How to do the jet purchase properly

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Alan William – April 6, 2012

On Tuesday, Auditor General Michael Ferguson released his spring report, which included a severe criticism of the government's proposed purchase of F-35 fighter jets. But the AG could have gone even further in his findings and recommendations.

The first question asked of the AG in his press conference was "who is accountable" for this mess? He provided no clear response.

That's understandable. The fact is that the overlap and duplication between the ministers of Public Works and Government Services Canada (PWGSC) and the Department of National Defence (DND) guarantees that no single minister is accountable for defence procurement. In any organization or business, ensuring clear accountability is absolutely critical to achieving success. When accountability is shared there is a natural tendency to be less rigorous, as there is always someone else to count on.

It is always nice to argue that the process is complex and that is why delays and problems occur. It is complex only because the government does not want to simplify the process.

The AG's report rightly admonished the bureaucrats for not keeping ministers adequately informed of the problems and risks in the program, and of the associated costs. In my opinion however, the Auditor General glossed over the ministers' lack of due diligence. Over the past five years, many reports have been published detailing the problems and delays in the development of this program and of the continuing escalation of costs, including by the Pentagon and the U.S. Government Accountability Office (GAO). It defies logic to suggest ministers were not aware of these reports. Ministers could have gone to the Office of the Parliamentary Budget Officer (PBO) or to independent audit organizations for reassurance. They did not.

In his report the AG noted that, "National Defence engaged PWGSC late in the decision-making process and hampered PWGSC's ability to carry out its responsibilities as contracting authority to ensure the integrity of the procurement process." This is no excuse. Officials in PWG-SC were fully aware that this multibillion dollar program was underway. They did not need a special invitation to integrate themselves into the program and to demand the necessary information to allow themselves to fulfil their role and mandate. They chose not to do so.

The minister should have simply said no. Instead, PWGSC merely requested a confirming letter from DND and then meekly went along with the charade.

The degree to which the bureaucrats undermined the process should have been spelled out more clearly. To better explain the extent of the deception, let me first provide a brief understanding as to how the defence procurement process is supposed to work.

It starts with the military preparing a "statement of requirements." The civilian procurement authorities within DND and PWGSC then take this document, convert it to specifications that can be bid upon by industry, prepare and circulate a tender offer, receive and evaluate the bids and select the winner. In other words you first specify the requirements and then you pick a winner. In this case the exact opposite process was followed.

In 2006, the DND bureaucrats recommended the F-35A to the minister as the best jet to replace the CF-18s and four years later finalized the requirements for the jets. Can anyone doubt that the requirements were rigged to ensure that the F-35 was the only option available to meet Canada's needs?

Also, the AG did not discuss the government's misinformation campaign. In fact, it was the continuing distortion of the truth that emboldened me to speak out. All of the reasons given by the government to acquire these jets were flawed. The rigid adherence to the $75-million cost per aircraft figure, in the face of the voluminous contrary data was insulting. Canadians deserve honesty from our leaders. I hope this is a lesson that this and all future governments won't forget.

Finally, the government's response is grossly misguided. First, its plan to establish a Secretariat within PWGSC to play a lead co-ordinating role in the replacement of Canada's CF-18s is bewildering. As mentioned above, this minister of PWGSC, Rona Ambrose, and her officials have shown themselves totally unable to fulfil their responsibility to ensure integrity in the process. Why would we now entrust her with more responsibility? Second, putting in place a committee of deputy ministers to provide oversight just obfuscates accountability even further.

Instead, I would recommend the following approach to the Prime Minister. Adopt a two-prong solution. First, commit to establishing a new defence procurement organization with one minister accountable for defence procurement.

It should be up and running within a year. Second, with respect to the program to replace the CF-18s, assign one of your most trustworthy ministers (outside PWGSC and DND) to head up this file and report directly to the prime minister with cabinet support. Provide this minister with an equally capable deputy minister (outside PWGSC and DND) and necessary staff to undertake this program. Monthly progress reports would be made to cabinet and the prime minister with quarterly reports to Parliament. Conduct independent annual audits, which would be made public.

Their first task would be to begin an open, fair and transparent procurement process. Contrary to other views, Canada's participation in the F-35 program does not inhibit our ability to conduct an open, fair and transparent process. The first step in this direction is obviously rewriting the statement of requirements to ensure it is truly open to competition.

If the F-35 is truly the best jet at the best price, it will win such a competition.

Alan Williams is a former Defence Department assistant deputy minister, matériel who spearheaded Canada's participation in the Joint Strike Fighter program. He is the author of Reinventing Canadian Defence Procurement: A View From The Inside.

Original article on Ottawa Citizen website