Departmental Response – Office of the Auditor General Report Recommendations

Para 42
Rec 1

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.

Agreed. The Department will address this recommendation by conducting a review of how defence materiel holdings are planned to make sure the right quantities of the right items are available for Canadian Armed Forces use, and that they are stored in locations that result in an overall better service level.

A review of how the availability of materiel is measured at the individual warehouse level, as well as across the national supply system will also be undertaken.

In their Auditor General's observations on the Government of Canada's 2017-18 and 2018-19 consolidated financial statements reports, the Office of the Auditor General noted they were pleased with the Department's actions to meet its commitments in the 2016 multi-year action plan to improve materiel management practises. These two new reviews will build upon the progress of the 2016 multi- year plan to improve the newly-assessed aspects of our business and ensure the Canadian Armed Forces are well supported with materiel.

Improved capability to forecast materiel requirements and to position materiel to better serve the Canadian Armed Forces.

1 July 2021 – Revised measures for materiel availability will be approved and the Departmental Results Framework will be updated to reflect the changes.

31 July 2021 – Formal Defence Supply Chain Governance monitoring of materiel availability will begin.

30 June 2022 – Results of review of materiel planning and forecasting policy, tools and processes will be presented to Governance along with an implementation plan for approval that addresses the OAG's observations.

31 Dec 2028 – The next generation of Materiel Planning and Positioning tools will be integrated with the next generation Enterprise Resource Planning System, as part of a capital software project that is already in its early approval stages.

OPI: ADM(Materiel) / DGMSSC

OCI: Strategic Joint Staff

Para 49
Rec 2

National Defence should improve its oversight of high priority requests to ensure that such requests are only used when necessary.

Agreed. National Defence is currently conducting a holistic review in order to improve, and optimize costs, for the freight distribution services within the Canadian Armed Forces, while maintaining operational effectiveness. This program is in the initial stage of defining the problem.

Providing greater certainty to the time it takes for the Supply Chain to deliver materiel to units will reduce the need for unnecessary high priority requests.

In addition, in the short term, National Defence will reinforce the use of High Priority Requests in compliance with established policy.

Implementation action to improve how materiel is requested and distributed to end users. The newly proposed solution will come with performance monitoring (oversight) as a critical success factor.

30 April 2024

31 Dec 2020 – Communication that reinforces the 'high priority requests' policy and direction.

31 Mar 21 – Review and data analysis complete

31 Mar 22 – Distribution system design complete and implementation order issued

OPI: Strategic Joint Staff

OCI: Canadian Joint Operations Command

OCI: ADM(Materiel)/DGMSSC

Para 56
Rec 3

Agreed. As noted at the response to recommendation at para 56, National Defence is currently conducting a holistic review in order to improve, and optimize costs, for the freight distribution services within the Canadian Armed Forces, while maintaining operational effectiveness.

This review is in its first stage of defining the problem and determining the best methodology to query the existing data. The next stage will be the collection and analysis of this data to determine the optimal materiel distribution system for National Defence. A key element of this review is for the distribution system to include decision-making for end-users founded on a full understanding of costs.

Once next steps are identified these will be fully communicated to the leaders and end-users in the CAF materiel distribution function, including preliminary plans for specific practitioner training.

Implementation of improved guidance and communication of costs to practitioners.

Implementation of cost-optimized material distribution domestically.

31 Mar 21 – Review and data analysis complete

31 Mar 22 – Distribution system design complete and implementation order issued

15 Jan 23 – Review of financial framework and adjustments made as required.

OPI: Canadian Joint Operations Command

OCI: Strategic Joint Staff

OCI: ADM(Materiel)/DGMSSC