VICTORIA, British Columbia – Canada's Department of National Defence is looking to send more maintenance work to private companies and improve efficiency on supporting weapon systems as it tries to save money.

The new program called the Sustainment Initiative is slated to get underway in mid-June, according to a report produced for the Department of National Defence (DND) and obtained by Defense News.

The DND spends CDN $2.5 billion (US $1.8 billion) annually on maintaining military equipment, according to the Dec. 17, 2015 Sustainment Initiative Business Transformation Strategy Report, written by the KPMG consulting firm. Much of the work is done by federal government employees at locations across the country, while industry also takes on a share of maintenance operations.

But the current system is "unsustainable," according to the report.

The DND wants to make maintenance operations more efficient and involve industry at a greater level. DND spokesman Daniel Le Bouthillier said the initiative is being launched with other federal government departments involved in defense procurement and in close collaboration with the defense industry.

Any savings from more streamlined and efficient maintenance procedures for equipment would then be redirected into priority areas such as purchasing new equipment or supporting ongoing operations, according to the report.

"Clearly value for money is a key element and flexibility is a key element," said Andre Fillion, chief of staff for the assistant deputy minister for materiel at the DND.

"It's about hitting the right balance so we can get the job done."

Industry sources say they are closely following the initiative as it could expand their role for in-service support of warships, aircraft and vehicles. The initiative has strong support from both the DND management and industry, the KPMG report pointed out.

The DND hopes to use the Sustainment Initiative for the new Arctic Offshore Patrol Ships and the Joint Support Ships. Construction of the Arctic vessels has begun and the first is expected around 2018. Construction of the Joint Support Ships won't start until 2017 and the first vessel is not expected to be operational until 2020.

But John MacLennan, president of the Union of National Defence Employees, said his organization is concerned the initiative is simply a way to transfer work currently done by federal government employees over to companies.

Federal employees handle ship repairs, inspections on hulls and on-board systems and work on sonar, radars and other equipment. In addition they maintain combat aircraft and vehicles such as tanks. They are also involved in logistics support and running warehouses containing equipment parts.

"There is this belief in the DND that private companies can do a better job than in-house staff but that is simply not the case in our view," MacLennan said. "Having your own staff to work on equipment gives you the advantages of flexibility and expertise that the private sector can't match."

Fillion said the Sustainment Initiative is not aimed at reducing the DND's workforce but has a goal of increasing military readiness and saving money by improving how equipment is maintained.

The DND could very well find that a case could be made that it is more efficient to use additional federal government employees in the maintenance of certain weapon systems, he noted.

But MacLennan pointed out that there appears to be a shift at the DND toward more use of the private sector to provide various services.

On Jan. 25, the Canadian government, at the request of the DND, received information from the private sector on the provision of support vessels such as tugboats and fireboats for naval bases on the east and west coasts, MacLennan noted.

Such services are currently provided by federal employees and using government-owned vessels.

If a contract was issued for those services, the winning bidder would be required to provide their own fleets and crews. Industry has been informed that a contract for such services, if approved, would run for up to 25 years.

DND spokesman Evan Koronewski said the department is developing a business case analysis related to the replacement of its fleet of large tugs and fireboats. "The intent of this enquiry is to identify the availability and budgetary costs for the provision of tug and fireboat services within the commercial market," he explained.

But at this point there is no commitment to a contract with industry, according to the DND.

Email: dpugliese@defensenews.com

David Pugliese is the Canada correspondent for Defense News.

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