The Sustainment Initiative: How government is modernizing defence procurement
February 3, 2017 – Ottawa – National Defence / Canadian Armed Forces
The Sustainment Initiative is a new way of contracting private-sector maintenance and support services for military equipment. This approach will be applied to all significant new and renewed sustainment contracts.
The initiative was developed by the Department of National Defence in collaboration with Public Services and Procurement Canada, and Innovation, Science and Economic Development Canada. It aims to create more cost-effective and flexible sustainment contracts—a need that was highlighted in the Auditor General’s last report. Under the Sustainment Initiative, the three government departments work collaboratively to tailor contracts that address the following four principles:
- Performance (defence equipment that is operationally ready and mission capable);
- Value for money (the required services are procured at a price that corresponds to the market rate for comparable services);
- Flexibility (adaptable and scalable contracts that can readily be adjusted to changes in operational requirements or operating budgets); and
- Economic benefits (help create jobs and economic growth for companies in Canada).
The goal is to develop maintenance contracts that ensure a high level of military equipment readiness at best value to Canadian taxpayers and the Canadian Armed Forces (CAF).
The Aurora, H-model Hercules, and Hornet aircraft engine sustainment contracts that the Government announced today are the first to fully implement Sustainment Initiative principles.
How is this different?
The Department of National Defence has been taking concrete actions to ensure flexible contracts as CAF needs evolve, while encouraging industry to be more efficient and innovative.
For example, the recent in-service support contract for our Hercules aircraft fleet was amended to incorporate three tiers of pricing geared to how much flying is actually done in any given year, instead of basing the contract on one early estimate of how many hours we will need. This greater flexibility is better suited to the unpredictable nature of operations and is expected to result in greater long-term value for money.
Best practices already implemented have had positive effects on the contract. Cost savings, greater administrative efficiencies and most importantly, increased fleet availability to meet operational and training requirements, have already been achieved as a result of these changes.
The Sustainment Initiative builds on this approach and will result in more cost-effective and flexible contracts that underpin readiness and deliver economic benefits to the Canadian economy and Canadian companies.
How does it work?
Rather than apply a one-size-fits-all template to contract development, procurement specialists in the three government departments work together to tailor an individualized maintenance contract on a case-by-case basis.
When preparing the contracts, the procurement teams explore the following questions:
- Do the proposed sustainment services ensure the best performance of military equipment?
- Is the contract flexible enough to adapt to changing operational requirements and budgetary constraints over time?
- Do the proposed sustainment services offer jobs to Canadians and benefit the Canadian economy?
A phased implementation of the Sustainment Initiative was launched in summer 2016 for all new and renewed contracts supporting air, land, and maritime military equipment. By January 2018, the full process will apply to all sustainment contracts.
Department of National Defence
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