THE HYPOTHETICAL MOST EFFICIENT ORGANIZATION: THE FATAL FLAW IN THE ALTERNATIVE SERVICE DELIVERY PROCESS by Lieutenant-Colonel Clifford Beattie
Lieutenant-Colonel Cliff Beattie, CD, BBA, CGA graduated from St. Francis Xavier University (1981) with a Bachelor of Business Administration Degree. Commissioned as a logistics offi-cer in 1984, he served in finance staff positions at CFB Winnipeg and Air Command Headquarters. As the Interna- tional Arrangements Officer within the Directorate of Financial Operations at NDHQ (1992–96), he was responsible for coordinating financial arrangements in support of all UN, NATO and multinational oper- ations. In 1996, he was assigned to the Canadian Forces Recruit-ing, Education and Training System Headquarters where he held a number of staff appointments in the areas of reviews and evalua-tions, activity-based costing, budgeting, business planning, and Alternative Service Delivery. Upon graduation from the Canadian Forces College, he will serve as the Base Administration Officer at CFB Borden.
While the Framework for Alternative Service Delivery was promulgated in 1995 as a tool to facilitate departmental implementation of Program Review1, ASD should not be seen as primarily about cost-cutting, downsizing and job loss. It is about constructive approaches to governance, service delivery and accountability structures that engage Canadians as citizens and partners.2 — Treasury Board of Canada Secretariat
Our challenge at DND/CF is to con- public support and funding. In the face of tinue providing good quality support victory and with slowing or stagnant econo- services for the military missions, mies, high unemployment, rising deficits while we endeavour to reduce costs, and growing debt, the search for the peace streamline business practices, ac- dividend was on. In Canada, the search for quire new technologies, and ensure a peace dividend also became a key priority that sustainable jobs are maintained. of Government. In the ensuing years, the The goal is to invest in combat capa- Government announced a series of budget- bility. Alternative service delivery cut-ting and deficit-reducing initiatives. The (ASD) is helping us achieve that.3 Department of National Defence (DND) was a target of most of these initiatives because — Department of National Defence it represented over 40% of the Govern- ment’s discretionary expenditures. From INTRODUCTION 1989 to 1995, a number of bases were In the fall of 1989 the Berlin wall closed and several major reduction initia- came crashing down and, in so doing, it tives were announced and implemented rocked the very foundations of the military within the Depart- ment.4 The Cold War had infrastructure of most Allied forces. The ended in victory, Cold War had been won; however, Allied forces now faced a different battle, one for but for the military the battle for cold hard equipment and personnel in the period 1989 cash had just begun. to 1995, the Department still faced a signifi- Notwithstanding the savings realized cant funding challenge. Promised budgetary through the rationalization of infrastructure, increases failed to materialize and instead
1 funding to the Department was forecasted to ganizational Structure (MEEOS) Step. decrease or remain constant at best. Faced with declining resources in constant dollar ASD — THE GOVERNMENT terms, aging infrastructure, much obsolete or PROGRAMME nearly obsolete equipment, growing person- nel costs and inadequate capital spending, the The ASD concept and the related ov- Department sought to reduce costs by adopt- erarching implementation framework were ing a new Government initiative, Alternative initially developed by the Treasury Board of Service Delivery (ASD). ASD is a pro- Canada Secretariat (TBS) with a view to as- gram-me whereby Government Departments sisting Government Departments in modern- initiate process or activity reviews aimed at izing and restructuring the delivery of their improving services to Canadians by maxi- programmes and services. The Government mizing the return on every dollar spent. In views ASD as a strategy for innovation and other words, do more with less. In light of change management.5 It views ASD not as shrink-ing budgets, increasing programme an objective but as a means to an end.6 ASD delivery costs and a need to protect its com- is about reviewing and challenging the bat capabilities, DND adopted the ASD pro- status quo; it is about restructuring and im- gramme with full and unfettered eagerness. proving the delivery of Government pro- During the early 1990s, there was no grammes and service to Canadians. doubt that Government services needed to In its ASD framework, the TBS out- be rationalized and that new and better ways lined four possible options for consideration of delivering those services had to be exam- 7 in programme and service delivery reviews. ined and implemented. However, in consid- First, quality and efficiency improvements ering contracting out military services and could be realized through new management capabilities it is essential to recognize the risk and organizational structures. Second, part- of failure and potential consequences of nerships were encouraged with other Govern- error. This paper will outline the current ment Departments (OGDs), other levels of Departmental ASD strategy with a view to government, communities and the private recommending a modified approach to the sector. Third, Government programmes and current ASD Review Process, one that miti- services could be commercialized or con- gates risk whilst maximizing returns. It ar- tracted out to private industry. Fourth, pro- gues that the current Departmental ASD grammes or services could be privatized methodology runs the risk of hurrying the where there was no continuing need for fur- ASD process towards contracting out ser- ther Government involvement. vices and capabilities to private industry at the expense of the very benefits it was envi- According to the TBS framework, sioned to achieve: internal resource savings, there were no cost reduction or downsizing activity efficiencies and greater force effec- targets associated with these options; the tiveness. The current Departmental meth- pri-mary goal was “getting government odology for implementing the ASD pro- right” through the creation of a more client- gramme is funda-mentally flawed and, as orient-ed, innovative and cost-effective pro- such, must be replaced with a more struc- gramme delivery structure.8 However, al- tured and verifiable ASD Review Process, though cost reduction was not the overriding the core of which would be the establish- goal, Government departments had to func- ment of a More Efficient and Effective Or- tion within their funding allocations and most
2 could anti-cipate reduced funding allocations. service at a lower cost. Consequently, cost Although ASD was not intended as a cost cutting was now at risk of becoming an end reduction ini-tiative, fiscal realities had the in itself instead of a means to an end; all that potential to dic-tate otherwise. Therefore, was missing was the establishment of reduc- departments might be forced to use ASD as a tion targets. It would not take long for these means to cut costs without giving due con- to materialize. sideration to the broader consequences of those decisions on the efficient and effective The proclaimed benefits of the new delivery of existing departmental pro- DND ASD programme were built upon re- grammes and services. DND is no excep- ports from Australia, the United Kingdom tion. and the United States that similar military programmes resulted in savings of 20% to 12 DND’S ASD PROGRAMME AND 30% in targeted areas. At the inception of FRAMEWORK the programme, the Office of the Auditor General (OAG) noted that non-core support In 1995, DND unveiled its own ASD services consumed approximately one-third programme and related strategy, the primary of the Department’s budget of $10.3B.13 In focus of which was to maintain and invest in light of these figures, the senior decision- combat capabilities. To achieve this goal making body within the Department, the De- 9 ASD would target non-core activities — pri- fence Management Committee (DMC), con- marily the support services. The Departmen- servatively and confidently forecast that the tal ASD programme was designed to select DND ASD programme would result in year- the most cost-effective and practical way to over-year savings of $200M in 1999 and in- deliver support services to CF members. crease to $350M in 2001.14 Not only had Several non-core support services were tar- cost cutting become a major aim of the ASD geted for review, including construction en- programme, it now had an established gineering, equipment maintenance, transport benchmark against which to be measured. and supply services, financial services, food The transformation of cost savings from a services, information and technology, to 10 means to an end, into an end in itself, was name but a few. Although the TBS had now complete. The targeted annual savings made it clear that ASD was not to be viewed of $350M by 2001 became the ultimate as a cost-cutting or reduction initiative, DND measure of suc-cess whilst the real aim of made this the first of its four primary aims. the Government ASD programme, a more The other aims were getting maximum value efficient and effec-tive programme delivery for the dollar, streamlining business prac- and service support structure, became mar- tices and ensuring the future of sustainable ginalized and almost abandoned. jobs within DND/CF.11 The targeted reductions might not This far-from-subtle change in focus have been so problematic if it were not for is significant. It is readily apparent that cost the fact that they were already needed to reduction had become an overriding aim of offset funding shortfalls in higher-priority the ASD programme instead of some other areas. measure of efficiency or effectiveness, such as improved services or the maintenance of
3 Table 1 — OAG Overview of Business Case Analysis (BCA)18 During the past decade the capital budget, effectiveness, non-core activities currently measured as a percentage of the overall DND conducted inside the military would be trans- budget, had gradually decreased to between ferred completely to Canadian industry where 17% and 19%,15 far below its target level of practical to do so. The second stated that 23%. The forecasted savings that could be where an external market capability is not realized through the ASD programme became possible and where BCAs demonstrated po- a “carved in stone” target because the De- tential for increased cost effectiveness, non- partment required those savings to reinvest core activities would be delivered through in combat capabilities, primarily by way of the most appropriate internal alternative ser capital acquisitions. The ASD savings were vice delivery option.16 However uninten- seen as a remedy for a critical shortfall in tional or inadvertent it may have been, the capital funding and therefore it was essential promulgation of these principles, especially that they were realized. However, there was the former, focused the attention of most in one other impediment to success; a bias to- the Department on ways to transfer non-core wards the contracting out of services precip- activ ities to private industry. itated by the two initial Departmental ASD policy statements. Although BCAs were viewed as a key safeguard in determining whether a par- The first policy statement proposed ticular non-core activity would be trans- that, where Business-Case Analysis (BCA) ferred to private industry, compliance with demonstrated potential for increased cost
4 internal BCA policy and procedures was tabulated they were found to be considera- found to be bly higher than an in-house developed hy- less than adequate. In a recent audit on pothet-ical (MEO) estimate. In response, ASD within DND, the Office of the Auditor the ASD team initially requested that more General (OAG) commented that in the 14 money be put on the table or that the con- ASD projects reviewed, BCAs were ob- tract be re-scoped with respect to support served to have been either poorly done or levels so that an outside contractor could not done at all.17 Table 1, an extract from win the bid. In so doing, CFB Kingston the OAG Report on ASD, provides an over- would be seen to be complying with per- view of 12 of the 14 individual BCAs. ceived Departmental di-rection — the con- tracting out of support ser-vices.22 The fact In his report, the OAG specifically that the local staff considered they could do highlighted the poor quality of the BCA pre- the same job at a lower cost than private pared in support of the ASD project at CFB industry, with savings mea-sured in the hun- Goose Bay. With this in mind, it is impor- dreds of thousands of dollars, was inconse- tant to remember the critical safety valve role quential because the goal was contracting the BCA is supposed to play in the ASD Re- out instead of economy, efficien-cy and ef- view Process. The OAG observed that the fectiveness. Fortunately, in this in-stance CFB Goose Bay BCA failed to meet the De- common sense prevailed and the con-tractor partment’s own internal criteria for preparing bids were eventually deemed non-compliant. a BCA. The following components of the This case provided an opportuni-ty to ob- Goose Bay BCA were found not to have been serve the benefits of undertaking an analysis fulfilled: the aim; the level of service; base- of how non-core activities could be redes- line costs; success factors; the adequacy of 19 igned, re-engineered or restructured within the options; and selection of the best option. DND and still gain economies and ef- Of the remaining component, the feasibility ficiencies greater than private industry could of options, the OAG stated that this was 20 offer — the introduction of a hypothetical mostly not met. In the final analysis, the MEO. The benefits of conducting hypothet- Department cannot truly ascertain how ical MEO reviews were becoming obvious, much was actually saved or, viewed another even if they were paper re-engineering exer- way, lost in CFB Goose Bay. In this in- cises. Unfortunately, hypothetical MEO re- stance, the Department allowed a non-core views were not initially part of the Depart- activity to be contracted out without know- ment’s formal ASD framework; this would ing the real value of the targeted services or not happen until FY 1999/00. the potential savings that could have been realized through a hypothetical most effi- The initial Departmental ASD Re- 21 cient organization (MEO) option. The view Process consisted of six steps and gave focus within the Department, at least in structure and form to a very complicated and some instances, was shown to have been on risky decision-making process. To its contracting out to pri-vate industry and not credit, the Department eventually realized on cost savings or efficiencies. that the initial ASD Review Process needed A more poignant example is that pro- revisions to remove some of the problems vided by CFB Kingston. In 1977, the base noted above. In early 2000, a revised ASD sought to contract out food services for an Review Process was promulgated. It also amount not to exceed $4.8 million. Howev- consisted of six steps; however, two signifi- er, when the bids from private industry were cant amendments were made. First, a re-
5 quirement to conduct rigorous BCAs, not mally included in the process. Detailed below just baseline costings, was instituted. Sec- is a summary of the ASD Re- view Process ond, the concept of developing a hypotheti- before and after amendment. cal MEO for the non-core activity was for-
Table 2: ASD Review Process23, 24 Initial ASD Review Process Revised ASD Review Process Step 1 — activity classification and validation Step 1 — screening — validate that the — defined the status of an activity as either activity is still required; determine its core core or non-core or non-core status; and scope the activity Step 2 — activity definition — resulted in the Step 2 — analysis — conduct a business scope of the activity being defined, the base- case analysis (BCA), supporting a recom- line costs being determined and the selection of mendation to develop an ASD Option an option Step 3 — way ahead — involved the endorse- Step 3 — way ahead decision — develop ment of an implementation plan by the Execu- ASD options, including an MEO option tive Authority Step 4 — concept development — directed the Step 4 — development — prepare the creation of a project team to implement the statement of work, request for proposal approved action plan and verification plan Step 5 — implementation — the selected and Step 5 — implementation — implement approved ASD option was implemented the chosen option Step 6 — verification and audit — the results Step 6 — verification — compare planned were evaluated against actual results and adjust accord- ingly
It is important to note that the initial core activi-ties to the competitive process. ASD Review Process did support an internal The success of these two in-house bids is ASD option known as an “in-house bid”.25 even more impressive when one considers In-house bids allowed an internal organiza- the Departmen-tal bias towards contracting tion, normally the owners of the non-core out. This bias came to a head when CFB activity, to develop and submit a bid in the Goose Bay contracted out base support ser- competitive or contracting process. In an vices to private industry. Subsequent to the attempt to level the playing field, in-house awarding of the contract to private industry, teams were kept at arm’s length and encour- the local union at CFB Goose Bay submitted aged to develop their own internal or in- a formal complaint. Their complaint alleged house proposals. Consultants could be used that if they had been given the opportunity provid-ed all incremental costs were incor- to develop a [hypothetical] MEO they would porated into their final bid. Although the in- have been able to compete with the private house option was successful on at least two sector in terms of cost and level of service.27 occasions — food services in Trenton and at However, we shall never know the answer to the CF Publications Depot26 — the Depart- this assertion because of the local ASD ment still had not fully accepted the concept team’s failure to comply with the estab- of re-structuring, reorganizing and reform- lished Departmental ASD methodology. ing from within prior to subjecting its non-
6 The CFB Goose Bay ASD Project view Pro-cess, the Departmental ASD con- and the subsequent complaint by the local cept maintains a propensity for making deci- union forced the Department to consider es- sions based on short-term factors and retains tablishing a hypothetical MEO Step in the a bias towards contracting out. The existing ASD Review Process. However, this was not ASD methodology, although improved, is easy. Public Works and Government Ser- still fundamentally flawed. vices Canada (PWGSC), the Government’s If DND were serious about comply- contracting authority, raised concerns that ing with the spirit and intent of the Govern- DND internal organizations would gain an ment’s ASD framework, it would redirect its unfair advantage over private contractors by focus away from “cost cutting” and “con- having two opportunities to submit a pro- tracting out” and move toward restructuring, posal, both an MEO option and an in-house re-engineering and reorganizing its non-core bid.28 PWGSC’s concern was accommodat- activities to achieve economies, efficiencies ed by allowing an internal organization to and improved effectiveness. The Department submit an initial hypothetical MEO proposal can achieve this by replacing the hypothetical for independent review by a body led by MEO Step in the ASD Review Process with someone from outside the Department, and a more structured and verifiable step known to re-table a revised submission to the same as a MEEOS Step. independent body should the first submis- sion not be accepted. Subsequent rejection PROPOSED CHANGE TO ASD would result in the activity’s going to com- METHODOLOGY — A MANDATED petitive bid without the MEO as an option. MEEOS STEP In both instances the hypothetical MEO If the current ASD methodology is would never be tested through trials or im- fundamentally flawed, then the Departmen- plementation. tal challenge becomes one of making mid- A perceived limitation of the hypo- stream adjustments so that the potential bene- thetical MEO Step is that an independent fits from a restructured, measurable and veri- body would determine whether or not the fiable ASD methodology can be realized in hypothetical MEO is worthy of implement- the short term and sustained in the long term. ing. More problematic was the fact that the For the most part, the current ASD frame- MEO team would be allowed only 90 days work is fundamentally sound, with one ma- to develop and submit its MEO proposal. It jor exception — the hypothetical MEO Step. could reasonably be argued that even the The hypothetical MEO Step needs to be for- simplest non-core activity would take in ex- malized within the ASD framework. In other cess of 90 days to develop assuming that all words, commanding officers must be direct- concerned are properly trained, the process ed to develop and implement a MEEOS for is well defined and understood, and that ade- their area or areas of command responsibil- quate costing data are readily available. The ity. compressed timelines run the risk of the The MEEOS Step would not only re- MEO team’s missing factors and costs that place the hypothetical MEO Step in the could lead to an incorrect decision. Accord- ASD framework, it would also be advanced ing to the OAG, of the nine ASD projects within the ASD framework and moved from that have gone to contract, three may not Step 3 to Step 2 in the ASD Review Process have selected the best option.29 Even with (see Table 2). The effect of these changes the pos-itive aspects of a revised ASD Re- would be to refocus the ASD initiative back
7 on making decisions based on economy, effi- structured in five phases. In Phase I, each ciency and effectiveness criteria instead of commanding officer would be given 12 to on cost cutting and contracting out biases. 18 months to define his MEEOS. The The existing ASD framework is equivalent MEEOS would be defined by reviewing all to preparing and implementing a campaign base or unit functions with a view to taking plan only after having the benefit of internal a comprehensive look at all activities, proc- and external staff checks. The proposed esses and functions carried out at that base or MEEOS Step would take the campaign plan unit. The commanding officer would then and run it through war-gaming, live field ex- reorganize, prioritize and validate all activi- ercises and battle-hardening implementa- ties and func-tions and then restructure those tion. After all, the Department must be as- functions into the most efficient and effective sured that the campaign plan will survive organizational structure possible. As with contact with the enemy. In this military ex- any business problem or military challenge, ercise, the enemy is not the private sector, it problem definition is the most critical step in is inefficient and ineffective operations and the decision-making process. The MEEOS activities. Step ensures that problem definition is not over-looked in the haste to make decisions. Only by implementing a selected A proposed implementation plan, tailored to MEEOS can a commanding officer fully the size of the base or unit, would be devel- appreciate if his campaign plan generated oped for the recommended MEEOS. the economies and efficiencies initially fore- cast. More importantly, the commanding In Phase II, the recommended MEE- officer will be able to ascertain whether the OS would then be submitted to a DND panel economies and efficiencies gained in one of experts. This panel, comprising serving area impinged on another or the overall ef- military and civilian members, functional ex- fectiveness of the unit. In other words, did perts in the chosen target functions, costing the commanding officer streamline too specialists, and superior commanders, would much or in the wrong places? The answers to review, critique and approve each MEEOS these questions can be truly found only proposal and related implementation plan. through the implementation of a MEEOS In Phase III, the approved MEEOS, Step. As long as the non-core activity is with any amendments and/or clarifications owned by the military, commanding officers incorporated therein, would be returned to will be able to make adjustments to over- the commanding officer for implementation. come problem areas or to address unfore- The MEEOS and implementation plan would seen challenges. However, once a non-core then be signed by the commanding officer activity is contracted out, it is highly likely and published. By assigning his name to the that the Depart-ment would have to pay a report, the CO would gain ownership of the premium to make any amendments; flexibil- process and responsibility for the subsequent ity and responsiveness might be lost to the results. It also represents his public procla- rigours of private sector negotiations. mation that the unit MEEOS is the best or- The fundamental underpinning of this ganizational structure possible under the approach is a heartfelt belief that the mili- cur-rent military construct. tary knows its business better than anyone During the implementation phase, else does and, when given the opportunity, Phase IV, of 6 to 12 months, depending on can make the necessary tough decisions. the size of the base/unit, the commanding The proposed MEEOS process would be officer will document and track actual
8 changes and savings against the proposed More-over, the MEEOS Step ensures that MEEOS. In addition, he will also document any streamlining efficiencies and/or cash all unforecasted ramifications associated with savings are maximized and retained within implementing the MEEOS. In this scenario, the Department before the MEEOS is of- unsustainable taskings could easily be iden- fered up for competition against private in- tified and the ramifications analyzed. Issues dustry. Should the MEEOS assumptions be like incremental instructor taskings, summer proven wrong during the implementation or cadet camp taskings, UN or NATO mis- phase, the Department could still adjust the sions, Remembrance Day ceremonies and end-state posture. Under the contracting out support to domestic operations could be option, the Department might have to pay a factored into the Review Process. The bene- premium to expand capacity beyond the fit of this process is that the Department hypothetical MEO numbers. maintains the ability to document and react The MEEOS Step outlined above to unforecast and unforeseen complications would appear to be sound in theory. How- arising from the implementation of the ever, the real test of any new idea or initia- MEEOS. An independent review of a hypo- tive is in the implementation. Although not thetical MEO would not provide such granu- widely known throughout the Canadian larity of detail and decision making support. Forces (CF), the recently established Cana- Under the MEEOS Step the Department dian Forces Recruiting, Education and Train- retains the ability to adjust the end-state to ing System (CFRETS)30 provides an inter- allow for such changes, and in doing so al- esting and concrete example of what can be lows for longer-term factors to effect and done when this process is followed and sup- adjust the end-state establishment posture or plemented with outstanding leadership and a savings estimates. The MEEOS process is a full responsibility and accountability frame- complete and verifiable process that could work. form the benchmark for any follow-on ASD option such as contracting out. THE CFRETS MODEL — A PRACTI- CAL EXAMPLE OF MEEOS In Phase V, assuming the MEEOS has been established and implemented, the Shortly after the ASD initiative was base or unit is said to have the most efficient formalized within the Department, CFRETS and effective organizational structure possi- raised concerns about the undue emphasis ble under a Departmental construct. It is at and pressure placed on contracting out to this point that the MEEOS could be offered private industry. Looking at the ASD pro- to compete with private industry. If private gramme from a macro perspective, CFRETS industry can provide the same basket of ser- saw the inherent benefits associated with vices as stipulated in the MEEOS at a implementing a more structured and meas- cheaper price and with the same standards of ured approach to the ASD Review Process. service, then the MEEOS should be con- CFRETS, adopting the TBS’s multifaceted tracted out to private industry. The com- approach to ASD, defined ASD as any “ac- manding officer has, after all, certified that tion or actions taken to deliver current task- the process or the base is ready for competi- ings and/or responsibilities in a more effi- tion with the private sector. This process cient, effective and economical manner.”31 de-mands accountability and verifiability CFRETS recognized and encouraged the within the Department and discourages consideration of the full spectrum of ASD hasty decisions based on short-term factors.
9 Table 3 — CFRETS Operating Budget and Reductions35 Fiscal Year Budget Amount Percentage Change
1995–1996 $178 M 1996–1997 $154 M –13.5% 1997–1998 $143 M – 7.1% 1998–1999 $111 M –22.4% 1999–2000 $109.7 M – 1.2% TOTAL –$68.3 M –38.4% options initially proposed by the TBS, from haustive process review, one activity and one contracting out to forming partnerships with position at a time. So what did CFRETS ac- community colleges. Admittedly, the prima- tually accomplish? y focus was not on contracting out, the focus was on re-engineering and restructuring from In very simple terms, CFRETS had an within. To say that the CFRETS model was operating budget of $178M in fiscal year successful would be an understatement. (FY) 1995/96 with a further $60M in requests for additional funding, bringing the total to In the OAG Report on ASD, the Audi- $238 million. In the subsequent four years, tor General reported that DND had revised its the incremental funding requests were elimi- initial ASD estimates for year-over-year sav- nated and CFRETS’ funding base decreased ings. For 1999, the savings estimate was re- to $111M by FY 1998/99. At the same time, vised downward from $200M to $68M. In CFRETS was directed to cut in excess of 600 the out-years, the 2003 savings estimate of military positions. However, the military re- $350M per year was adjusted to a 2004 esti- ductions were extracted from CFRETS’ estab- mate of $175M a year.32 However, it should lishment but not directly costed. The total be noted that these figures do not include one funding adjustment within CFRETS between cent of the savings realized within CFRETS FYs 1995/96 and 1998/99 was thus some during the same period. The reason for this is $67M in real budget dollars or $127M if the that both the Department and OAG defined elimination of the requests for incremental the “savings benchmark” in terms of contract- funding is included. By factoring in the mili- ing out or in-house bids. Neither organiza- tary salaries, a further $25M in savings could tion acknowledged nor reflected the savings be claimed. realized through other ASD options. CFRETS submitted its ASD reports on a In this environment of such extraordi- regular basis to ADM (HR Mil) only to find nary resource reductions, one might suspect that they were never included in the DND that activities within CFRETS would have ASD Status Reports.33, 34 The simple reason been adversely affected and that recruiting, ed- is that the CFRETS initiatives were not “front ucation and training had to have suffered. In cover” material nor were they focused solely reality, CFRETS’ activities increased in al- 36 on con-tracting out; the savings were realized most every sector. Figure 1 is a depiction through sheer determination to conduct an ex- of CFRETS’ budget charted against total training days and recruit applicants.
Figure 1 – CFRETS Historical and Future Trends
10 Funding vs Training and Recruiting Statistics
Total RET versus Total CFRETS Budget
700 $190
$180 600 178 d 622 622 622 622 621 $170
482 ) 500 $160 154.5 400 $150 340 356 418 300 $140 142.8 $130 Applicants (000s) 271 200 120.2 Funding ($millions $120 Total All Training Days an 100 118.1 119.2 118.1 118.1 118.1 118.1 $110 0 $100 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 Fiscal Year Training Days plus Applicants Funding Baseline
As can be seen in Figure 1, CFRETS’ moved forward. Similar adjustments were funding envelope has decreased signifi- made at the Canadian Forces College and at cantly whilst demand for training days and the Royal Military College and serve further recruits applications have increased substan- to illustrate the benefit of a MEOOS process. tially. It is interesting to ponder what would have hap-pened if the non-core activities in The key to the CFRETS strategy was CFRETS had instead been contracted out to not only the MEEOS methodology but also private in-dustry in 1995. Two key points an extraordinary focus on resource man- emerge: first, the Department would have agement. The Comd CFRETS made re- lost the efficiencies and effectiveness real- source management a key success factor ized through pro-cess reviews and re- and, thus, he directed every commanding engineering; and secondly, the private con- officer to be-come personally involved in tractor would have billed DND for all train- the allocation and utilization of assigned ing demands in excess of the contracted resources. Quarterly budget reviews were level. In other words, DND would have lost implemented and formation commanding on both counts. officers were held ac-countable for allocated resources. In those instances where forma- Another benefit of the CFRETS ap- tion commanders could not substantiate proach was the ability to reassign resources funding levels or priorities, the funds were to meet approved priorities in accordance removed and held for reassignment. Forma- with the CFRETS Business Plan or to cor- tion commanders were specifically held ac- rect initial restructuring estimates. For ex- countable for items outlined in their individ- ample, Recruiting Services forecast person- ual business plans. As much as business nel savings of 30% over a three-year period. plans are disliked and distrusted within the However, through the implementation phase, Department, they can, when prop-erly used, Recruiting Services could not realize its end offer an outstanding “accountabil-ity” tool. state targets without compromising its oera- The CFRETS strategy required units tional capabilities. CFRETS, on the other to streamline operations and activities using hand, simply adjusted the end state and the full spectrum of ASD options available
11 to ensure that training and support services cate programme re-engineering from within could be maintained with the same or a re- (MEO), it is still nothing more than a hypo- duced level of resources. The adoption of a thetical or paper exercise that must be com- MEEOS-like methodology worked well in pleted in 90 days. The revised ASD Review CFRETS and it is not unreasonable to as- Process champions short-term benefits with- sume that its adoption elsewhere in DND out due regard for the longer-term implica- would yield similar results. tions of such decisions. The proposed re- forms do not go far enough and thus the ASD CONCLUSION Review Process remains fundamentally In the foreseeable future, it is highly flawed. unlikely that the Government of Canada will If the goal of an ASD strategy is to walk away from its stated priority of “getting gain economies, efficiencies and improved government right” through the advocacy of measures of effectiveness, that ASD strategy innovative programme delivery and change must not only theorize and hypothesize ab- management. The TBS ASD framework pro- out the future structure on non-core activi- vides all Government Departments with a ties, it must take reasonable steps to prove structured methodology for redesigning pro- that the proposed end state is feasible. This gramme delivery within an environment of can be done only through practical imple- continually restrained resources. DND, like mentation. Within a military context, the all other Government Departments, is faced consequence of error must be considered with the challenge of being asked to do and considered very seriously. Once a non- more with less. core activity is contracted out it is highly Although the Government ASD unlikely that the activity could be reconsti- framework recommended the consideration tuted if the working assumptions are proven of a wide spectrum of ASD options, from wrong. Moreover, once the activity is con- negotiated partnerships to activity termina- tracted out, the cost of that service will be tion, DND has so far focused its attention determined by the process owner and, thus, almost exclusively on the contracting out of the Department may not be able to control non-core activities to the private sector. future costs. Through the promulgation of its initial ASD principles, the Department unfortunately em- The adoption of a formal MEEOS barked upon an ASD strategy that encom- Step in the ASD Review Process would al- passed an inherent bias towards cost cutting low the Department to field-trial its recom- and contracting out at the expense of promot- mendations and afford an opportunity for ing innovative change management from commanding officers to amend structures within. and processes based on real-world develop- ments. The proposed MEEOS Step does not The initial ASD strategy, when cou- advocate a massive change to the ASD Re- pled with problems in ASD training, man- view Process; it simply recommends a agement oversight and the costing process, change in focus. The MEEOS proposal is meant that the initial ASD Review Process built on the belief that the military knows its was not only prone to errors but also flawed. business better than anyone else does and The recently proposed introduction of an that it has the prowess to make the required MEO Step into the ASD Review Process can changes. The MEEOS Step advocates that be perceived as a positive development. Al- command-ing officers must be afforded the though the proposed MEO Step does advo- necessary time to develop and implement
12 site-specific MEEOSs, as the current 90-day assess their activities and programmes against the window al-lotted to develop a site-specific fol-lowing six guidelines or tests: first, Public Inter- est Test — does the programme area or activity con- MEO is con-sidered totally inadequate. The tinue to serve the public interest?:; second, Role of adoption of a MEEOS Step does not attempt Government Test — is there a legitimate and neces- to eliminate the possibility of contracting sary role for government in this programme area or activity?; third, Federalism Test — is the current role out to the pri-vate sector; it simply recom- of the Federal government appropriate, or is the pro- mends that inter-nal reviews be conducted gramme a candidate for realignment with the prov- prior to placing the non-core activity in com- inces?; fourth, Partnership Test — what activities or petition with the pri-vate sector. The adop- programmes should or could be transferred in whole or in part to the private/voluntary sector?; fifth, Effi- tion of a MEEOS Step, when augmented ciency Test — if the programme or activity contin- with a structured and stringent responsibility ues, how could its efficiency be improved?; and sixth, and accountability resource framework, is Affordability Test — is the resultant package of pro- key to achieving the desired end state. grammes and activities affordable within the fiscal constraint, and if not, what programmes and activities The constant requirement to stream- would be abandoned? Source: Treasury Board of Canada Secretariat, “Alternative Service Delivery: line activities, especially non-core activities, ASD Context”
13 10Ibid,
14