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Other Key Issues

Modernization of Information Management and Information Technology 

  • National Defence is committed to ensuring that our Information Management and Information Technology systems remain relevant and effective.
  • That is why we are requesting $61.5 million in these Estimates to address urgent upgrades required across three of our core Information Management and Information Technology platforms.
  • The platforms being upgraded and modernized include National Defence platforms for:
    • The Defence Resource Management Information System (an integrated software tool used to conduct finance material, acquisition and support, as well as real property and Defence Logistics activities);
    • The Defence Supply Chain; and,
    • PeopleSoft (human resources management).
  • Timely, trusted, and secure information that can be shared across National Defence is the foundation of sound evidence-based decision-making.
  • The modernization and upgrade of these systems will ensure that our platforms and systems can effectively manage resources and people, improve operations, and strengthen service delivery.

Key Facts

  • Budget 2021: Announced $283.6M over five years to upgrade and modernize existing National Defence Information Management and Information Technology platforms and information systems.
  • In January 2022, National Defence received Treasury Board approval to access $272 million (including centrally withheld costs) for the following initiatives:
    • Defence Resource Management Information System (DRMIS) Modernization Options Analysis: One year of funding (2021-22) will go towards undertaking Options Analysis activities in preparation for the DRIMIS Modernization Project.
    • Defense Resource Business Modernization (DRBM): One year of funding (2021-22) will go towards advancing various sub-initiatives under the DRBM program. This will be a precursor for system integration, including upgrading DRMIS-dependent systems and processes.
    • DRMIS Legacy Infrastructure: Five years of funding (2021-22 to 2025-26) to conduct DRMIS equipment maintenance, increase information technology infrastructure and enhance the information technology security posture until the new platform comes online.
    • PeopleSoft Upgrade: Five years of funding (2021-22 to 2025-26) will be used to modernize the existing PeopleSoft application and update civilian and military systems.
    • Defence Supply Chain (DSC): Five years of funding to modernize DSC which will enable predictive analytics and improve storage, distribution, and maintenance facilities.

Federal Contaminated Sites Action Plan

  • National Defence acknowledges its responsibility and accountability for the impact that defence activities have on the environment, communities, and people.
  • Through the Federal Contaminated Sites Action Plan we are investing resources to clean up historical contamination and minimize future environmental impact from military activities.
  • That is why National Defence is requesting $74.9 million in these Estimates to continue Phase IV of this plan which will enable custodians to continue to remediate eight high priority contaminated sites.
  • This funding will also support the ongoing efforts to reduce environmental and human health risks, and associated federal financial liabilities.
  • Through programs such as these, National Defence is committed to ensuring our members and activities respect the environment, and promote environmental stewardship.

Key Facts

  • Federal Contaminated Sites Action Plan (FCSAP): Federal contaminated sites are sites located on land owned or leased by the federal government, or on land where the federal government has accepted responsibility for the contamination.
  • Established in 2005 as a 15-year program with $4.54 billion in funding, the FCSAP was renewed in 2019 for another 15 years (2020-2034) with $1.16 billion for the first five years (Phase IV from 2020 to 2024), including:
    • $1.05 billion to remediate 1,316 contaminated sites;
    • $24.3 million to assess 242 sites; and
    • $83.4 million to manage this program.
  • Eight ongoing high priority remediation projects in 2023/24:
    • The Firefighting Training Area #1, Canadian Forces Base Borden Remediation Project (Ontario);
    • Esquimalt Harbour Remediation Project (British Columbia);
    • BAF-3 Brevoort Island LRR (Nunavut); The Firefighting Training Area, 3 Wg Bagotville (Quebec);
    • Stony Point (Former Camp Ipperwash) (Ontario);
    • Site-Wide PFAS, CFB Edmonton (Alberta);
    • New ATESS Refinishing Shop (Ontario); and
  • Trichloroethylene (TCE) Contamination, CFB Valcartier (Québec). These projects are associated with high priority contaminated sites for which legal, environmental and/or health risks have been identified.
  • Remediation of these sites also reduces the liability values reported in the Public Accounts of Canada for National Defence’s contaminated site inventory.
  • Fiscal Year 2022/23 Outcomes (Preliminary Numbers):
    • Assessment activities conducted at 50 sites, of which 10 received Federal Contaminated Sites Action Plan funding.
    • Remediation activities conducted at 209 sites, of which 184 received Federal Contaminated Sites Action Plan funding.
    • 55 site closures, of which 17 received Federal Contaminated Sites Action Plan funding.
    • There was a 10% reduction in contaminated sites liability in 2022-23.  

Defence Policy Update

  • Our defence policy, Strong, Secure, Engaged (SSE) is the foundation for how the Canadian Armed Forces (CAF) is supported and equipped, ensuring that we are strong at home, secure in North America, and engaged globally.
  • While SSE accurately identified shifts in the security environment, the world has evolved in significant ways since its release, and it could not have anticipated the speed and intensity with which those shifts have taken place.
  • New and emerging threats require us to conduct a defence policy update and meet today’s security challenges.
  • This update will set out a clear plan of action to ensure that the CAF has the resources and capabilities required to meet its mandate.
  • Updating our defence policy is vital to ensuring that we have the necessary direction, resources, and future-ready capabilities to adapt to a dynamic and complex global operating environment.
  • As part of this process, it is important to hear from our partners and stakeholders, including parliamentarians.
  • I was heartened to hear about the dialogue between my officials and many of you on pressing issues such as personnel, defence procurement, and Arctic Security challenges.
  • I am also actively engaging with allies, academic experts, and Canada’s defence industry on this review, and look forward to engaging Indigenous partners and other key stakeholders as the process unfolds.

If pressed on timeline for release:

  • Updating the defence policy is a key priority and we need to make sure that we get it right to ensure it meets the needs of the Defence Team.
  • We will continue to engage key stakeholders and provide updates on the review process.

Key Facts

  • In Budget 2022 the Government of Canada committed to conduct a review of our defence policy Strong, Secure, Engaged (SSE) in order to update it for a world that has become less secure and less predictable.
  • National Defence is committed to engaging with partners and Allies during the review process, as well as with Industry, Parliament, defence experts, and Indigenous Partners.
  • Launched in 2017, SSE continues to be National Defence’s guiding strategy for responding effectively to a changing world.
  • SSE aims to ensure that the Canadian Armed Forces are a modern, capable, combat-ready military that can keep Canada secure and contribute to a more peaceful world.
  • Through SSE,National Defence committed to increasing defence spending by 70% over ten years (2016-17 to 2026-27).
  • 78% of SSE projects are currently in the implementation/close out phase.

Details

  • On March 27, 2023, National Defence hosted two separate engagements with members of the Senate Standing Committee on National Security, Defence and Veterans Affairs (SECD) and the House Standing Committee on National Defence (NDDN). The purpose of these engagements was to hear from Parliamentarians on key defence issues to inform the DPU process.
  • Key themes across both discussions included: Arctic and NORAD, personnel issues (recruitment), as well as procurement challenges.
  • More specifically, NDDN members focused on:
    • Arctic Security and Continental Defence: Echoing their recent study, the topic of Arctic security was prominent in the discussion. Members expressed their concerns over Russian and Chinese ambitions in the Arctic and the new threats they pose to the region, notably with regards to sub-surface warfare. Members also spoke about the implications and opportunities created by having five NATO Arctic allies. Members agreed that the policy on ballistic missile defence is outdated and that the joint command of NORAD is where Canada can best add value.
    • Personnel: The issue of recruitment was of particular interest to NDDN members, who discussed solutions to fill the ranks of the CAF. For example, members agreed on the importance of reducing delays in the recruiting process, assuring that it is inconceivable that we are losing people who are willing to join the CAF because of the wait time.
    • Procurement: Members agreed that the Canadian procurement system is a “disaster” that needs to be fixed, including by finding ways to reassure the naturally risk-averse defence industry, fostering predictability, and shortening decade-long procurement processes. They also advocated for stronger accountability and faster approval processes, especially for equipment needed quickly. All members agreed that Canada needs to invest heavily in its defence capabilities and that now is the time to do so.

Other Defence Policy Update engagements:

  • On January 12 and 13, Minister hosted roundtable discussions with senior members of Canadian aerospace and defence industry associations and executives.
  • National Defence hosted two engagements with representatives of the defence and security expert community in February.
  • Additionally, the Defence Team has engaged across government and with allies.
  • In March 2023, National Defence launched a web portal for the general public and intends to engage with Indigenous partners in the near future, in addition to further engagements with industry and experts.

McKinsey & Company Contracts Overview

  • External consulting services provide an important enabling function.
  • They supplement the important and ongoing work of our personnel by bringing industry expertise to the table and, in some cases, propriety information to help spur change and innovation.
  • In fact, these are the driving factors behind the contracts we have issued to McKinsey & Company.
  • National Defence has awarded 15 contracts to McKinsey & Company for a total value of $29,652,665 between January 1, 2011, and January 18, 2023.
  • National Defence has one active contract with McKinsey & Company that is scheduled to end in April 2023.
  • These contracts have informed senior Defence leadership in establishing the Chief Professional Conduct and Culture – the driving force behind our culture evolution initiatives.
  • Such contracts have also helped the Royal Canadian Navy position itself for the digital future, including in the way that it optimizes the readiness of its crews and ships.
  • They have added our efforts in modernizing supply chain management. An area that very much benefits from outside perspectives.
  • In many cases, McKinsey’s services have enabled National Defence to measure its performance against similar Canadian and international organizations - a process known as benchmarking - to identify opportunities for organizational improvement.
  • Ultimately, each of these contracts were short in duration, targeted and supported specific Defence objectives.

If pressed on severances

  • I have asked the Department to review the application of severances that were applied to our submissions.
  • Officials are currently evaluating the documents and we will keep the Committee appraised of our progress. 

Key Facts

  • Since January 2011, National Defence has awarded 15 contracts to McKinsey & Company for a total value of $29,652,665.
  • In February 2021, Public Services and Procurement Canada (PSPC) established a non-competitive National Master Standing Offer (NMSO) with McKinsey & Company, which expired on February 28, 2023.
  • National Defence has raised twelve (12) call-ups against the NMSO since 2021, for a total value of $29,057,057.
    • PSPC is the Contracting Authority for each of National Defence’s call-ups against the NMSO.
    • Each National Defence call-up requirement was sent to PSPC to process, approve and issue.
  • In 2019, National Defence awarded one (1) sole-source contract to McKinsey & Company for $24,860.
  • National Defence raised two (2) contracts against a PSPC Supply Arrangement for a total value of $570,749.
  • The following National Defence Organizations have held contracts with McKinsey & Company since 2011:
    • Chief Professional Conduct and Culture (7)
    • Assistant Deputy Minister (Materiel) (2)
    • Canadian Joint Operations Command (2)
    • Royal Canadian Navy (3)
    • Vice Chief of the Defence Staff (1)

Details

Chief Professional Conduct and Culture (CPCC)

  • In 2021, CPCC was established to lead culture evolution efforts, including new approaches to address the root causes of systemic challenges and gaps at National Defence.
  • CPCC engaged McKinsey and its benchmarking services as a means to measure National Defence’s procedures, practices, programs and culture against comparable Canadian and international organizations, including the private sector.
  • These services have informed CPCC’s priorities and corresponding organizational structure.
  • Since 2021, CPCC has held a total of seven (7) contracts, with McKinsey & Company totaling approximately $18.1 million (including taxes).
    • All of CPCC’s contracts are call-ups issued against PSPC’s non-competitive NMSO with McKinsey & Company.

Canadian Joint Operations Command (CJOC)

  • The primary role of the Canadian Joint Operations Command (CJOC) Headquarters (HQ) is to provide command and control of deployed Canadian Armed Forces (CAF) operations.
  • Past internal surveys of CJOC personnel – supported by Defence and Research Development Canada Operational Research scientists – showed a high rate of burnout, health issues, and frustrations within CJOC headquarters’ environment, including a lack of a coherent onboarding and orientation programme.
  • CJOC engaged McKinsey & Company on two instances to support the Command’s work to transform and evolve the organization. This included the development of a workforce strategy.

Royal Canadian Navy

  • The Royal Canadian Navy (RCN) is committed to becoming a digitally mature organization and has established a series of strategic objectives to do so.
  • These include increasing the use of digital technologies to enhance the delivery of training as well as military readiness.
  • To respond to these deliverables, the RCN engaged McKinsey & Company on three separate occasions over the course of 2021 and 2022 to propose a roadmap for prioritizing, sequencing and resourcing their internal activities for the successful implementation of their Digital Strategy.
  • Further, and in line with its strategic digital objectives, the RCN is working to deliver a modern Artificial Intelligence (AI) powered fleet personnel management tool known as Digital Parade State (DPS).
  • The DPS will increasingly be used to assign the appropriate and optimal crews to vessels scheduled for deployment. The RCN engaged McKinsey – leveraging its propriety information - for technical expertise and assistance in developing a path forward.
  • Of note, and as a pre-cursor to its work on digital transformation outlined above, the RCN also initiated one non-competitive, contract with McKinsey in 2019 to deliver a workshop for the RCN and other Defence Team members.

Assistant Deputy Minister (Materiel)

  • The Assistant Deputy Minister (Materiel) solicited multiple external independent experts to build a robust set of recommendations on supply chain leading practices.
  • As part of this process, McKinsey & Company offered seven specific recommendations related to decision making, people and professionalization, processes, technology, and analytics, which were supported by their research on the subject matter and their insights on other supply chain transformation efforts.
  • In concert with recommendations provided by other external experts, the recommendations from McKinsey are being used to inform the department’s supply chain modernization plans to improve performance.

Vice Chief of the Defence Staff

  • The Defence Renewal Team (DRT) was established in 2012 and consisted of a 22 member team (military and civilian) to lead, coordinate and drive a comprehensive business process renewal programme.
  • In 2013, the DRT and McKinsey worked jointly over a five-month period to design and develop a portfolio of initiatives with the aim of streamlining internal operations and increasing efficiency to transform the way in which the Department achieves better results for Canadians and the Canadian Armed Forces.
  • The work performed between McKinsey and the Department ultimately informed National Defence’s, Defence Renewal Charter (2013) and corresponding action plan which focused on improvements in the areas of organizational practices as well as performance (i.e. operations and training), maintenance and materiel, information management and technology, infrastructure, personnel and management systems.
  • While the DRT was stood-down in 2017, its work was folded into the development of SSE initiatives related to modernizing the business of defence, increasing the efficiency and effectiveness of DND/CAF to ensure stable, realistic and predictable funding.

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