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CANADIAN DEFENCE PROCUREMENT LACKS OVERSIGHT
The Ottawa Citizen
By David Pugliese
Source: The Ottawa Citizen
Twelve military equipment projects totalling $7.3 billion are considered "high risk," have gone over budget and are at least two years behind schedule, according to a Defence Department review.
Taxpayers, however, will remain in the dark on exactly which programs have run into difficulty. The department has declined to release details. So far, $600 million has been spent on the programs in question.
Other equipment projects could also face cost overruns, but the department would not provide further details.
The analysis of capital equipment projects was done to identify higher-risk programs that warrant an audit, according to the study by the department's chief of review services. It was produced in April and released recently.
"For the 12 higher-risk projects, project cost (or forecast) increased by 9 per cent on average and was behind schedule by 2.2 years," the analysis said.
It added that those projects had not changed in terms of numbers, or type of equipment or capability to eventually be delivered .
The report also determined that non-competitive contracts could cost taxpayers extra, but it did not get into details about how much. "Sole-source acquisition can result in higher costs to the Crown, especially with amendments to the contract," it pointed out. "Projects with competitively tendered contracts were considered lower risk," the analysis said.
The analysis recommended the chief of review services conduct audits into five higher-risk projects. Because the department has limited auditing services available, it recommended that assistant deputy ministers conduct examinations into another six equipment programs.
The report says 64 per cent of 25 higher-risk projects have fallen behind schedule. That includes the 12 already identified to be in the most difficulty.
Such slippage is a strong indicator of the potential for delayed acquisition of the equipment or a capability as well as an increase in project management costs, according to the review.
The department recently put the document up on its website, but censored details about which projects have run into trouble as well as specifics about costs.
Defence officials declined to be interviewed about the review.
But in an e-mail to the Citizen, the department cited a provision under the access to information law that allows it to censor the report. It claims that the names of the equipment programs and other related details constitute advice to the department or to the defence minister, and thus cannot be seen by the public.
In its e-mailed response, the department said criteria for identifying projects for review could include the presence of high-risk transactions, cost or schedule changes, the initial risk assessment of the project, the overall value and a project's history of meeting its set timetables.
The projects examined were those already under way in May 2006. The review examined 162 capital equipment projects totalling a little more than $51 billion.
The review did not look at the $24 billion in new equipment projects announced by the Conservative government between June 2006 and July of this year. Those new projects include the purchase of heavy-lift helicopters, the acquisition of C-17 and C-130J transport planes and new fleets of tanks, army trucks and supply ships. The Harper government also announced the construction of Arctic patrol ships, the establishment of a new training centre in the North and the modernization of the navy's frigates.
Deliveries of C-17 aircraft have started, but most of the other programs are still in early stages, with the equipment to be delivered over the next decade.
Alan Williams, the department's former assistant deputy minister for materiel, said the projects examined by the review could include equipment purchases, upgrades to existing equipment or in-service support contracts for various systems.
Mr. Williams said he found it significant that the review raised the question about sole-sourcing of military contracts. "In contrast to what the government has been saying, they're acknowledging that you spend more money on sole-source contracts," said Mr. Williams, author of Reinventing Canadian Defence Procurement. "Without competition, you can waste taxpayers' dollars."
The Harper government has come under fire in the last year in the Commons for what critics say are a series of non-competitive contracts awarded to defence firms. MPs with the NDP, Liberals and Bloc Québécois have all warned that directing contracts to particular firms without competition costs taxpayers money and limits the involvement of domestic firms.
The government has responded numerous times that the procurement process is fair, open and transparent. The equipment is needed quickly by the military, it contends.
The chief of review services' analysis recommends strengthening the management of capital equipment programs by conducting audits early in the acquisition process. It also pointed out that more management control should be directed to programs based on their level of risk.
Idnumber: 200710290001
Edition: Final
Story Type: Business
Length: 781 words
PRODUCTION FIELDS
NDATE: 20071029
NUPDATE: 20071029
DOB: 20071029
POSITION: 1
 Pugliese Defence Watch, david pugliese ottawa citizen, PROCUREMENT Posted in PROCUREMENT | Leave a Comment "
CANADIAN FORCES CHINOOK AND C-130J TRAINING CONTRACT COMING
CAE set to land federal training contract; Ottawa-based xwave key participant in $500-million deal
The Conservative government is getting set to approve a $500-million program that would see the creation of aerospace training facilities to teach Canadian Forces aircrews how to fly new transport planes and helicopters, as well as aircraft to be bought in the future for search and rescue.
A team of Canadian companies led by CAE of Montreal will be awarded the contract for what is known as the Operational Training Systems Provider or "OTSP."
Montreal-based CAE, one of the world's largest aviation simulation firms, had been deemed by the federal government as the only qualified bidder for the program. Awarding the contract, however, had been delayed by the federal election in October.
Neither the Defence Department or Public Works and Government Services Canada responded to a request for comment.
The Conservative government is expected to highlight the contract as an example of its efforts to invest and build up Canada's aerospace firms in tough economic times.
Defence officials privately say the OTSP program, which will include new training facilities and simulators at different locations in the country, will provide the air force with a common infrastructure for teaching crews on a number of aircraft. The project would run over the next 20 years and include training on new C-130J transport aircraft, Chinook helicopters and aircraft yet to be purchased, such as new fixed-wing search-and-rescue planes.
The final worth of the deal will depend on how much training for various aircraft fleets will be eventually be included. The initial deal for CAE is expected to be worth around $250 million.
The contract to buy 17 C-130J transports has already been signed and the first plane is expected to arrive in 2010. Discussions regarding the purchase of 16 Chinook helicopters have been continuing for more than two years and no contract has been signed. The fixed-wing search-and-rescue program isn't expected to acquire an aircraft until around 2015.
Richard Stoneman, an analyst who monitors the training and simulation market for Dundee Securities in Toronto, said he was told that an announcement on the first phase of the OTSP program could come over the next several weeks.
"The C-130J training will be announced as phase one of this program," said Mr. Stoneman. "Phase 2 will be the Chinook training. And Phase 3 will be the search and rescue."
CAE spokesman Chris Stellwag said no contract has yet been signed. "We hope to be under contract for the C-130J portion of the OTSP contract before the end of CAE's fiscal year, which is March 2009," he said.
Mr. Stellwag said the CAE team that will work on the project includes:
- xwave defence and aerospace in Ottawa;
- MacDonald Dettwiler Ltd. of Richmond, B.C.;
- NGRAIN of Vancouver;
- Atlantis Systems International of Brampton;
- Bombardier of St-Laurent, Que., and:,
- Simgraph Inc. of Laval, and
Officials with xwave defence and aerospace did not respond to a request for comment.
The then-minister of public works, Michael Fortier, announced plans to buy the training system in July 2007. At the time, he said buying aircrew training services from a single provider was part of the government's objective to establish a world-class aircrew training capability in Canada and to provide a seamless transition for the operation of the new aircraft fleets.
Details on how many new jobs will be created by the initiative were unavailable. Officials said once a contract was awarded a centre of training excellence would be built but they did not indicate where.
Mr. Stoneman said it is likely that several training schools will be constructed to deal with the number of aircraft fleets the military operates.
He noted that once those centres are operating, there is the possibility that Canada could offer training to the militaries of other nations for a fee.
For more Canadian Forces and Defence Department news go to the Ottawa Citizen and David Pugliese's Defence Watch at:

, David Pugliese, Ottawa Citizen Posted in Air Force | 1 Comment "
CANADIAN FORCES LOOKS FOR COUNTER ROCKET RADAR
Published Jan. 2, 2009
The Canadian Forces is looking to spend at least $50 million on a new radar to warn troops about incoming rockets and mortar bombs.
The new program follows an earlier attempt which saw $33 million spent to lease a similar system but that project produced mixed results.
This time around the army is looking for a radar that has a range of up to 30 kilometres and can be quickly set up by several soldiers.
For its 2003-2004 Afghanistan mission, the Canadian military had leased a radar, dubbed Arthur, from Sweden but soldiers complained it had mis-identified friendly aircraft and electrical power lines as incoming enemy rockets. Out of 3,200 incidents the radar identified as enemy fire, only two could be confirmed as real, according to a report filed by Canadian military personnel.
At the time the army shelved plans to purchase what were known as counter-bombardment radars, citing the concern the technology was not developed enough to make their use practical. It decided to wait until the U.S. military figured out what it would do in terms of such technology.
But now the Canadian army has revived its plan to purchase such radars. A contract for a new system is expected sometime in 2010 but it is unclear whether the equipment would be delivered in time to protect Canadian troops in Afghanistan.
Prime Minister Stephen Harper has stated that Canada will withdraw the bulk of its troops from Afghanistan in 2011.
Afghan insurgents have fired Chinese-made rockets at Canadian soldiers as well as mortar rounds and home-made rockets.
The new system would not only warn that a warhead was incoming but it could determine the location from where it was fired from.
The Citizen asked the Defence Department in November for comment on the radar project but received no response. It is now common practice at the department not to respond to questions about how money is being spent on equipment.
Defence insiders, however, say the army wants up to 10 radars.
Several firms with Ottawa-based offices are expected to bid on the project.
Lockheed Martin officials say they will offer Canada its EQ-36, a new radar system now being developed for the U.S. army.
Mark Starr, Lockheed's vice president of radar programs, said Canada has requested information on the radar, which can detect and locate mortar, artillery and rocket fire. "We're very interested in making our system available to the Canadian Army," he added.
Raytheon Canada intends to offer its improved Sentinel radar which can detect rockets and mortar rounds and other aerial threats at longer ranges.
Luc Petit, business development manager at Raytheon Canadian, pointed out that the Sentinel is being used in Iraq by the U.S. army and is also being used by the British military. Mr. Petit noted that Raytheon can also offer a land-based gun system than can be integrated with the radar and used to destroy incoming warheads.
Gary Hollink, president of Saab International Canada, said the firm will offer the army an advanced version of its Giraffe radar which can provide 360 degree detection and tracking of incoming warheads. Mr. Hollink noted that the Canadian navy already uses a version of the radar on its Halifax-class frigates.
He said the army could install a Giraffe at Kandahar airfield and "provide coverage and surveillance to a very significant range."
In 2006 Saab acquired the company which built Arthur, the artillery and rocket detection radar used by Canada earlier in Afghanistan.
Despite the ongoing problems with that system the army concluded that Arthur did provide "a psychological morale booster for soldiers living in camp" since the troops knew that a radar was available to warn against incoming warheads.
, David Pugliese, David Pugliese Defence Watch, Ottawa Citizen, radar Posted in Afghanistan, Army | Leave a Comment "
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