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Canada Unveils Sweeping New Procurement Rules

Priority on Offsets, Job Creation

Feb. 5, 2014 - 03:45AM   |  
By DAVID PUGLIESE   |   Comments
Canada put on hold a decision to purchase F-35s following allegations that the government misled the public on the jet's cost. Under new procurement rules, the government will provide more information to industry about military procurements.
Canada put on hold a decision to purchase F-35s following allegations that the government misled the public on the jet's cost. Under new procurement rules, the government will provide more information to industry about military procurements. (Tom Reynolds)
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VICTORIA, BRITISH COLUMBIA — Canada’s government announced on Wednesday the creation of a defense procurement secretariat, along with initiatives meant to streamline the purchase of equipment for the military and Coast Guard.

The government will also put more emphasis on leveraging purchases of defense equipment to create jobs and economic growth in Canada, said Diane Finley, minister of Public Works and Government Services. That department oversees government procurement.

Finley said the changes in what the government is calling its Defence Procurement Strategy will “create high paying, highly skilled jobs right here in Canada.”

The details of the strategy were announced by Finley and Defence Minister Rob Nicholson in a statement Wednesday morning.

“Today’s launch of the Defence Procurement Strategy reaffirms the government’s commitment to develop and maintain a first-class, modern military that is well-equipped to take on the challenges of the 21st century,” Nicholson said.

The government’s initiatives closely follow a report from the Canadian government’s procurement adviser issued last year, which recommended that foreign defense companies be required to provide domestic companies with quality offset work in a number of key areas such as cybersecurity, training systems and soldier protection.

The 88-page report, titled “Canada First: Leveraging Defence Procurement Through Key Industrial Capabilities,” was aimed at addressing growing frustration among Canadian defense firms that complain they have seen little quality work from the billions of dollars of military contracts announced in the past several years by Canada’s Conservative Party government. Those include the purchases of tanks, helicopters and transport aircraft.

The report from Tom Jenkins, special procurement adviser, noted that the Canadian government intends to invest CAN $240 billion (US $216 billion on new defense equipment in the next 20 years.

It recommended developing, at least initially, key industrial capabilities in six areas: Arctic and maritime security, soldier protection, command and support, cybersecurity, training systems, and in-service support. Foreign firms that want to bid on Canadian defense contracts would be required to provide offsets in those areas and would receive better consideration for their bids if they provide Canadian companies with work on international programs.

In their announcement Wednesday, Finley and Nicholson noted that an export strategy will also be developed to support international sales of Canadian defense products. Key industrial capabilities that the government wants to promote among industry will also be identified and highlighted.

The government also plans to provide more information to industry about military procurements, including informing companies early on about projects and publishing an annual acquisition guide to outline its priority programs.

The Defence Procurement Secretariat to be established within Public Works would provide expertise needed to oversee purchases of military equipment. The secretariat will use the principles of early and frequent engagement, independent advice and efficient decision-making to streamline defense procurement processes, the ministers stated.

An independent, third-party Defence Analytics Institute to provide expert analysis to support the objectives of the Defence Procurement Strategy will be established.

Tim Page, president of the Canadian Association of Defence and Security Industries, called the move a “critical and positive milestone” that will enhance security and economic interests. The association represents more than a 1,000 defense and security companies in Canada.


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