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Falling Short: Suboptimal Outcomes in Canadian Defence Procurement

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Falling Short: Suboptimal Outcomes in Canadian Defence Procurement University of Calgary PRISM: University of Calgary's Digital Repository Graduate Studies The Vault: Electronic Theses and Dissertations 2018-09-26 Falling short: suboptimal outcomes in Canadian defence procurement MacMillan, Ian MacMillan, I. (2018). Falling short: suboptimal outcomes in Canadian defence procurement (Unpublished doctoral thesis). University of Calgary, Calgary, AB. doi:10.11575/PRISM/33132 http://hdl.handle.net/1880/108780 doctoral thesis University of Calgary graduate students retain copyright ownership and moral rights for their thesis. You may use this material in any way that is permitted by the Copyright Act or through licensing that has been assigned to the document. For uses that are not allowable under copyright legislation or licensing, you are required to seek permission. Downloaded from PRISM: https://prism.ucalgary.ca UNIVERSITY OF CALGARY Falling short: suboptimal outcomes in Canadian defence procurement by Ian MacMillan A THESIS SUBMITTED TO THE FACULTY OF GRADUATE STUDIES IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY GRADUATE PROGRAM IN MILITARY AND STRATEGIC STUDIES CALGARY, ALBERTA SEPTEMBER, 2018 © Ian MacMillan 2018 Abstract Why do Canada’s military procurement projects often fall short of their primary goals? Otherwise known as a suboptimal result, defence acquisitions regularly fall short of established delivery schedules, accruing cost-overruns, sometimes resulting in cancellation of key materiel. One-hundred percent of the twenty-five Major Crown Projects at the Department of National Defence have experienced delays in achieving key milestones. Aside from cost, suboptimal results are injurious to Canada’s tri-force military. Fortunately, the matter has not gone unchecked. A fairly recent surge in procurement research has generated a critical mass of Canadian-focused literature. Preliminary research for this study shows a connection between suboptimal results and the organizations and personnel that populate procurement processes. Based on the bureaucratic politics model, a competitive interaction between uniquely conditioned policy players causes suboptimal delays and costs. Players orient outcomes to suit personal and organizational interests. The advantage of the bureaucratic politics model is the clarity with which it illustrates decision processes. Its simplistic structure serves as an ideal model for comparing three cases in Canadian procurement. Taken from the Department of National Defence’s Status Report on Transformational and Major Crown Projects, this study tests the bureaucratic theory against the Tank Replacement Project, the Joint Support Ship Project, and the ongoing project(s) to replace Canada’s CF-18 Hornets. The objective is to see if these cases share common findings contributing to suboptimality. The bureaucratic model assists the methodological goal of a structured, focused comparison. Two of the three cases demonstrate the competitive interaction between players as a factor in determining delays and cost-overruns. Although the Joint Support Ship Project included a host of unique players competing to determine decision outcomes, the factor that contributed to schedule slippage was the result of ii widespread agreement on a build in Canada approach. This consensus led to reliance on one underequipped shipyard to approach an overambitious project. Based on the overall study, three findings prevail. First, reports by bureaucratic institutions like the Parliamentary Budget Office and the Office of the Auditor General have tremendous political capital. Second, domestic production schemes are noble, but sometimes unrealistic. Third, competition for goods is always necessary. iii Preface This dissertation is original, unpublished, independent work by the author Ian MacMillan. Small sections of the dissertation includes material sourced from publications by the author. They are cited accordingly. iv Acknowledgements Most of all, the author would like to thank his parents, siblings, and close friends for their longtime encouragement and support. This doctoral degree would not have been possible without them. The author would like to thank Professor David Bercuson for his excellent supervision, as well as his encouragement and support. The author would like to thank Professor Rob Huebert, and Professor Maureen Hiebert for their outstanding feedback and analysis. The author also thanks his external committee members— Professor Michael Nesbitt, and Professor Jean-Christophe Boucher—for their excellent comments and feedback. The author thanks Donna Keene-Ochosky, Shelley Wind and Nancy Pearson Mackie for: so many important pieces of advice; an unquantifiable amount of important information; and listening to him gripe. The author thanks Professor Matthew Kerby of the Australian National University for his longtime encouragement and support. The author thanks Professor Russell Williams of Memorial University of Newfoundland for introducing the author to defence procurement during his Master of Arts degree. The author thanks Michael Hargadon (LLB, MA, BA Hons) for inspiring excellence. The author thanks Dr Sebastien Maineville for encouraging the author to pursue graduate studies, and for inspiring a new level of intellectual creativity. The author thanks Professor Emeritus Henri Habib for his encouragement. Dr David Laskin’s creative advice and encouragement were a major resource to the author throughout his doctoral degree; thanks Dave. The author would like to thank Fred Mannix and Captain Bill Wilson, the Arthur JE Child Scholarship, and the Queen Elizabeth II Scholarship. The work for this dissertation would not have been possible without these generous sources of funding. v Table of Contents CHAPTER 1—INTRODUCTION……………………………………………………………..1 Background of the study, statement of the problem, and the research question………..1 Significance of the study………………………………………………………………..5 Theoretical approach...………………………………………………………………….6 Case selection…………………………………………………………………………...7 Organization of the study……………………………………………………………….8 CHAPTER 2—LITERATURE REVIEW: THE STATE OF CANADIAN DEFNCE PROCUREMENT RESEARCH……………………………………………………………….10 Procurement in Canada’s post-war defence literature………………………………….11 The emergence of procurement as a special area of Canadian defence literature……...14 What is missing and the way forward…………………………………………………..22 CHAPTER 3—THE BUREAUCRATIC POLITICS MODEL………………………………...26 3.1—The bureaucratic politics model defined………………………………………….31 3.2—A model to inject structure and organize findings..………………………………38 CHAPTER 4—METHODOLOGY…………………………………………………………….45 The qualitative research tradition………………………………………………………45 Structured, focused, comparison……………………………………………………….47 Data collection and analysis……………………………………………………………50 Conclusion……………………………………………………………………………...55 CHAPTER 5—THE TANK REPLACEMENT PROJECT…………………………………...56 The past: the main battle tank has been an asset to the Canadian Army………………57 The project: Afghanistan and canceled refurbishments………………………………..65 Results and conclusions………………………………………………………………..88 CHAPTER 6—THE JOINT SUPPORT SHIP PROJECT…………………………………….98 The past: support ships are essential to Canadian security…………………………….99 The project: build in Canada, no matter how impractical……………………………..102 Results and conclusions………………………………………………………………..127 CHAPTER 7—REPLACING CANADA’S CF-18s…………………………………………...136 The past: fighter jet interceptors were an effective contribution to North American defence………………………………………………………………………………….137 The project: F-35s, Super Hornets, more Hornets, and maybe, possibly, F-35s?...........144 Results and conclusions………………………………………………………………...163 CHAPTER 8—CONCLUSION………………………………………………………………..172 REFERENCES…………………………………………………………………………………182 vi List of Abbreviations ALSC (Afloat Logistics Sealift Capability) AOR (Auxiliary Oil Replenishment) ASW (Anti-submarine Warfare) CAF (Canadian Armed Forces) CBC (Canadian Broadcasting Corporation) CDAI (Conference of Defence Associations Institute) CDS (Chief of Defence Staff) CF (Canadian Forces) CFB (Canadian Forces Base) CGAI (Canadian Global Affairs Institute) DFAIT (Department of Foreign Affairs and International Trade) DND (Department of National Defence) GAC (Global Affairs Canada) HMCS (Her Majesty’s Canadian Ship) IC (Industry Canada) IED (Improvised Explosive Device) ISAF (International Security Assistance Force) ITC (International Trade Commission) JHQ (Joint Headquarters) JSF (Joint Strike Fighter) JSS (Joint Support Ship) KKV (King, Keohane, and Verba) MGS (Mobile Gun System) MMEV (Multi-Mission Effects Vehicle) vii MOU (Memorandum of Understanding) MP (Member of Parliament) NATO (North Atlantic Treaty Organization) NDP (New Democratic Party) NORAD (North American Aerospace Defense Command) NSPS (National Shipbuilding Procurement Strategy) NSS (National Shipbuilding Strategy) OAG (Office of the Auditor General) ORCD (Operational Requirements Concept Document) PBO (Parliamentary Budget Officer) PSCP (Public Services and Procurement Canada) PWGSC (Public Works and Government Services Canada) RCAF (Royal Canadian Airforce) RCMP (Royal Canadian Mounted Police) RCN (Royal Canadian Navy) RPG (Rocket Propelled Grenade) TBS (Treasury Board Secretariat) UK (United Kingdom) UN (United Nations) US (United States) USAF (United States Air Force) USMC (United States Marine Corps) viii CHAPTER 1—INTRODUCTION Background of the study, statement of the problem, and the research question “Countless minor incidents—the kind you can never really foresee—combine
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