Defence procurement strategy
Learn about how the defence procurement strategy is improving Canada’s defence procurement practices.
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Improving defence procurement
The defence procurement strategy is working to improve procurement practices while maximizing economic benefits for Canadians, through the application of:
- early and continuous engagement
- timely and effective decision-making
The strategy was shaped by industry engagement and recommendations from independent advisors including the:
- Canada First: Leveraging Defence Procurement through Key Industrial Capabilities report by Tom Jenkins
- Aerospace Review Report by David Emerson
The objectives of this approach include:
- Delivering the right equipment to the Canadian Armed Forces and the Canadian Coast Guard in a timely manner
- Leveraging our defence equipment purchases to create jobs and economic growth in Canada
- Identifying key industrial capabilities to ensure defence procurements drive innovation, exports and growth of firms
- Implementing an export strategy to support international sales opportunities and participation in global value chains
- Streamlining defence procurement processes—ensuring streamlined and coordinated decision-making for defence and Canadian Coast Guard procurements
- Reviewing National Defence’s delegated authority to purchase goods and services to achieve more efficient procurement practices
Delivering the right equipment to the Canadian Armed Forces and the Canadian Coast Guard in a timely manner
The procurement process uses early and continuous industry and client engagement to:
- better understand available industry solutions
- shaping requirements and identifying innovative solutions to government needs
- share information between industry and government
- allows for an open, fair and transparent process
- provide industry with a better understanding of capability requirements and desired benefits to Canada
- limits the risk of problems emerging later in the process
- ensures cost-effective and timely delivery of the right equipment for the CAF
- facilitate more timely and informed decision-making by government
In addition, National Defence’s Independent Review Panel for Defence Acquisition (IRPDA) provides a third-party challenge function within National Defence. This function supports the review of requirements for major projects and associated resource allocation. This will result in greater up-front clarity in the procurement process and help validate military requirements, enabling more timely resolution of contract letting.
Leveraging our defence equipment purchases to create jobs and economic growth in Canada
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 are assessed using value propositions. This assessment motivates bidders to put their best proposals forward, as industrial considerations directly influence which bidding firm wins a contract. The value proposition guide outlines our approach to leverage economic benefits when assessing procurements and provides guidance to industry on how to develop their value propositions.
The guide outlines 4 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 defence and Canadian Coast Guard procurements over $100 million. Eligible procurements valued between $20 and $100 million are also reviewed to determine whether a value proposition may be applied.
Identifying key industrial capabilities to ensure defence procurements drive innovation, exports and growth of firms
Canada’s key industrial capabilities inform potential economic benefits of individual procurements so that they:
- meet the needs of the Canadian Armed Forces
- increase the competitiveness of Canadian firms in the global marketplace
We’ve 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 value 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 of Canada 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
Streamlining defence procurement processes—ensuring streamlined and coordinated decision-making for defence and Canadian Coast Guard procurements
The Defence Procurement Secretariat within PSPC manages a working group of ministers, supported by a Deputy Ministers Governance Committee, to oversee key decision-making in the implementation of defence procurement projects.
The secretariat’s mandate includes:
- coordinating an implementation approach to defence procurements across multiple departments
- National Defence
- Innovation, Science and Economic Development Canada
- Global Affairs Canada
- Fisheries and Oceans
- Fisheries and Oceans
- Canadian Coast Guard
- ensuring rigorous advice is provided to governance committees
- this enables timely, effective discussions and decisions on critical issues such as trade-offs between capabilities, costs and benefits to Canada
- supporting the early and continuous engagement of industry throughout the procurement process
- engaging independent advice to strengthen the integrity of the procurement process or individual procurement projects
- monitoring progress of procurements to support the timely, effective resolution of issues
Reviewing National Defence’s delegated authority to purchase goods and services to achieve more efficient procurement practices
To support the streamlining of defence procurement processes, National Defence’s delegated authority to procure defence supplies has been increased to up to $1 million. This number will increase to $5 million by April 2019.
This is expected to provide increased efficiency in the purchase of goods of lower value and complexity by reducing the transaction overhead cost of working between multiple departments.
Modernizing our approach and collaborating with industry
We are finding innovative ways to improve defence procurement, through modernized approaches and collaborating with industry. As part of this work we are using 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.
Review of Canada’s contract cost principles and profit policy
In 2015, PricewaterhouseCoopers (PwC) reviewed how we determine contract price for defence procurement. The review found that the guidance we used to determine contract price was old and needed updating to keep pace with procurement in Canada and abroad. PwC recommendations are helping us improve our price policies and practices.
- Backgrounder: Piloting a streamlined approval process for defence procurements (February 14, 2019)
- Minister Qualtrough CANSEC Speech (May 31, 2018)
- Defence Investment Plan (May 30, 2018)
- Defence Capabilities Blueprint (May 30, 2018)
- State of Canada’s Defence Industry Report (May 25, 2018)
- Strong, Secure, Engaged: Canada’s defence policy (June 7, 2017)
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