The Conservative government is making so little headway in six-year-old plans to re-equip the Canadian Armed Forces that it’s again shifting billions of dollars of unspent military-hardware funding to budgets at least half a decade in the future.
The 2014 budget unveiled by Finance Minister Jim Flaherty Tuesday would transfer more than $3-billion of military-equipment spending to fiscal years beyond 2018-19.
It’s the second time in three years that Ottawa has had to do this. In the 2012 budget, the government kicked forward $3.5-billion of unused capital-equipment cash to future years.
These repeated transfers of Department of National Defence capital funding reflects just how badly the Canadian government has fumbled the ball on military purchasing, defence insiders say.
It also raises doubts about whether and when the government will actually spend the money. Mr. Flaherty insisted Ottawa is still committed.
“We’re not reducing spending on the armed forces, but there’s no point in having money sitting there when they can’t spend it this year,” he said Tuesday.
The list of postponed military acquisitions has been growing steadily – including search-and-rescue aircraft, next-generation fighter jets, Arctic patrol ships, a major icebreaker, naval resupply ships and maritime helicopters.
“There’s not much happening,” a senior Canadian military source said, speaking on condition of anonymity because the official is not authorized to speak on the matter. “Everything is delayed.”
In 2008, Ottawa unveiled an ambitious shopping list for the Canadian military called the Canada First Defence Strategy. It’s proven harder to execute than hoped.
David Perry, a senior defence analyst with the Conference of Defence Associations Institute, said he was surprised to learn how much earmarked cash is once again being shifted to future budgets but added that he has tracked a “persistent underspending” of military procurement money in recent years.
Mr. Perry said one problem is the federal government tried to buy so much at once after a relatively long pause in purchasing big-ticket military items that saw Ottawa’s required expertise and capacity wither away.
That’s what happens, he said, “when you take a procurement holiday for almost a decade.”
The Paul Martin Liberal government had already kick-started a resumption in military procurement before it was defeated in 2006, and the 2008 Tory acquisition strategy ended up being piled on top of this, he said. The 2012 cuts designed to balance the budget, Mr. Perry said, are also making things worse – cutting the number of defence purchasing staff by 400 people.
“You’ve got a work force that’s actually shrinking and trying to move twice as much money and twice as many projects.”
The dysfunctional record of military procurement – delays and cost overruns – has hurt the Conservatives’ carefully cultivated reputation as prudent stewards of the public purse.
Last week, Ottawa announced a new process for making major military purchases that would reduce National Defence’s influence in steering acquisitions – an effort to speed up buying and reduce costs.
In a significant overhaul of how Ottawa buys military equipment, National Defence Minister Rob Nicholson and Public Works Minister Diane Finley said that major military acquisitions will now be managed by a Defence Procurement Secretariat that reports to the Department of Public Works and is governed by senior civil servants across a range of departments.
Major military purchases in Canada have frequently lacked what critics call a single point of accountability because as many as three or four government departments play a part in selecting what to buy – decisions that are sometimes made in isolation from one another.
National Defence currently has particularly strong influence because it first draws up specifications for what features it needs in equipment – which can result in the department effectively picking a supplier before a competition is held.
This will change with what is unofficially called the “super secretariat,” a term the government does not embrace, but which captures the concentration of decision-making taking place.
Defence officials will still have a central role in deciding what to buy for the Canadian Armed Forces, but other departments and outside advisers will now have the ability to properly question what is being requested.
For instance, as one person who was familiar with the announcement said, if the request is for a “Cadillac and you actually need a Corolla” then the system needs someone who “has the authority to ask why do you need this Cadillac?”
The secretariat, overseen by deputy ministers from Public Works, Defence, Industry Canada and Treasury Board, will rely on independent advisers, “fairness monitors” and arm’s-length audits to try to keep military purchases from going off the rails.
The government has already placed two troubled procurements under the management of secretariats at Public Works: fighter jets and fixed-wing search-and-rescue aircraft.
The model was first used to manage the shipyard selection process for more than $30-billion of public shipbuilding, a decision that was hailed by many as a success.