Procurement – General

Defence Procurement Canada

  • This Government is taking action to improve the way it procures equipment for the Canadian Armed Forces.
  • To do this, the Prime Minister asked me to support the Minister of Public Services and Procurement in creating Defence Procurement Canada.
  • I have met with the Minister, and our departments have established a team – led by Public Services and Procurement Canada – to determine the best way forward.
  • Timelines have shifted due to the COVID-19 pandemic and its impact on government operations, but will be revised once the situation stabilizes.
  • Together, we must ensure that Canada’s biggest and most complex procurement projects are delivered on time, within budget, and with enhanced transparency.
  • We will also ensure that defence procurement has tangible benefits for Canada’s economy.

Key Facts

  • National Defence manages over procurement 12,000 contracts annually.
  • In 2019, National Defence’s contracting authorities for goods and services increased to:
    • $5M for competitive contracts; and
    • $250,000 for non-competitive contracts.
  • National Defence now directly manages over 80% of defence contracts.
  • COVID-19: National Defence’s work with Public Services and Procurement Canada has been delayed since the onset of the pandemic. Timelines will be re-assessed once the situation stabilizes.

Details

  • Strong, Secure, Engaged outlined six key commitments to streamline defence procurement, to better meet the needs of the military, and deliver projects in a more timely manner.
    1. Increasing financial authorities: In May 2019, the Government of Canada increased National Defence’s financial authorities for competitive service contracts from $1 million to $5 million. National Defence now handles over 80% of its contracts. Service contracts over $5 million are still handled by Public Services and Procurement Canada (PSPC), on behalf of National Defence.
    2. Simplifying project approval: For low-risk projects managed by PSPC on behalf of National Defence, a pilot project was established to eliminate the additional step of seeking Treasury Board approval. This pilot is complete, and the next steps are now being reviewed.
    3. Incentivizing research and development: Through the application of the Industrial and Technological Benefits policy to defence procurement, the Government incentivizes Canadian research and development. For example, the policy has been integrated into the procurement of new advanced fighter aircraft and remotely piloted aircraft systems. The policy also requires that companies undertake business activity in Canada equivalent to the value of the contract.
    4. Enhancing industry engagement: PSPC and National Defence regularly engage with defence industry to respond to questions and ensure greater clarity regarding project requirements. For example, through the procurement process for a new advanced fighter aircraft, the Government of Canada hosted an industry day, regional forums, and consultations designed to engage and inform industry on the proposal process. 
    5. Increasing the procurement workforce: Since 2015, National Defence has hired an average of 75 new procurement experts per year to strengthen its capacity to manage the acquisition of complex military capabilities.
    6. Enhancing transparency: With the publication of the 2018 Defence Investment Framework and the 2019 Annual Update, National Defence delivered on the commitment to increase transparency of deference procurement by providing Canadians with regular updates on major projects and programs.

Version 1 – 2020-06-10 – Source: Supps(B) 2020-2021 note: “Defence Procurement Canada”

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Auditor General’s report: Supplying the Canadian Armed Forces

  • National Defence appreciates the work of the Office of the Auditor General and looks forward to the release of its report.
  • National Defence always ensures that the Canadian Armed Forces has the materiel it needs to do the important work we ask of them.
  • For example, during the COVID-19 pandemic, we made sure that military personnel have the necessary personal protective equipment to keep them safe.
  • During this time, military expertise was also called upon to provide inventory management assistance for planning and distributing personal protective equipment across Canada.
  • National Defence has one of the largest footprints of any department or agency across the Federal Government.
  • This presents some inherent challenges, but we continue to learn and make improvements.
  • We have already made important changes to how we manage our 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.

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 29,000 types of items across 19 missions in 25 countries.
  • COVID-19: It is not yet clear what impact the pandemic will have on supply chains.

Details

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 those of major supply chains in industry, but with the added complexity that large quantities or equipment are stockpiled in warehouses to enable operations at short notice.
  • Through its DSC, National Defence maintains approximately $77 billion in tangible capital assets, including $5.8 billion in inventories – which comprise 85% of the Government of Canada’s Public Accounts inventories.

Version 1: 2 – 2020-06-10 – Source: PACP Notes and Media Response Lines

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