintenance, engineering support, engineering changes and inventory replenishment required for equipment to be available to support CAF training and operational requirements. 

Results achieved

Departmental results Performance 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 Below 7.93% 31 March 2021 5.72% 7.61% 7.36%
% of stock disposed that was identified as surplus Greater than 23% 31 March 2021 Results not availableNote *
New indicator as of 2020-21
Results not availableNote *
New indicator as of 2020-21
33.4%

Budgetary financial resources (dollars)

2020–21 Main Estimates 2020–21 Planned spending 2020–21 Total authorities available for use 2020–21 Actual spending (authorities used) 2020–21 Difference (Actual spending minus Planned spending)
3,907,432,104 3,910,791,611 4,701,330,194 4,119,915,713 209,124,102

Human resources (full-time equivalents)

2020–21 Planned full-time equivalents 2020–21 Actual full-time equivalents 2020–21 Difference (Actual full-time equivalents minus Planned full-time equivalents)
2,176 2,525 349

Financial, human resources and performance information for the Department of National Defence and the Canadian Armed Forces’ Program Inventory is available in the GC InfoBaseEndnote 154.

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