Defence Procurement Strategy

Learn about how the Defence Procurement Strategy is improving Canada’s defence procurement practices.

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Improving defence procurement

Established in 2014, the Defence Procurement Strategy is a government-wide initiative to improve defence procurement involving four core federal departments (National Defence, the Canadian Coast Guard, Public Services and Procurement Canada, and Innovation, Science and Economic Development). Each department is responsible for a distinct aspect of the procurement process. These departments are working together to develop more efficient, timely and streamlined processes.

  • National Defence (DND) and the Canadian Coast Guard (CCG):
    • define requirements
    • develop specifications
    • analyze associated options and cost estimates
    • obtain policy and funding approval
    • provide technical expertise and manage integration of equipment or services during the project or procurement
  • Public Services and Procurement Canada (PSPC):
    • leads the stakeholder and industry engagement before and during the procurement process
    • develops the procurement strategy
    • leads the solicitation process
    • oversees the technical benefits and price evaluation
    • manages the resulting procurement, contract and vendor performance
  • Innovation, Science and Economic Development (ISED):
    • administers the Industrial and Technological Benefits (ITB) Policy
    • makes recommendations on the application of the policy to procurements
    • determines evaluation criteria intended to leverage economic benefits from resulting contracts and export components of those criteria, with advice from Global Affairs Canada (GAC)
  • The strategy was shaped by industry engagement and recommendations from independent advisors including the:

Delivering the right equipment to the Canadian Armed Forces and Canadian Coast Guard in a timely manner

Defence procurement is shaped by Strong, Secure, Engaged: Canada’s defence policy (2017), and the National Shipbuilding Strategy, and is guided by the Defence Investment Plan (2018). Together with the CCG Fleet Renewal Plan, these help PSPC ensure that the Canadian Armed Forces (CAF) and the CCG are well-equipped and supported.

The government uses early and continuous industry and client engagement to:

  • better understand available industry solutions
  • share information between industry and government
  • provide industry with a better understanding of capability requirements and desired benefits to Canada
  • facilitate more timely and informed decision-making

In addition, DND’s Independent Review Panel for Defence Acquisition provides a third-party challenge function within National Defence. The panel supports the review of requirements for major projects and associated resource allocation. This results in greater clarity in the procurement process from the beginning and helps validate military requirements, enabling the timely awarding of contracts.

Streamlining and modernizing defence procurement processes and ensuring coordinated decision-making

The government is finding innovative ways to improve defence procurement and decision-making through modernized approaches and collaborating with industry.

Defence Procurement Strategy Secretariat

In 2014, the government created a Defence Procurement Strategy Secretariat within PSPC to coordinate and implement a new approach to defence procurement across multiple departments, including DND, CCG, ISED and GAC. The Secretariat provides advice to governance committees.

Applying a streamlined approach for defence procurement approvals

As part of efforts to modernize and streamline procurement, in late 2018 PSPC launched an 18‑month project piloting a streamlined approval process for defence procurements.

This approach is intended to help CAF members receive the equipment they need faster, without compromising on oversight and due diligence.

Reviewing the current National Defence delegated authority

To support the streamlining of defence procurement processes, DND’s delegated authority to procure defence supplies is expected to be increased to $5 million in 2019. This is expected to provide increased efficiency in the purchase of goods and services of lower value and complexity.

Reviewing Canada’s contract cost principles and profit policy

In 2015, PricewaterhouseCoopers (PwC) reviewed how PSPC determines contract pricing for defence procurement. The review found that the guidance used to determine contract pricing was old and needed updating to keep pace with procurement in Canada and abroad. PwC recommendations are helping the government improve pricing policies and practices.

Leveraging defence equipment purchases to create jobs and economic growth for Canadians

The Industrial and Technological Benefits (ITB) Policy leverages defence and security procurements to create highly-skilled jobs and economic growth across the Canadian economy.

Bidder proposals may be assessed using value propositions. This assessment motivates bidders to put their best proposals forward, as industrial considerations directly influence which bid wins a contract. The value proposition guide outlines Canada’s approach to leverage economic benefits when assessing procurements and provides guidance to industry on how to develop their value propositions.

The guide outlines four criteria that may be used to evaluate value propositions:

  • supporting the development of Canada’s defence sector across the country, including small and medium-sized enterprises
  • enhancing the participation of Canadian companies in global supply chains
  • investing in research and development in Canada
  • demonstrating export potential

The policy, including the value proposition, is applied to DND and CCG procurements over $100 million. Eligible procurements valued between $20 and $100 million are also reviewed to determine whether a value proposition may be applied.

PSPC uses the principles of managing intellectual property in defence and marine procurement to help improve defence procurement outcomes and advance the broader Canadian socio-economic agenda.

Identifying key industrial capabilities to ensure defence procurement drives innovation, exports and growth

Canada’s key industrial capabilities inform potential economic benefits of individual procurements so that they:

  • meet the needs of the CAF and the CCG
  • increase the competitiveness of Canadian firms in the global marketplace

PSPC identified 16 key industrial capabilities that represent areas of emerging technology and established domestic capabilities, which are globally competitive and essential to national security. This gives industry a greater understanding of where to focus investments in preparation for upcoming procurements.

Implementing an export strategy to support international sales opportunities and participation in global supply chains

Canada’s defence industry is a key driver of the Canadian economy. The Export Strategy for Defence Procurement aims to enhance the international competitiveness of the Canadian defence industry and improve the economic outcomes of defence procurement.

The government helps Canadian companies capitalize on opportunities in defence-related sectors by:

  • promoting Canada as a destination of choice for defence innovation
  • focusing on the markets that hold the greatest promise for Canada’s defence industry

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