Defence purchases and upgrades process
Learn about the stages of military equipment acquisition and find information for procurement stakeholders.
The five stages of military equipment acquisition
The Department of National Defence (DND) follows a rigorous, systematic process to ensure that military equipment and services that are procured meet a capability deficiency or emerging requirement identified by the Canadian Armed Forces (CAF). DND’s project management approach is governed by policy set by the Treasury Board of Canada, which states that:
- projects achieve value for money
- sound stewardship of project funds is demonstrated
- accountability for project outcomes is transparent
- outcomes are achieved within time and cost constraints
DND works closely with the CAF, partners in other federal government departments such as Public Services and Procurement Canada (PSPC) and Innovation, Science and Economic Development (ISED), as well as defence industry experts. This process helps to ensure that the CAF remains a first-class military, ready to face the challenges of the 21st century, by accurately identifying and targeting the requirements of the CAF.
In general, the equipment acquisition process is divided into five stages.
Phase 1: Identification
The goal of the first stage is to define the requirement in broad terms. The Royal Canadian Navy, the Canadian Army, the Royal Canadian Air Force or Canadian Special Operations Forces Command must show that there is a deficiency or an emerging requirement in current CAF capabilities and that new equipment or services are needed to meet current or future CAF operational requirements. Project teams must also show that the capability cannot reasonably be achieved in any other way.
The project team develops a list of the capabilities that the proposed equipment or service must be able to deliver, sets a proposed date to begin the project and, if approved, a proposed earliest date by which the equipment or service can be ready to use. The focus at this stage is on identifying and confirming the need, not on the solution. Before proceeding to the Options analysis stage, the high-level requirements are reviewed by the Defence Capabilities Board and the Independent Review Panel for Defence Acquisitions.
Phase 2: Options analysis
During the second stage, the project team prepares a preliminary statement of operational requirement and a complete business case analysis of the options that would meet the identified capability requirement. The business case also identifies the best option. DND senior leadership uses the business case analysis to make its decision about the best option to meet the capability need and demonstrate value for money.
The business case is reviewed by the Defence Capabilities Board and the Programme Management Board, which provides senior management with decision support and advice, while the Independent Review Panel for Defence Acquisitions validates the preliminary statement of operational requirements. Following the necessary approvals, the project is allocated funding for the Definition stage.
Phase 3: Definition
The third stage marks the transition from determining what should be done to meet the capability need, to determining how the preferred option will be implemented. The objective is to plan a successful project that is affordable and achievable. The project team now translates the preferred option into a detailed description of the whole project, finalizes the statement of operational requirement for approval, validates the project costs, and prepares a project management plan. If the project meets Programme Management Board approval, the team prepares a Corporate Submission to the Minister of National Defence or the Treasury Board of Canada to receive expenditure authority to proceed to the Implementation stage.
Phase 4: Implementation
At the fourth stage, the project team, with the support of other government departments, ensures that the contracted goods or services are delivered as stipulated in the contract and that the project remains within scope, on time and within budget. The first step in implementation is usually a competition among suppliers of goods and services, carried out in collaboration with Public Services and Procurement Canada, followed by an evaluation of the bid. The selected supplier is then contracted to deliver the goods or services.
Complex equipment is usually tested and verified by DND and CAF and, in many cases, modified to meet the CAF’s specific requirements. The equipment or services are then delivered according to the schedule stipulated in the contract. For equipment acquisitions, CAF members are trained on its use. Depending on the complexity of the equipment, such as aircraft, the training may take several months or years.
Phase 5: Closeout
Project closeout, the fifth stage, begins when the new equipment and supporting organization, or service, is fully operational. Closeout means that the project team gives formal notification to DND senior management that the operational capability has been achieved, all the conditions and limitations imposed on the project have been met, and that lessons learned have been duly recorded and passed on. It also allows DND authorities to close the books and the accounts for the project. The closeout stage is usually complete within three months.
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