Background Notes

Auditor General’s Report: Supplying the Canadian Armed Forces

  • National Defence fully accepts the Auditor General’s findings and recommendations released in its spring 2020 report.
  • 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changes to how it manages inventory, including stocktaking, the reporting of inventory costs, and the disposal of old, outdated equipment.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.
  • As noted in the Management Action Plan, we are also taking several steps to properly prioritize materiel orders and communicate costs to those personnel ordering that materiel.
  • For example, in the short term, we have reinforced policy guidance on how to properly prioritize requests with the responsible personnel, which will enhance financial stewardship.
  • Further, DND/CAF has begun a thorough review of its freight distribution system to improve efficiency and optimize costs.
  • 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.

Key Facts

  • 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 19,303 types of items across 18 missions in 21 countries.

Details

  • 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 National Defence and CAF 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 to the Auditor General

  • In response to the three recommendations made by the Auditor General, National Defence committed to:
    • Recommendation 1: 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. 
    • Recommendation 2: 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.
    • Recommendation 3: Improving how costs are communicated to decision makers and end-users as part of an improved distribution system.

House Committee on Public Accounts’ Recommendations

  • November 19, 2020: The House of Commons Standing Committee on Public Accounts held a hearing on the Auditor General’s spring 2020 report. The Committee heard from Jody Thomas, Deputy Minister of the Department of National Defence; Troy Crosby, Assistant Deputy Minister, Materiel; and Major-General Trevor Cadieu, Director of Staff, Strategic Joint Staff.
  • December 10, 2020: The House Standing Committee on Public Accounts tabled its fourth report: Supplying the Canadian Armed Forces, of the 2020 Spring Reports of the Auditor General of Canada.
  • Findings and Recommendations: The Committee’s report echoes the Auditor General’s findings, concluding that DND/CAF often did not deliver the materiel requested by the CAF on time and did not have sufficient controls in place to determine whether it avoided needless transportation costs. As a result, the Committee made four recommendations in its report to help DND/CAF improve its delivery of materiel so that the CAF is properly equipped to meet its operational requirements:
    • Recommendation 1: National Defence should provide the House of Commons Standing Committee on Public Accounts with a progress report with regard to A) reviewing its materiel forecasting and positioning to ensure that sufficient stocks are maintained at the right locations; and B) reviewing its materiel availability measures at the warehouse and national levels and using these measures to monitor whether stock levels are met. A final report should also be provided.
    • Recommendation 2: National Defence should provide the Committee with progress reports regarding the development of the next generation of Materiel Planning and Positioning tools and their integration with the next generation Enterprise Resource Planning System.
    • Recommendation 3: National Defence should provide the Committee with a progress report with regard to improving its oversight of high-priority requests. A final report should also be provided.
    • Recommendation 4: National Defence should provide the Committee with a progress report with regard to communicating the costs of all available transportation methods and providing clear guidance on how to select the mode of transportation to ensure that decisions are founded on a full understanding of costs. A final report should also be provided.
  • The Committee’s four recommendations request that the Government provide 11 progress reports and three final reports on the measures it is taking in response to the Auditor General’s report.

National Defence’s Response to the House Committee on Public Accounts (PACP)

  • March 25, 2021: National Defence tabled in the House of Commons the Government Response to the fourth Report of the Standing Committee on Public Accounts, entitled Report 3, Supplying the Canadian Armed Forces – National Defence, of the 2020 Spring Reports of the Auditor General of Canada.
    • In its response, DND/CAF notes its support for all of the Committee’s recommendations and that it remains committed to ensuring materiel is forecasted, delivered, and positioned in a timely manner with appropriate oversight.
    • DND/CAF also noted that making sure CAF members are well-supplied is a key capability, and it will continue to do what is required to improve its ability to uphold its responsibilities.
    • In its Government Response, DND/CAF also provided two progress reports the House Committee on Public Accounts (PACP) requested by April 30, 2021, specifically those related to recommendations three and four. 

Culture Change

  • National Defence knows there is a gap between our desired culture and the reality for many Defence Team members.
  • To close this gap and root out the harmful attitudes that have enabled misconduct, we must pursue real culture change.
  • We recently announced several actions to initiate this change.
  • First, former Supreme Court Justice Louise Arbour will begin an independent review to help us understand why this culture persists and what we can do about it.
  • One element of this review will include how National Defence can establish an independent, external reporting system that meets the needs of those impacted.
  • Second, National Defence has established a new organization – the Chief of Professional Conduct and Culture – to create the conditions for cultural transformation.
  • This organization will communicate clear expectations for all Defence Team members, including leaders, and review reporting mechanisms, supports and services, and data collection.
  • We will also continue our efforts to implement the Declaration of Victim Rights in our military justice system.
  • National Defence’s culture change efforts will be supported by $236.2 million of additional funding as announced in Budget 2021, including enhanced support for victims.  
  • While these actions are a step in the right direction, addressing systemic misconduct has no ‘end-state’ and achieving real culture change will take time and listening to survivors.

Key Facts

  • Budget 2021: $236.2 million over five years to address sexual misconduct and gender-based violence (starting in Fiscal Year 2021-22).
    • $33.5 million (per year, ongoing, funded from existing resources) to DND and VAC, to eliminate sexual misconduct and gender-based violence.
  • April 29: LGen Carignan named Chief, Professional Conduct and Culture.
  • April 30: Release of CDS/DM Initiating Directive for Professional Conduct and Culture.

Details

  • April 2021: Announcement on Independent External Review
    • Conducted by Former Supreme Court Justice Louise Arbour.
    • Will review National Defence culture, including military justice system’s policies, procedures and practices, including performance evaluation and promotion systems.
    • Will provide concrete recommendations on how National Defence can establish an independent external reporting system that meets the needs of those impacted.
  • April 2021: CDS/DM Directive on Culture Change:
    • Establishes new role/organization: Chief of Professional Conduct and Culture;
    • Prioritizes listening to those affected by sexual misconduct, to improve supports and services;
    • Directors the simplification and enhancement of reporting mechanisms, including for those external to the chain of command;
    • Promotes improved data collection;
    • Supports the work of external and independent reviews of National Defence and its culture;
    • Creates path to close out Operation HONOUR; and
    • Supports implementation of Bill C-77.
  • Chief of Professional Conduct and Culture roles and responsibilities:
    • Lead institutional efforts to develop a professional conduct and culture framework that holistically tackles all types of harmful behaviour, unconscious biases, and systemic barriers;
    • Assume responsibility as the principal advisor to the CDS and DM on professional conduct and culture;
    • Complete and publish a Decision Support Framework that articulates the considerations and options available to the CDS and DM where they receive a complaint of misconduct against a DND or CAF General Officer/Flag Officer or Senior Executive;
    • Consolidate input and perspectives from victims/survivors, and external experts;
    • Simplify and enhance reporting mechanisms, including for those external to the chain of command;
    • Strengthen support mechanisms for victims/survivors; and enhance tracking mechanisms.

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