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 that Defence is equipped to conduct missions.

Results

Effective defence procurement is vital to ensuring that 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 continues to make improvements to ensure that procurement is set up for success through rigorous and timely consideration within the project approval process.

The CAF developed the Integrated Priority List that highlights the capabilities and investments required to effectively execute the North American Aerospace Defense Command (NORAD) mission sets of Aerospace Warning, Aerospace Control, and Maritime Warning within the broader defence, security and safety of North America. Advocacy continues for current and future requirements in order to influence and inform the Department of National Defence (DND) and the United States Department of Defense acquisition processes.

The CAF outlined the requisite capabilities and areas of investments required to effectively execute the Continental defence missions and fully define Strong, Secure, Engaged initiatives 109 and 111, North Warning System renewal and NORAD Modernization. Key activities included:

• The CAF continued to investigate future technological solutions and capabilities for maintaining situational awareness in the approaches to North America including the Arctic and Polar regions; and
• NORAD developed an Integrated Priority List to describe capability deficiencies that affect NORAD from executing its assigned missions and supported CAF Force Development efforts towards NORAD Modernization.

The Materiel Group continued to work with internal organizations as they prepare for enhanced contracting authorities.

Gender-Based Analysis Plus (GBA Plus)

In FY 2021-22, the Canadian Army's Soldier Operational Clothing and Equipment Modernization initiative continued planning and development of Statements of Requirement that will be provided to industry when funding becomes available. The initiative has been examining the full range of personal protective equipment, load carriage, and clothing to determine whether any items need to be redesigned to accommodate different body shapes or gender considerations. Also, combat uniform sizing is being modified from the NATO-standard four-inch increments to two-inch increments, effectively doubling the available number of sizes, to enable individuals to select a better-fitting uniform.

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 the Defence Team procure equipment and services that take users’ diverse needs into account, and improve the efficiency of the process.

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

As directed by Strong, Secure, Engaged: Canada’s Defence Policy initiative 100 and the Defence Energy and Environment Strategy, defence procurement continued adhering to Canadian environmental standards and integrating energy and environmental considerations into procurement decision-making. Additionally, in support of the Government of Canada’s objective of net-zero emissions by 2050, procurement of all new defence capabilities continued conforming to the Greening Government Strategy by pursuing energy and operational efficiency. The environmental and energy considerations in defence procurement supported the United Nations’ 2030 Agenda for Sustainable Development and the United Nations Sustainable Development Goal #13, Climate Action.

Experimentation

Public Service and Procurement Canada (PSPC), Treasury Board Secretariat, and DND established a working group and developed options for a risk-based contract approval process for defence procurement where the financial value exceeds PSPC’s existing limits. In 2021, it was renamed the Risk-Based Approach and the pilot extended until March 2025.

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

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 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

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

• In FY 2021-22, DND continued to leverage the PSPC-led Risk-Based Approach pilot for eligible procurements;
• DND participated in all four meetings of the FY 2021-22 Defence Industry Advisory Group. These meetings included DND-led discussions on the project scheduling transformation initiative within DND, NORAD modernization efforts, and impacts of the COVID-19 pandemic on defence projects and supply chains. In addition, the Defence Team participated in the first ever Canadian Defence Marketplace, a virtual networking event held by the Canadian Association of Defence and Security Industries to respond effectively to the COVID-19 social distancing requirements. DND officials also spoke at several industry events, including the CAF Leadership Series held by the Canadian Association of Defence and Security Industries in Fall 2021 to replace the CAF Outlooks in-person event, the Common Defence 2021 Conference, and the Canadian Defence Security and Aerospace Exhibition Atlantic in Halifax, Nova Scotia; and
• SSE initiative #94 aimed to reduce project development and approval time in the Department of National Defence by at least 50 percent for low-risk and low-complexity projects through improved internal coordination, increased delegation, and strengthened approval processes. The initiative was successfully closed in FY 2021-22, resulting in 2 to 3 times faster processing times for eligible projects which leveraged streamlined project paths and governance between 2017 and 2022. Moving forward, DND will continue to further explore and promote innovative acquisition practices and processes.

Results achieved

Departmental results	Performance indicators	Target	Date to achieve target	2019–20 Actual results	2020–21 Actual results	2021–22 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 2022	Results not available	67%	75%Footnote 1
	% of goods and services contracts that are awarded within established performance targets	100%	31 March 2022	92%	92%	96%Footnote 2

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.

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 grow and professionalize the procurement workforce. The Materiel Group completed the following activities:

• The Professionalization Working Group was restructured and membership expanded in order to provide consistent governance at a more senior level. A formal Terms of Reference was developed and approved. The Working Group met three times in FY 2021-22, and developed a professionalization model with a corresponding health check that will serve as a foundation for future professionalization activities;
• Development continued around competencies, the project management organization design within the constraints of human resources policy which led to the development of a course on negotiation and career paths for various occupations to support project delivery;
• In FY 2021-22, the Project Management Competency Development program accredited a total of 68 Project Managers at various levels, to qualify Project Managers for major capital projects and align the program with Treasury Board of Canada Secretariat; and
• Work began in March 2022 to develop and deliver a three-point scheduling and earned value management training package and discussions with PSPC on aligning policies. In 2021, work began on a negotiation course which reached the final stages of quality assurance at the end of FY 2021-22.

Key equipment acquisition projects in FY 2021-22 include the following:

• Manned airborne intelligence, surveillance and reconnaissance;
• Canadian Surface Combatant;
• Arctic and Offshore Patrol Ship;
• Joint Support Ship;
• Fixed-wing Search and Rescue Aircraft Replacement Project;
• Future Fighter Capability Project;
• Remotely Piloted Aircraft System;
• Strategic Tanker Transport Capability;
• Logistics Vehicle Modernization;
• Armoured Combat Support Vehicle;
• CP-140 Aurora Incremental Modernization Project;
• Interim Fighter Capability Project;
• Hornet Extension Project;
• CH-148 Cyclone Project; and
• Victoria-class Modernization.

Defence equipment acquisition results are based on the recognised project performance characteristics of scope, schedule and cost, using prescribed performance thresholds established through interdepartmental governance committees and project approval authorities. Revisions to project baselines require protracted discussions and engagement of interdepartmental governance committees, and can lead up to re-engaging the Project Approval authority (minister or Treasury Board). As the original schedule baselines are often developed based on several unknowns and assumptions early in the project lifecycle, revisions to the schedule for project oversight and reporting purposes typically occur through interdepartmental governance, and ensure that the revised schedule used to help manage project risks is grounded in evidence. Stated differently, addressing risks that have materialized can lead to a revised baselines, which in turn form the basis for future internal and external results reporting. This approach to performance reporting aligns with the Departmental Results Framework and is under review to ensure continuous improvement. 

For more information on these and other projects, consult the Investing in Equipment and Current Projects webpage.

Results achieved

Departmental results	Performance indicators	Target	Date to achieve target	2019–20 Actual results	2020–21 Actual results	2021–22 Actual results
5.2 Defence equipment acquisition is well-managed	% of capital equipment projects that remain in most recent approved scope	100%	31 March 2022	100%	94.12%	93.8%Footnote 1
	% of capital equipment projects that remain on most recent approved schedule	100%	31 March 2022	100%	94.12%	93.75%Footnote 1
	% of capital equipment projects that remain within most recent approved expenditure authority	100%	31 March 2022	100%	94.12%	87.5%Footnote 1

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.

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

DND delivered full operational capability or commence the following projects and initiatives in FY 2021-22:

• Defence Lessons Learned System;
• Secure Iridium Replacement Initiative;
• Search and Rescue Mission Management System Replacement;
• Designing and producing a common Command and Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance backbone;
• Polar Epsilon 2 Project; and
• Delivery of the Ground Segment - Phase 2 of the Medium Earth Orbit Search and Rescue Project.

Throughout FY 2021–22, DND continued to deliver on key information management and information technology capital projects as outlined in Strong, Secure, Engaged, despite the challenges of the COVID-19 pandemic. Since project reporting controls are in place to inform senior management when projects face challenges, appropriate steps were taken promptly to resolve issues.

The Defence Team continued to adopt project management best practices by engaging early with industry and delivery partners, and engaging closely with other government departments.

Results achieved

Departmental results	Performance indicators	Target	Date to achieve target	2019–20 Actual results	2020–21 Actual results	2021–22 Actual results
5.3 Defence information technology acquisition is well-managed	% of information technology projects that remain within approved scope	100%	31 March 2022	100%	100%	100%
	% of information technology projects that remain on approved schedule	100%	31 March 2022	94%	76%	87%Footnote 1
	% of information technology projects that remain within approved expenditure authority	100%	31 March 2022	100%	100%	93%Footnote 2

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.

Departmental Result 5.4 – Supplies are available and well managed

In FY 2021-22 the department continued to enhance materiel accountability by implementing modern, effective inventory controls, supply chain management and inventory valuation. The following are three examples:

• The Defence Supply Chain Performance Measurement Framework has been rolled-out across National Defence in an intuitive dashboard. This informs decision-making around the areas of Responsiveness, Accuracy, Cost, and Equipment Status;
• The National Disposal Initiative was progressed, creating warehouse space, through selective reduction of depot holdings. Outcomes of this initiative have contributed to enhanced life cycle oversight of materiel, improved visibility over national strategic materiel holdings, optimized use of warehouse space, improved stewardship of materiel holdings, and decreased “cost of ownership” for DND/CAF; and
• DND established the Data Remediation and Marking of Serially Managed Materiel contract in November 2020 to apply unique identification marks such as 2-dimensional barcodes to existing Defence materiel. This initiative supports the adoption of automated data capture and entry technologies, including barcode scanners, delivered by the Automatic Identification Technology Project. It also supports Canada’s commitments to NATO by ensuring compliance with relevant NATO Standardization Agreements that support interoperability of materiel identification across NATO countries. At the end of FY 2021-22 over 800 materiel master records have been identified, over 30 000 items have been physically marked, and over 16 000 materiel data records were remediated.

Results achieved

Departmental results	Performance indicators	Target	Date to achieve target	2019–20 Actual results	2020–21 Actual results	2021–22 Actual results
5.4 Supplies are available and well managed	% of stock that is unavailable to meet forecasted demand	7.93% or less	31 March 2022	7.61%	7.36%	7.39%
	% of stock disposed that was identified as surplus	At least 23%	31 March 2022	Results not available New indicator as of 2020-21	33.4%	57.9%

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.

Budgetary financial resources (dollars)

2021–22 Main Estimates	2021–22 Planned spending	2021–22 Total authorities available for use	2021–22 Actual spending (authorities used)	2021–22 Difference (actual spending minus planned spending)
4,741,325,826	4,741,325,826	4,802,250,254	3,747,686,232	(993,639,594)

Human resources (full-time equivalents)

The following table shows, in full time equivalents, the human resources the department needed to fulfill this core responsibility for FY 2021–22.

2021–22 Planned full-time equivalents	2021–22 Actual full-time equivalents	2021–22 Difference (Actual full-time equivalents minus planned full-time equivalents)
2,843	2,457	(386)

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.