Procurement – General
Transfer for Contracting and Procurement of Defence Supplies
- The Government of Canada recognizes the challenges associated with military procurement and is examining the procurement cycle to find solutions.
- In 2019, Public Services and Procurement Canada gave National Defence the authority to internally manage more of its own acquisitions to streamline procurement processes.
- To support these new authorities, Public Service and Procurement Canada is transferring $2.5 million to National Defence through these Estimates.
- This annual transfer will fund 33 full-time positions to support the increased volume of purchases that we will now be managing.
- This additional staff will allow National Defence to manage procurement projects in a timely manner.
- With these additional authorities from PSPC and recent changes to the TBS Contracting Policy, National Defence can now buy or acquire defence supplies up to a value of $7.5 million.
- In 2019, National Defence's authorities to buy or acquire defence supplies increased to $5M for competitive contracts and $250,000 for non-competitive contracts.
- National Defence now directly manages over 80% of defence contracts, streamlining the procurement process, a goal set in Strong, Secure, Engaged.
- Since 2015: The Materiel Group has experience steady growth in personnel of roughly 75 new procurement experts per year to strengthen its capacity to manage the acquisition of complex military capabilities.
- As a result of the recently updated Treasury Board Contracting Policy, National Defence received authority of $7.5M for competitive contracts and $375, 000 for non-competitive contracts.
- Assistant Deputy Minister (Materiel) is the functional authority for procurement and the lead on the three-phase implementation of the increased contracting authorities.
- Phase 1: delegation up to $400,000 was officially launched in April 2016 after the Delegation of Authority matrix was signed by the Minister of National Defence in February 2016.
- Phase 2: delegation up to $1 million commenced on in April 2018 upon receiving Treasury Board approval.
- Phase 3 (in the National Capital Region): delegation up to $5 million was granted within the Assistant Deputy Minister (Materiel) group. In late November 2019, a pilot was launched within the Royal Canadian Navy, granting an additional delegation of up to $400,000.
- Phase 3 (in regions): increasing delegation to the regions will be considered based on need and capacity, once the delegation is fully implemented in the National Capital Region.
Tactical Narrowband Satellite Communication
- Satellite-based communications are essential to modern military operations and for exercising Canada's sovereignty.
- In these Main Estimates, we are seeking $16.5 million for the continued development of the Tactical Narrowband Satellite Communication Project.
- This project will provide guaranteed access to American ultra-high frequency communications to support our military operations domestically and abroad, and upgrades to our existing systems.
- For example, we will acquire engineering services and fund feasibility studies from the US Department of Defense, to adapt the US-owned systems for use by the Canadian Armed Forces.
- Our forces currently rely on commercial contracts and access to allied forces' systems under specific circumstances.
- Access to the US constellation will provide Canadian Armed Forces planes, ships, and ground vehicles with a communications network comparable to that of a cellular phone system.
- These improvements will result in greater autonomy and flexibility for our forces, while ensuring interoperability with our most important ally.
- The total project budget is $500M to $1B.
- The project will allow access to the United States' narrowband military communications system for 15 years, which requires:
- Upgrades to equipment and network modifications;
- Modifications to Canada's Satellite Operations Centre; and
- Training of personnel.
- In March 2019, the project entered the definition and early implementation phase.
- The project is scheduled to be fully implemented by 2025 and remain in service until 2038.
- The Tactical Narrowband Satellite Communications – Geosynchronous Project will provide guaranteed access to the United States' Mobile User Objective System (MUOS) narrowband satellite communications constellation.
- MUOS will deliver Beyond Line of Sight Ultra-High Frequency global communications to the Canadian Armed Forces (CAF) between 65° North and 65° South.
- The project will provide the CAF with guaranteed access to a capability that it currently lacks, and for which it must rely on Mutual Logistics Supply Arrangements with allies or short-term, ad-hoc commercial contracts.
- Access to allied forces' narrowband satellite communications systems comes with restrictions, as it is generally only granted to the CAF for specific missions in which the ally, or the NATO coalition, is a participant.
- Access is not assured and can be revoked at any time, should the system owner decide to re-allocate bandwidth for higher priorities.
- The current system hardware used by NATO is not MUOS compatible. To maintain operability with NATO allies, the project will also acquire access to legacy communications services to complement the MUOS service.
- This may be achieved through a series of longer-term arrangements with allies and commercial providers.
- Satellite communication is one of four main efforts within National Defence's space program, along with surveillance of space; surveillance from space; and positioning, navigation, and timing. Other CAF satellite communications projects include:
- Mercury Global: will enhance the CAF's accessibility to wideband satellite communications between the latitudes of latitudes of 70°N and 70°S. The project achieved Full Operational Capability in October 2020.
- Enhanced Satellite Communication Project – Polar: will provide wide- and narrow-band satellite communications to support operations above 65°N, where there is currently no such capability available. The system is scheduled to be operational in 2032.
- Protected Military Satellite Communications: will provide anti-jam, survivable, nuclear-hardened satellite communications to the CAF. The project achieved Initial Operational Capability in 2013 and is scheduled to achieve Full Operational Capability in 2029.
Auditor General's Report: Supplying the Canadian Armed Forces
- National Defence appreciates the work of the Office of the Auditor General and fully accepts its findings and recommendations.
- National Defence has already made important changes to how it manages inventory, including stocktaking, the reporting of inventory costs, and the disposal of old, outdated equipment.
- We also continue to make strides in modernizing how we track and store materiel, including through barcoding.
- National Defence will build on this progress to better forecast, position, store, and distribute its materiel, including through enhancing our data analytics capabilities.
- National Defence will also review how it prioritizes materiel orders and communicates costs to those personnel ordering that materiel, to enhance financial stewardship.
- We are committed to ensuring that the Canadian Armed Forces has what they need, when they need it, for the important work Canadians ask of them.
If pressed on CAF medical supply chains and PPE:
- The Auditor General did not analyze our medical supply chains in this audit.
- However, we are committed to ensuring that the Canadian Armed Forces has the materiel it needs to conduct operations and maintain readiness.
- Stockpiles of medical-grade personal protective equipment remained stable in the early months of the pandemic, as military personnel provided assistance in response to COVID-19.
- Since then, we have acquired additional medical-grade personal protective equipment for the Canadian Armed Forces.
- National Defence accounts for 85% of the Government of Canada's Public Accounts inventories.
- National Defence manages $77B in tangible capital assets, including $5.8B in inventories.
- National Defence processes over 560,000 orders per year of materiel and manages over 460 million items.
- The Canadian Armed Forces is concurrently managing 29,000 types of items across 19 missions in 25 countries.
- COVID-19: The COVID-19 pandemic has not negatively affected National Defence's ability to supply the Canadian Armed Forces
- On July 8 2020, the Auditor General of Canada released its audit on Supplying the Canadian Armed Forces (CAF).
- This CAF-specific audit was tabled as part of the Auditor General's Spring 2020 Reports. It was scheduled to be tabled in March 2020, however the tabling date was postponed to July 2020 due to COVID-19.
- The audit studies whether National Defence supplies the CAF with the materiel it needs, when it needs it, while avoiding needless transportation costs.
- The Auditor General did not analyze our medical supply chains in this audit.
- The scope of this audit included tools, spare parts, uniforms, specialized clothing, and rations. It did not include aircraft, vessels, vehicles, and ammunition.
Auditor General Recommendations
- The audit contains three recommendations for National Defence.
- National Defence should review its materiel forecasting and positioning to ensure that sufficient stocks are maintained at the right locations. It should also review its materiel availability measures at the warehouse and national levels and use these measures to monitor whether stock levels are met.
- National Defence should improve its oversight of high-priority requests to ensure that such requests are used only when necessary.
- National Defence should communicate the costs of all available transportation methods and provide clear guidance on how to select the mode of transportation to ensure that decisions are founded on a full understanding of costs.
National Defence's Response
- In response to the three recommendations made by the Auditor General, National Defence committed to:
- Conducting a review of its materiel planning and forecasting to ensure the right quantities of the right materiel are available at the right time for CAF use. National Defence also committed to reviewing its performance indicators of materiel availability at the individual warehouse level and across the national supply system.
- Reinforcing its established policies on high priority requests and conducting a holistic review of its overall distribution system to increase efficiency, enhance oversight, and reduce the need for unnecessary high priority requests.
- Improving how costs are communicated to decision makers and end-users as part of an improved distribution system.
Defence Supply Chain
- The Defence Supply Chain (DSC) manages the vital flow of materiel and commercial supplies between the Department of National Defence and Canadian Armed Forces clients. This is done through a complex network of storage, distribution, and maintenance facilities.
- The DSC also maintains inventory and tangible capital assets dispersed across a number of organizations and locations with a depth and breadth of inventory equivalent to major supply chains in industry.
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