Core responsibility 5: Procurement of Capabilities

In this section

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.

Progress on results

This section presents details on how the department performed to achieve results and meet targets for Procurement of Capabilities. Details are presented by departmental result.

Table 5.1: Targets and results for departmental result Defence procurement is streamlined.

Indicator

Target

Date to achieve

2021-22 result

2022-23 result

2023-24 result

% of projects that meet the approved project development and approval timelines (low risk and low complexity projects)

100%

March 2024

75%

86%

83.3%Footnote 1

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

100%

March 2024

96%

95.6%

94.4%Footnote 2

Table 5.2: Targets and results for departmental result Defence equipment acquisition is well-managed.

Indicator

Target

Date to achieve

2021-22 result

2022-23 result

2023-24 result

% of capital equipment projects that remain in most recent approved scope

100%

March 2024

93.8%

94%

100%

% of capital equipment projects that remain on most recent approved schedule

100%

March 2024

93.75%

81%

93%Footnote 3

% of capital equipment projects that remain within the most recent approved expenditure authority as forecasted for the fiscal year

100%

March 2024

87.5%

88%

93%Footnote 4

Table 5.3: Targets and results for departmental result Defence information technology acquisition is well-managed.

Indicator

Target

Date to achieve

2021-22 result

2022-23 result

2023-24 result

% of information technology projects that remain in approved scope

100%

March 2024

100%

100%

100%

% of information technology projects that remain on approved schedule

100%

March 2024

87%

89%

90%Footnote 5

% of information technology projects that remain within approved expenditure authority

100%

March 2024

93%

100%

100%

Table 5.4: Targets and results for departmental result Supplies are available and well-managed.

Indicator

Target

Date to achieve

2021-22 result

2022-23 result

2023-24 result

% of stock that is unavailable to meet forecasted demand

At most 5.28%

March 2024

7.39%

7.61%

7.2%Footnote 6

% of stock disposed that was identified as surplus

At least 23%

March 2024

57.9%

41.5%

93.25%

% of stock where warehouse replenishment settings require review to achieve better materiel positioning and timely customer satisfaction

At most 3.28%

March 2024

-

3.34%

3.57%Footnote 7

Additional information on the detailed results and performance information for the Department of National Defence and the Canadian Armed Forces' program inventory is available on GC InfoBase.

Details on results

The following section describes the results for Procurement of Capabilities in FY 2023–24 compared with the planned results set out in the Department of National Defence and the Canadian Armed Forces' departmental plan for the year.

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Defence procurement is streamlined

Defence procurement requires that the Department balances procurement costs with operational requirements, schedule and socio-economic benefits. In fiscal year (FY) 2023-24, these challenges were further compounded by a rapidly changing security environment, evolving technology, complex procurements, and staffing shortages in critical areas of procurement. In response to these challenges, the Department piloted several innovative programs directly targeted at increasing procurement capacity and optimizing Defence procurement, which included:

  • Continuous Capability Sustainment to incorporate more timely technology updates into in-service Canadian Armed Forces (CAF) digitally enabled equipment platforms including armoured vehicles, naval vessels, aircraft and soldier portable communications systems to better maintain operation relevance in concert with Canada's Allies, and compliance with regulatory changes;
  • Establishment of a Purchase and Supply Group (PG) Academy to recruit and develop procurement and materiel management specialists through their careers; and
  • Continued to support the Public Services and Procurement Canada (PSPC) led Defence Procurement Review.

To promote streamlined and flexible procurement approvals in FY 2023-24, DND/CAF:

  • Continued to leverage the PSPC led Risk-Based Approach to contract approvals, which enabled lower complexity projects to be advanced on shorter timelines; and
  • Implemented a phased roll out of new increased contracting authorities, allowing the Department to internally approve 80% of its contracts.

The Department of National Defence (DND) is currently piloting a new right-sizing approach for cost estimating activities to better allocate resources. Previously, estimating costs for investment projects required a dedicated cost analyst, regardless of complexity or risk. While this ensured consistency and integrity in the costing process, it also resulted in an inefficient allocation of resources, particularly in cases of low-complexity, low-risk projects. To address this issue, the department's new approach will tailor the level of costing effort based on an initiative's Project Complexity and Risk Assessment rating and its financial implications. By streamlining the process in this way, DND aims to redirect some of these resources to focus more on high-risk and complex projects where costing expertise is most needed, thereby improving overall efficiency and effectiveness in resource management.

In FY 2023-24, the Department of National Defence (DND) awarded 94.30% of its contracts within the established performance target. Due to higher-risk, more complex requirements due to an increase in DND's contracting authorities, a new performance indicator was developed and will be used to measure the degree to which defence procurement is streamlined according to level of complexity.

The Department continued to expend significant efforts to deliver on the 362 Strong, Secure, Engaged Canada's Defence Policy, procurement projects underway and ensure that the CAF is equipped with the modern capabilities they need to succeed in a complex and constantly evolving world.

Project development efforts continued many capital projects that were already under way in support of North American Aerospace Defense Command (NORAD) Modernization. These include advanced air-to-air missiles, future fighter fleet, air-to-air refueling aircraft, upgrading CAF's infrastructure at four locations in Canada's North, upgrading fighter infrastructure and NORAD Quick Reaction Alert facilities, and the CAF's air operation infrastructure projects, which will all continue to strengthen the Defence Team's ability to deter and defeat aerospace threats.

Defence equipment acquisition is well-managed

To manage the lengthy acquisition process required to develop and implement complex projects, the Department continued its efforts to grow and professionalize the defence procurement workforce. Key results achieved in FY 2023-24 include:

  • Launch of the PG Academy Fundamental program, a one-year training program focused on the recruitment and training of entry level procurement specialists through a blend of classroom and on-the job learning. The first cohort of 11 procurement specialists began their training in September 2023 and will be placed in various procurement positions across DND upon completion. Recruitment for the second cohort of 15 procurement specialists began in fall 2023;
  • The Competency Based Project Management Organization project held a series of engagements which will lead to potential organizational design improvements for project and program delivery. Career pathing tools and key project role profiles were developed to promote broader access to aspiring candidates from various classifications into project management streams;
  • The Project Management Competency Development programme qualified over 65 project staff at various levels; and
  • New training in advanced project management techniques including a three-point estimate for project schedules and negotiation was launched with 38 project staff trained. The department also continued to progress Earned Value Management through engagements with industry.

Key equipment acquisition projects in FY 2023-24 included:

  • The Canadian Surface Combatant Project: Design continued to progress towards construction readiness. The project has been progressing through functional design to support the start of production activities in 2024. Canada received a Revised Project Implementation Proposal from the shipyard in Fall 2023 and the Land Based Test Facility Design Development was completed in December 2023. The project's Modified Build Contract allowed the start of some pre-construction activities in Spring 2023 such as land cleaning, utilities and road access;
  • Arctic and Offshore Patrol Ship: Canada accepted the 4th of six planned ships, HMCS William Hall on 31 August 2023. In March 2024, HMCS Max Bernays began its inaugural sail from Halifax, Nova Scotia, to its new homeport of Esquimalt, British Columbia, the first Arctic;
  • Joint Support Ship (JSS): The first JSS completed all structural steel work on the hull and critical work on propeller shafts and helicopter handling systems commenced. JSS 1, the future HMCS Protecteur, is in the outfitting phase and systems installation has commenced (e.g. cable pulling, heating, ventilation, air conditioning, piping, and insulation). JSS 2, the future HMCS Preserver, made significant progress with 50% of the hull now under construction. The final Sea to Shore Connector was delivered in March 2024;
  • Fixed-wing Search and Rescue Aircraft Replacement Project: Canada accepted all but one of the aircrafts in Spain and a 5th aircraft was ferried to Comox, British Columbia. Certification testing for several canvasses including low-level flight, cold soak operations, computed air release point and initial Contaminated runway friction index testing were conducted. Training for both initial aircrew and maintenance personnel was completed in May 2023;
  • Future Fighter Capability Project: As part of the Implementation Phase, the project formalized the procurement of an initial tranche of 16 CF-35A aircraft, associated equipment, sustainment elements and weapons. Work to advance the planning for the delivery of the aircraft, equipment, the provision of related services and infrastructure, as well as the start of pilot and maintenance technician training commenced. The project also advanced the procurement of some of the required weapons, and worked to finalize the design of the Fighter Squadron Facilities in Cold Lake, Alberta and Bagotville, Quebec to begin their construction and continued to provide inputs to the Defence of Canada Fighter Infrastructure project design and implementation activities to ensure consideration of future fighter specific requirement;
  • Interim Fighter Capability Project (IFCP): The project released the 13th and final aircraft to operational service. The remaining seven IFCP aircraft purchased from Australia will be harvested for parts to support the fleet. Remediation/abatement work for Hangar 14 at Ottawa International Airport was completed enabling renovations to proceed;
  • Remotely Piloted Aircraft System (RPAS): A design contract was awarded in May 2023 for the RPAS Ground Control Centre. In November 2023, the RPAS project received Amended Project Approval and Expenditure Authority for Implementation. Associated contracts for the RPAS acquisition were signed in December 2023, including a direct commercial sales contract with General Atomics Aeronautical Systems, Inc., and a Foreign Military Sales contract with the United States government for specific system components;
  • Strategic Tanker Transport Capability (STTC): Approval to increase project scope with the inclusion of the NORAD Modernization Additional Air-to-Air Initiative and to advance into Implementation phase for the acquisition of up to nine CC330 Husky aircraft was granted in June 2023. Contracts were also awarded for the procurement of three additional used Airbus A330 aircraft, and a contract for the procurement of four new Airbus A330 Multi-Role Tanker Transport aircraft and conversion of the five used aircraft was awarded. Canada has accepted delivery of two used A330-200 aircraft, both of which were entered into service and flew missions;
  • Logistics Vehicle Modernization: An evaluation was completed in October 2023, which comprised of costing, industrial benefits, an economic impact assessment, and technical requirements. Through consultation with Defence Procurement Strategy (DPS) Governance, Canada decided to proceed directly to contract award recommendation and preparation to seek Treasury Board Expenditure and Contracting Authority for the Implementation phase. In January 2024, Public Services and Procurement Canada announced the selection of General Dynamics Land Systems Canada and Marshall Aerospace Canada, in a joint venture, as the preferred bidder;
  • Armoured Combat Support Vehicle: The Armoured Combat Support Vehicle project completed the Reliability, Availability, Maintainability, Durability (RAMD) testing Phase 2A in October 2023, in Gagetown, New Brunswick on the Troop Cargo Vehicle, Ambulance vehicle, and Command Post vehicle variants. Final acceptance of the first fielded Ambulance variant to the Canadian Army took place on 19 October 2023. RAMD Phase 2B was successfully completed on 24 February 2024. The Initial Cadre Training for four Ambulance vehicles was completed with the Canadian Army on 6 November 2023, and for four Troop Cargo vehicle on 15 March 2024. A total of 30 Ambulances and nine Troop Cargo Vehicles were delivered to the Canadian Army by the end of FY 2023-24;
  • Canadian Multi-Mission Aircraft Project (CMMA): Following a detailed Options Analysis Phase, the project received Project Approval to commence Definition activities in June 2023 and Project Approval for Phase 2 Implementation in November 2023. The Government of Canada signed a Foreign Military Sales Case with the United States Government for the acquisition of up to 16 Boeing Poseidon P-8A aircraft and support services on 29 February 2024;
  • Light Armoured Vehicle Reconnaissance Surveillance System: Canada achieved the First Major Article delivery and accepted five vehicles to support RAMD testing, which was conducted at 2 Canadian Division Support Base Valcartier. Four additional vehicles were also delivered to 5 Canadian Division Support Base Gagetown;
  • Three Block IV aircraft CP 140 Aurora Incremental Modernization Project: Three Block IV aircraft were delivered, resulting in a total of ten modernized aircraft in service. The Block IV Procedures Crew Trainer (PCT) and Operational Mission Simulator training devices were accepted;
  • CF-18 Hornet Extension Project (HEP): The project continued to take delivery of equipment and progress aircraft software development, flight testing and airworthiness certification activities. Aircraft wiring modifications required for equipment installation were on schedule with 43 aircraft completed. Ongoing production of the new Radar delayed delivery of six aircraft and HEP Initial Operational Capability to June 2024;
  • CH-148 Cyclone Procurement Project: Treasury Board of Canada Secretariat (TBS) reaffirmed the project scope and granted increased funding and a revised schedule with Full Operational Capability in 2026. Defence accepted the 27th aircraft and conversion of aircraft to Capability Release 2. One resumed, with six aircraft now modified. A Foreign Military Sales contract was put in place for the electronic warfare sub-system. Further significant work will continue for this project in FY 2024-25;
  • Cormorant Mid-Life Upgrade: The project completed engineering design activities including the critical design review and began production planning activities. The preliminary design review for the Simulator was achieved and planning activities are ongoing for Simulator infrastructure requirements in Comox, British Columbia; and
  • Victoria-class Modernization: Consisting of various projects which will enhance the habitability, joint force capability, and survivability of the Victoria-class submarines. The project continued the implementation of several habitability and quality of life initiatives on HMCS Victoria. The final three Victoria-class Modernization projects moved into Definition Phase and the Galley Improvement Project transitioned into Implementation Phase.

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Defence information technology acquisition is well-managed

The Defence Team continues to deliver on key information management, information technology and space projects as outlined in Strong, Secure, Engaged: Canada's Defence Policy. The Defence Team continues to deliver on key information management, information technology and space projects as outlined in Strong, Secure, Engaged Canada's Defence Policy. Key initiatives for FY 2023-24 included:

  • Optimizing and supporting critical command and control applications and systems;
  • Acting as the departmental representatives for a wide range of in-service strategic, non-tactical computer information system and strategic communication services;
  • Providing assured and timely in-service support to assigned critical, high-priority strategic and operational joint capabilities and services. As capabilities get delivered, integral in-service support organizations will be resourced and given responsibilities to provide timely engineering, technical authority and life-cycle materiel management support over commercial and military communication systems to ensure sustainment in the field of remote-sensing, satellite communications and strategic Radio Frequency communications infrastructure;
  • Implementing an integrated capability management approach with relevant capital projects and project delivery activities in the domains of space, cyber and joint capabilities. In order to provide cradle to grave service delivery, the In-Service Support organization has been integrated into the Major Capital Satellite Communication Projects (Enhanced Satellite Communication Project - Polar and Tactical Narrowband Satellite Communication - Geosynchronous);
  • Collaborating with other capability delivery organizations within and outside of DND to ensure maximized business and operational benefits;
  • Adopting and adapting to emerging Technology including Cloud capability and multiple security levels, and the use of Artificial Intelligence to enhance defence capabilities; and
  • Materiel Identification Enterprise Modernization Initiative - The full Operational Capability for Phase 1 was delivered in December 2023. Due to software delivery delays, the Search and Rescue Mission Management System's full operational capability has moved to FY 2025-26.

The Defence Team continues to adopt project management practices to expedite delivery and to retain agility and flexibility in the rapidly-evolving information technology capability domain. This effort includes:

  • Early engagement with industry and delivery partners;
  • Close engagement with Public Services and Procurement Canada (PSPC) and Innovation, Science and Economic Development Canada (ISED) to streamline processes. The Enhanced Satellite Communication Project - Polar has been having biweekly meetings with PSPC and ISED for several months to expedite the path to DPS approval; and
  • Close and frequent engagement with Communications Security Establishment (CSE), High Security Organizations within the Government of Canada, and Allies.

Supplies are available and well-managed

The Department continued to enhance materiel accountability by implementing modern, effective inventory controls, supply chain management and inventory valuations. Key achievements in FY 2023-24 included:

  • The Defence Supply Chain Performance Measurement Framework continued to inform decision-making around the areas of responsiveness, accuracy, cost, and equipment status. Further capability was developed in the form of additional complimentary and intuitive dashboards that provided supply chain stakeholders with the information to best support CAF readiness;
  • The disposal line of business continued to be empowered to use analytical tools to drive business decisions and improve disposal activities;
  • Liaised with external partners to design a Defence Supply Chain (DSC) Resiliency Framework to enable risks to be identified and prioritized based on specific CAF requirements. This work has enabled the development of enhanced relationships with our national resiliency community to enable a more whole-of-government approach to risk sensing and logistics intelligence; and
  • All organizations within the Department were assigned specific activities to improve materiel accountability and required to provide updates on these and other materiel accountability activities in their bi-annual Materiel Accountability Action Plan (MAAP). MAAP performance and results were presented to DSC governance at mid and end year.

Key risks

Several risks can affect the department's ability to achieve its Departmental Results including:

Military Strength – There is a risk that Defence will not have the right military personnel, in the right numbers, at the right place, and at the right time.

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.

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.

Resources required to achieve results

Table 5.5: Snapshot of resources required for Procurement of Capabilities.

Resource

Planned

Actual

Spending

$4,750,783,217

$4,927,504,771

Full-time equivalents

2,670

2,874

Complete financial and human resources information for the Department of National Defence and the Canadian Armed Forces' program inventory is available on GC InfoBase.

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Related government-wide priorities

Gender-based analysis plus

During FY 2023-24, the Defence Team continued to make investments in Gender-based analysis plus (GBA Plus) resources to guide and support the project management community and build a better understanding of the relationship between intersectionality considerations and Defence procurement.

In support of GBA Plus work, DND also advanced several initiatives to raise awareness of gender equality, intersectionality, diversity and human rights, including:

  • Working Group on Diversity and Inclusion: A community of practice group met monthly to engage in knowledge transfer, activities, initiatives, host guest speakers to advance the intersectional lens on diversity, equity, inclusion, and accessibility;
  • Lifting as you Lead Mentoring Circle: A 10-week inclusive leadership program that has provided more than 700 members with an innovative space and opportunity to actively partake in making workplaces inclusive; and
  • Ask Me Anything series: A platform to learn from lived experiences of fellow public servants who share their stories to help educate and move the public service towards a culture where equity is embedded.

More information on GBA Plus can be found in the GBA Plus Supplementary Information Tables section of this report.

United Nations 2030 Agenda for Sustainable Development and the Sustainable Development Goals

Defence procurement continued to adhere to Canadian environmental standards and integrate energy and environmental considerations into procurement decision-making. The procurement process for the Logistic Vehicle Modernization project included a mandatory requirement for industry to deliver lower emissions trucks than those in our existing fleet and incentivized even lower emissions solutions. The procurement process for the RPAS project required bidders to demonstrate how they incorporated sustainable aviation fuels, GBA Plus principles, and Indigenous participation in their solutions.

To facilitate the implementation of the Standard on the Disclosure of Greenhouse Gas Emissions and the Setting of Reduction Targets, Defence held an information session in October 2023 for materiel acquisition and support practitioners. This two-hour event attracted over 600 participants in-person and online, who were briefed about requirements of the standard and then actively engaged in a question-and-answer period with panelists from multiple federal departments including central agencies.

More information on The Department of National Defence's contributions to Canada's Federal Implementation Plan on the 2030 Agenda and the Federal Sustainable Development Strategy can be found in the Departmental Sustainable Development Strategy.

Indigenous relations

The Defence Team continued to work closely with its suppliers and procurement communities to provide economic empowerment for Indigenous peoples, and to increase diversity in procurement.

Additional information related to contracts awarded to Indigenous businesses for Procurement of Capabilities can be found in Internal Services.

Program inventory

Procurement of Capabilities is supported by the following programs:

  • Maritime Equipment Acquisition;
  • Land Equipment Acquisition;
  • Aerospace Equipment Acquisition;
  • Defence Information Technology Systems Acquisition, Design and Delivery; and
  • Defence Materiel Management.

Additional information related to the program inventory for Procurement of Capabilities is available on the Results page on GC InfoBase.

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