Explaining My Current 2% Skepticism

 While I have long been critical of the 2% metric for whether one is a good NATO ally or not--that is, does a country spend at least the equivalent of 2% of its GDP on defense--the current skepticism is about whether Canada can reach that target by 2032 as the Trudeau government hastily promised.  Let me listicle the reasons why Canada will fall short:

1. The decision was made hastily without a plan, just months after a long-awaited defence policy update made no commitments to get to 2% and the commitment to get to 1.76% was probably unrealistic.  
2. The most obvious obstacle would not be a lack of sincerity by the Liberals (they did dramatically increase defense spending since they came into office, but the growth of the denominator and lags in procurement have meant that they made some progress towards 2% but not as much as hoped), but a new Conservative government.  Pierre Poilevre cares far more about deficits, so his only words about this are aspirational, akin to Harper who helped inject the aspirational language into the 2014 Wales Summit declaration--that countries would work towards getting to 2% ... and then Harper cut defence spending.
3. The Treasury Board is still compelling the CAF and DND to cut spending by $1b as part of all agencies cutting spending.  The best way to start getting to two percent is, um, not to cut spending, but yet that hasn't happened.
4. The personnel crisis.  You can't spend money on salary, benefits, food, training, etc. for those soldiers/sailors/aviators who don't exist.  The CAF is down something like 15% or more (I keep learning the many different ways that recruitment is broken, and I feel bad for LGen Lise Bourgon as she inherited a clusterfuck that seems impossible to uncluster), so that is money that will be unspent.  
5. The subs are not a magic bullet for getting to 2% because procurement takes time.  Unless the government decides to sole source, the competition will take time. They will have to specify the requirements (the one emphasized to me was range under water, the various competitors (South Korea, Germany/Norway, Spain?, Japan, etc) will have to launch bids, the bids will have to be evaluated, etc).  This all is very time-consuming, so there may be a decision to buy a specific set of subs in the next eight years, it is highly unlikely that the navy will receive a single one, let along 12!* by 2032.  If Vegas set the over/under at one sub by 2032, I would bet the under.  Unless Canada pre-pays for the subs (which is not how things work here), the money for the subs simply will not be spent by 2032.
   
6. Canada has learned a lot of lessons from the Russian re-invasion of Ukraine, so there is a long shopping list of stuff that the CAF needs, that if bought, would get Canada closer to 2%--drones, anti-drone technology, advanced artillery, etc.  The problem is that everyone is learning these lessons, and the producers of these things are not really able to produce at scale.  Which means that Canada will be on the waiting list for HIMARS, for example.  Which again means not being able to spend the money allocated for such stuff.
7. Speaking of procurement, one important element of the Defence Policy Update was to hire more defence procurement folks.  That takes time, as those folks don't grow on trees (they do grow at NPSIA).  So, it will take awhile to recruit and train those folks.  

I think Canada will continue to move towards 2% as everything is more expensive, as the previous procurement decisions finally kick in (hey, we finally started building one of the surface combatant ships), and as the personnel crisis gets remediated-ish.   But 2%?  Nope, not gonna do it, as a hasty promise will meet the harsh realities of messed up procurement, broken recruitment, defence contractor collective action problems (will Davie stick a spoke in the sub wheel by trying to get domestic production of subs which would be so expensive and so time-consuming that the subs would take  many decades?) and, yes, politics.

*Re the sub personnel thing, I mentioned on the Hilltimes podcast my skepticism that the Navy could staff 12 subs.  I got push back from a senior naval officer about this, as they argued why they could start training enough submariners (squids) once they have a few operational subs (the navy has ... one) to staff 12 subs.  But that missed my point which was not the training but the recruiting.  This led to a conversation in which the officer gave a number of examples of how broken recruiting is, so, no, in my humble and semi-informed opinion, the navy won't be able to staff 12 subs.  

 

 

Looking for Some Defence Tech? My Day at CANSEC

Eric and I next to
the one staffed
aircraft on display

 

 Yesterday, I spent much of the day at CANSEC, which is the tradeshow for the Canadian defence industry.  I was able to go because one of the former participants in the CDSN Summer Institute, Eric Dion, had an invite and could have me as his +1.  I was most grateful because of two basic elements of my personality: I am deeply curious and I have a serious case of FOMO (fear of missing out).  And, yes, some good networking opportunities as well--mostly the government types, less the industry types, including one senior officer who will be on the podcast soon.

I missed the protests the day before--perhaps because the Minister of National Defence was there.  Some may wonder if going to this show makes me a tainted part of the military-industrial-academic complex.  I, of course, don't think so, since I am critical of the defence contractors most of the time, and their swag wasn't that great.  If they had given me a ride in an F-35, maybe I'd be a bigger fan?  Anyhow, as always, I think engagement pays off.  I learned a lot from walking the floor and chatting with people.  Such as:

• 

  tear gas antidote!
  

  What a vast array of firms/products there are.  I was going there expecting mostly guns, armored vehicles, planes, artillery, etc.  But armies do run on their stomachs/logistics, so there were folks pushing their cables, their popup tents/buildings, clothing (lots of arctic gear), red team hackers, drones, medical stuff (including antidotes to tear gas--I was tempted to ask if they sold to protest groups), and much more.  There were artillery shells, but not much arty, no tanks.  But all of the major shipbuilders of Canada and many from Europe were there. The biggest displays/terrain were Lockheed, General Dynamics, and a few of random initial folks.

  

  Small pic, big display
  

  

  They even had
  firms pushing their
  boxes and racks!
  

 

• 
• There's more than one way for a firm to get attention. These folks wearing Pac-man suits also had a pac-man game.  They obviously knew that their market is folks in their mid-50's, I guess.

 

 

 

 

• The place is kind of like Disneyland or Universal Studios--if you want to do the coolest things, go their first thing.  I didn't, so I didn't do any of the flight simulators.  
  
  
• Carleton STEM undergrad are quite employable, as I met several on the convention floor, part of various firms hawking their wares.
• 
  Culture change has a long way to go in this sector as a friend from CPCC (the culture change agency) that the only non-dude tactical dummy in the place was a tactical dog dummy.  I did spot one firm with a pregnant mannequin for a display of base layers, but apparently women in infantry is not something these folks are really building for. 
• If you grab some swag from a firm, you end up talking for a few minutes.  The swag was not that great, so I was not so motivated.  My partner in crime was more interested in each spot, so he did a lot of chatting.  I didn't have that many questions for most of the firms, but I did learn that ...
  

  

  The GD LAV display
  

• Canada sent its best light armored vehicles, not its castoffs, to Ukraine, as the General Dynamcs display of their ambulance variant (nice play to Canadians who prefer not to think about the  shooting part of, um, war) had friendly folks tell us about their systems.  The outside display area was otherwise not that exciting.

 

 

 

• Speaking of Ukraine, Zelensky was used to sell some pop up buildings:

• Drones are hip--heaps of drone displays 
  

  
  
  

• •  
   
• •  
   

•  

   

   
•  My fave display was explained by an aforementioned Carleton undergrad STEM student.  It featured an anti-drone missile system, where the missiles drop rubber spaghetti when they get close to the drone, aiming to foul up the drone's propellers (the red thing in the banner behind the system).  The missiles can be 3D printed!  One key in the anti-aircraft fight is whether one's system's ammunition is cheaper and easier to make than the incoming threat. 
   

• We are coming close to the technicals with this GMC Colorado SUV converted to Mad Max vehicle

 

 

 

• 
  This comms company caused me the greatest temptation to snark about my work on multilateral military ops--that these systems may be filled with curses as countries learn what their allies can't/won'
  t do.
  
  
  

• 

  
  

  That defence contractors hate the offset game but play it anyway.  I talked with one defence contractor at a reception two days before about how much it adds costs to appeal to Canadian politicians by promising jobs in Canada.  They apparently need tech to help figure this stuff out -->
  

• To play the game, they do stuff like this:
  

 

 

 

 

 

 

 

 I raised with one defence contractor that those jobs in Canada (which might not be the best investment for jobs) depend on selling weapons to unsavory places like Saudi Arabia, and they were, like, yep.

•  That baby F-35s like to cuddle:

 

 

 

 

 

 

 

 

 

• The defence community is small.  Great to bump into some twitter pals.
   

 

CDSN COVID Response Briefing Note, Procurement Edition

Last week, members of the Canadian Defence and Security Network, along with networks funded by the Department of National Defence (SPNET [Concordia-based group of engineers working on tech-related policy, like AI], the Defence and Security Foresight Group,and the North American and Arctic Defence and Security Network) released a briefing note, based on a teleconference we held via zoom to discuss a series of questions that DND had given us and some we had developed.  I am discussing each piece, day by day.  I discussed Operations on Wednesday, Security on Thursday, and Personnel on Friday. Caveats: I have less knowledge of procurement issues, so take my comments here with a larger grain of salt than usual; and I did not sit in on that group's discussions.  

What are the assumptions for 10% or 20% reductions in the defence budget?
Particularly in terms of the timing and process involved in either set of cuts?
• Govt may allow departments to identify potential cuts or it may freeze spending and ask departments to find savings. Unclear whether/how cuts may play out.
• Avoid equal misery. Some parts of the CAF will have to be cut further than others, cutting proportionately leads to significant inefficiencies.
• Focus on outputs and enterprise level optimization as a means to generate efficiency and savings.

The first question was challenging as we have no idea what the government will do in reaction to big budget deficits.  It could be that the deficits are so big that cutting the defence budget is not going to happen--that the deficits will just be lived with.  The Liberals are not a party of Austerity, not these days, so it is not clear that they will feel compelled to cut the budget.  However, the DND/CAF budget is the most cut-able part.  So, the key then is to have a good strategy.  Just cutting across the board is a bad idea--it lives some projects just short of completion, the military without some crucial stuff, and other, less essential projects getting more than needed.  Real cuts would require real prioritizing--what is necessary, what is important but not essential, and what would be good  but can be foregone.  And that would require another Defence Review and another one or half dozen CDSN zoom conferences. 
Likewise, rather than just focusing on what goes into the machine, focus on what is produced and how each entity can produce more efficiency to get the most out of the budget.












How can DND/CAF help to grow the economy following COVID-19?
• As demand was cut by order of government, there is no need to stimulate economy.
• If stimulus is desired, spending on the CAF is not the best tool. Focus should be on lump sum payments to low income earners and infrastructure investments.

The economists in our group had no patience with the ideas that (a) Canada needs a stimulus post-covid and (b) spending on the CAF to stimulate the economy.
First, because the economy was brought to a stop by the disease and by governments' decisions, there is less need to stimulate the economy to get it moving.  Opening up the economy will likely suffice.  Second, throwing money at the military does not really have a multiplier effect on the economy.  The procurement projects are slow and focused so one would not see a big, quick boost across the economy.  Throwing money at personnel might help improve employment a bit, but the force is not that big and can't get much bigger without a lot of work, so, again, marginal impact.  Instead, give the $ those who don't make much money--since they will spend it--and build stuff for the long term so that the deficits today are really investments in the future.  That would probably be mass transit (even if that feels icky in age of masks and social distancing) and green projects to reduce climate change-producing emissions. 

I think I prefer economists giving answers that are not politically appealing, as the last time they gave one that was, Austerity, it screwed things up for a generation.

Tomorrow is our last post from the briefing note--civil-military relations.

CDSN Workshop #1 With A Bullet: Defence Procurement

The Canadian Defence and Security Network has two basic parts: a headquarters that is running all kinds of activities to train, connect, and amplify (the website/twitter account/podcast are the first visible/audible efforts there with much more to come) and five research themes--personnel, procurement, operations, civil-military relations, and security.  Those five themes/nodes/groups/whatever will have workshops and other efforts each year that will hopefully build to five distinct research programs over the first three years of the grant, and then we will re-set and then have five new research programs over the last three years of the grant.

Yesterday, we had our first workshop, and it was within the procurement theme, organized by Philippe Lagassé--a fun irony that procurement moved most quickly.  It brought together individuals (rather senior ones) from the relevant agencies/divisions within the government, from academia, and from civil society.  We did not have any folks from industry, i.e., defence contractors, because that would have impacted what the government officials could say.  That plus Chatham House rules helped to produce a very robust conversation of the challenges facing those trying to get the "kit" to the Canadian Armed Forces, and the efforts they have made to overcome a variety of obstacles.

As someone who does not study procurement--I was there mostly in my capacity as the Director of the CDSN and not as a researcher--I was very much drinking from the firehose.  I didn't understand many of the acronyms, and it took me half of the day to figure out why the "colour of money" mattered (or perhaps not)--whether it comes from operational funds or capital funds.  I learned a great deal and so here are some of the things I picked up along the way.

1. It works!!  That is, the CDSN is an effort to get academics and military and government folks together so that we can understand each other.  The officials gave up a significant hunk of time, which is a precious commodity, to hang out with the academics yesterday, and the exchanges were quite forthright.  So, the efforts over the past five or six years to build this network paid off, and, yes, I am very pleased by that.  
2. The Defence Policy Review that produced the Stronger, Secure, Engaged report has been pretty meaningful.  While the exercise might have been aimed at producing certain results, it did lead to a greater focus and more resources on improving procurement.  The various pieces of that document have become signposts for policy-makers.  While procurement is hardly fixed, the SSE seems to have led to a variety of improvements that make spending more predictable, that have empowered folks at lower levels, and so on.
3. A key aspect of this is that Treasury Board, which holds the money in Canada essentially, and DND have overcome much earned distrust from the past and have figured out ways to move projects, especially less risky ones, along faster.  
4. I have a new favorite acronym: SNICR (pronounced like either the candy bar or a kind of laugh) or Snow and Ice Capability Recapitalization.  It refers to snow removal systems--snow blowers--that the military needs and procures.  
5. Betterment is not just something advertised on podcasts, but language used by Treasury Board to refer to efforts to improve an existing system rather than procure a new one (I think).  I asked why not use "Improvement", but the folks in the room just go along with TB jargon.
6. Talking about risk in this kind of setting is strange.  Why?  Because we can think of at least three kinds of risk--wasting money on a failed program, getting unwanted political attention, and people being at risk of losing their lives.  So, we need to be clear about what we mean by risk as some kinds of risk aversion make more sense than others and some kinds of risk acceptance might be necessary to move more quickly. 
7. The politicization of procurement, as analyzed by Kim Nossal, who was at this workshop, is a real impediment to improving stuff.  Why? Because it creates an environment of risk aversion.  Innovation requires failure--you have to try a bunch of stuff and then keep the stuff that works and accept the wasted money on failed efforts.  But if there are politicians and parties out there willing and eager to blow up any mistake into a major political issue, it deters folks from taking risks and thus stunting innovation.  
8. One way to handle this is to be far more transparent.  That most news stories gain traction after those in office deny that there are problems.  If the parties could agree (holy collective action problem) not to take every bit of procurement bad news and make it a talking point for the most simplistic soundbite in Question Period, we might create an environment where the folks doing procurement take reasonable risks that allow stuff to move faster.
9. Oh, and why do we need to be more agile, moving faster?  Because defence procurement is ultimately about getting better stuff to our troops in the field, in the skies, and at sea so that they are not outclassed by our potential adversaries who are also innovating.  I am not so certain autocrats do procurement better/faster as in such systems, taking risks and then having failures can mean more than political embarrassment--people can get killed.  But still, moving slowly in a high tech environment is not a good way to keep up with one's allies and stay ahead of one's adversaries.
10. Which leads to one conclusion.  We need to discriminate.  That is, we need to develop different procedures and different rules for different kinds of projects.  Stuff involving info technology probably needs a different set of procedures than boots or tanks.  One size fits all does not work, so the question is can we come up with procedures that vary, depending on not just the size of the project but the nature of the thing being procured.  Maybe sole sourced projects (no or little competition) makes sense under certain circumstances rather than being an excuse for one party to crap on another?  

Again, I don't know much about this stuff, but I feel like I have a much better idea of some of the big questions and challenges.  My hope and our plan is for this workshop to lead to not just another one in year two and another one in year three, but a pattern of sustained interactions so that we academics get better data, get a clearer idea of the questions, and that when we start to develop some evidence-based research and policy implications, that we have a receptive audience.  That is one way in which the CDSN research themes will work.  There will be other models in the other themes, where it is less your turn, my turn, your turn, and more co-creation.  The key is that there is a productive conversation going on, and I am so very pleased.  That Phil did a great job bring folks from various realms together, that the government/military folks put in much thought and were quite open about the challenges they faced, that there were great conversations not just between government types and academics but among the government folks themselves.  And that the students (MA and PhD) involved got a great deal out of it.

Money for value, indeed. 

Playing Politics with Defence Procurement? Oh Really?

This is probably not a good time for me to be trashing the defence industry in Canada as tonight I am attending an event which will have many reps from that aforementioned sector: the Vimy Gala.  Superstar Stéfanie Von Hlatky is receiving the Nichola Goddard Gamechanger Award from the Conference of Defence Associations Institute.  Woot for her, so I will be tuxed and attending. 

But this will not stop me from spewing about the latest news and its coverage: that the Liberal government has decided to split the latest pie--maintenance on the fleet of frigates--among the three major shipyards--Seaspan in Vancouver, Irving in Halifax and Davie in Quebec.  Folks are saying that giving some of it to Davie is political as the Liberals want to get votes in Quebec.  Ok, sure.  But this forgets the history of this government, which started with considering the cancellation of a Conservative plan to have work done at Davie to turn a commercial vessel into an interim naval supply ship.  That is the ship/decision that cost VCDS Norman his career because ... Irving was pushing the government to not give Davie any work. 

The larger pattern in Canadian shipbuilding is the effort by Irving to monopolize damn near all of the work--at least the work on the east coast.  They get to build the 15 ships that will replace the existing frigates and the scrapped destroyers AND they get to build a handful of Arctic Offshore Patrol vessels that the navy originally didn't want.  The Liberals claim that Irving couldn't get all of the maintenance work because it was too busy with all of this other work.  While I am skeptical of claims made about defence procurement by all sides, this kind of rings true since Irving does not seem to have the space to build and maintain heaps of ships at one time.  Indeed, the AOPS ships are going first, which means that the frigate-replacements will have to wait.  To be fair, they are also waiting because they had to have a competition for the design of the ships, and, yes, the decision was to go with one for ships that don't yet exist (the British type 26 by Lockheed) instead of the original decision to consider only ships that were already deployed and thus tested.

Anyhow, the media coverage of the maintenance decision makes it appear that the government is pandering to Quebec.  And I get that.  However, that coverage does not seem to reflect that by splitting the work, the government is not pandering to Halifax.  It is anti-pandering in a way since Halifax and Irving have an entitlement syndrome where they think that any piece of the pie that does not go to them is wrong.  Indeed, even though Irving wins in this decision, it does not win enough and since it always seems to motivated by a desire for relative gains (not how much do I get, but how much more do I get than you), it trashes the process.  This then weakens the legitimacy of this government to handle this stuff, and this happens with every government--sore losers trash decisions.

Again, to be fair, the Liberals might have been playing politics by giving Davie some work.  But not giving Davie some work would have also been political.  All procurement is political, and defence procurement is especially so.  The stakes are high, the number of firms are few, the issues are complex, and every Canadian government sucks at it.  I continue to believe that pretty much most, if not all, democracies are bad at defence procurement but in different ways.  The irony here is that the Harper government thought it solved this problem by having a pretty transparent process that was (I think) aimed to make long term commitments to Seaspan and Irving to win votes on both coasts.  What they didn't realize is that instead of getting to hold these ridings (districts) hostage--give us votes and you will get to have these ships/jobs, it turned out the other way: the companies and towns could say--give us the ships, and we will give you votes.  And they have made that promise to all of the parties, so all of the major parties are held hostage.  Ooops.

Thus, my annoyance with the coverage is that it does not consider the counter-factual--that if the Liberals had given all of the work to Irving, that would have been political and Davie would have screamed. 

What is the lesson here about the defence procurement game?

Confirmation Bias: Canadian Defence Procurement Edition

I have been arguing that defence contractors in Canada have been underrated..... as sources of dysfunction.  So, when I read today's story about the defensive strategy of the former Vice Chief of the Defence Staff, Mark Norman, who has been accused of leaking stuff, I find myself nodding my head.  Norman's attorney is going after the Liberal government and specifically the ties between the head of the Treasury Board (key budgetary watchdog) and the Irving Shipbuilding company, which seeks to monopolize all naval defence contracts.

Sure, of course, a guy with ties to the Irvings is in a spot to help them, one who has leaked before.  If it is not true, it is still useful "reasonable doubt" fodder.  I do wonder if the government has any ability to wave off the prosecutors since this is a bad news story timed for the election--that is when the trial will be. 

But to step back and examine my own bias for a second, I have long thought this case was handled poorly, that it made little sense to go after a VCDS for leaks when the entire government (which the defence attorney will prove pretty easily according to this article) leaks like a sieve.  However, this article is pretty much PR for the Norman defence and does not have much else in the way of sourcing.  Which gets to a different existing bias I have--that parliament does not have much of a role in this, and, if it did, it would be operating like Pugliese--via leaks. 

And so, I have to remember leaks do not perfectly portray what is going on but portray reality as the leaker would like it to be portrayed. Media outlets that rely on leaks can get played. I am not saying Pugliese is getting played, but I am not saying he is not. I tend to agree with him that Norman is getting shafted because the Liberals fucked up--they fell for Irving's pressure, started to push against a plan to fill the gap in supply ships via a Quebec firm, and then got caught via a leak.  As it turns out, Davie, the Quebec yard, was able to get the ship transformed and in service--a good news procurement story that might have gone the other way.

I am fond these days of quoting the Dumbledore line about it being easier to forgive other people for being wrong versus admitting they were right.  Seems to me the government of Canada, under the Liberals, should be reading more Harry Potter.  But again, that is my bias. 

Canada's Broken Defence Procurment: Time to Blame the Industry

David Pugliese does an amazing job of documenting the VCDS Mark Norman story about the investigation into his leaking of cabinet confidences.  There is much to the story, and it says much about the state of Canadian politics.  I'd just like to focus on one element of it: the defence contractors.

Whatever Norman's relationship with Davie, a Quebec shipbuilding firm, the key actor here that really starts the controversy is Irving, the shipbuilding firm that has gotten the lion's share of recent defence dollars.  It is responsible for both the Arctic Offshore Patrol ships and the new frigates.  The Seaspan company, on the west coast, is building the rest--supply ships, icebreakers, etc.  Because the RCN's supply ships were falling apart, the idea was to have a ship leased, reconfigured and used until Seaspan could produce the supply ships it is supposed to build.

Ah, but Irving complained, saying that the process was unfair, sole-sourced.  This is kind of funny (and sad) that Irving was not satisfied with winning the big competition, but felt compelled to screw with the minor contract going to the company that had lost the big competitions.  Maybe Irving would be better at this?  Oh wait, Irving is behind schedule on its ships, and a key challenge is it does not (I seem to remember) have enough dry dock space to work on many ships at once.  So, this important immediate need would either be put at the end of the line or it would force the other stuff to be delayed further.  A key thing to keep in mind about defence procurement is that delays mean heaps of money as defence inflation is a thing.  So, Irving butts in, causes a kerfuffle.  Seaspan joins in because it only has the second most number of ships to be built and second most amount of money heading its way (even as its own shipbuilding schedule is, of course, delayed).

The politics are complex, but since Davie is in Quebec, its premier (governor) was able to put enough pressure on the Liberal government to keep the program going, so ... ta da!  The ship in question is almost ready. 

The ruthless competition by one or two contractors to screw the third has spilled over into the leadership of the Canadian Armed Forces with Mark Norman in limbo for more than a year now.  Perhaps it is appropriate that his case should be as delayed as the typical procurement project, but the government should make a damned decision--to charge him or not.  That is actually the easy part of this (which is being bungled).  The hard part is to get Irving to be satisfied with damn near most of the dollars and not seek all of them.

While we can blame successive governments for screwing defence procurement up in a big way, they have had much help from the defence industry.  I have heard multiple reps from defence firms complain about government, and they are right.  But much of the blood or red ink is on their hands.  Maybe they don't need to follow the Japanese example of taking turns (Mitsubishi builds a sub in year 1, Kawasaki in year 2, M in year 3, K in year 4, etc).  But they do need to figure out how to live with each other and perhaps come up with rules of engagement so that they don't imperial Canadian defence and they don't burn officers who are just trying to get their people decent kit.

Charlie Foxtrot: the evergreen defence procurement post

I should just cite Kim Nossal and then run, but I can't help myself: I am not a fan of the Canadian Fighter Replacement Adventure.  Today, the Canadian government announced a decision on how to replace the aging F-18s: buy more old ones as an interim measure and then hold a competition.  Oh, but this new competition has two key features: 2022 as the target for a decision AND the Screw Boeing clause.  Let me explain my take.

First, the Liberals are here because the Conservatives also dithered and played politics with this decision.  Oh, and the NDP had fun with it as well.

Second, yes, Canada has been through this before, but whatever was gleaned from past competitions (in Canada, by the Danes, by the Aussies, whoever) apparently was not "fair" enough for the various companies to agree to use as a basis for a new competition.  Me?  I am lazy, so I would figure that if I had done a bunch of homework and then had to go back to the same project, I would not do so much new research.  I would build on prior work.  Apparently, this is not acceptable to the competitors.  Indeed, Sweden's  Saab was not in past competitions  because they thought they would lose (oh, and guess what, they will lose this time too--interoperability with US/NATO is a fundamental requirement and Sweden is not a NATO country so its planes tend not to be as interoperable [I think]).  Still, the fact that they can't build on the previous work means five years of effort to get a contract?!

Third, yeah, five years.  Wow.  A good reason for this might be that the folks who would do the work on this are working on the interim plane.  Oh, that.  This is a key part of the puzzle--the need to buy 18 F-18s from Australia (at a bargain since they don't want them anymore*) to fill in a capability gap.  This capability gap is the idea that Canada does not have enough planes to do a full NORAD emergency and a full NATO emergency at the same time.  My experiences with military folks says that the government could say that they would be willing to take on some risk by having fewer planes as it is unlikely that Canada would experience both emergencies simultaneously.  Risk is always present--the question is how much and how mitigated.  Anyhow, the other part of the interim thing is this--when the new planes are bought, the old ones must go.  That is the rules of interim purchasing I learned when this stuff came up the first time.

*  People are worried that this will be as bad as buying used subs from the UK, but that is very different.  A) The subs were out of commission and rusting, the planes not so much; B) the subs apparently were partly involved in UK's nuke weapon program, so much of the info about how to run/maintain the subs were not available to the Canadians; C) Canada has heaps and heaps of experience with F-18s.

I get that it took time for this government to figure out what it needed--88 planes!  And more time via the Defence Policy Review that would make it clear that this government would be willing to spend the money.  So, I could have said that they dithered for two years, but I think a fair assessment is that this decision could have been announced six months ago, maybe, but not any earlier than that.  Still, why take until 2022?  Maybe it takes that long, but I am skeptical.  I think a big problem is that the Review did not really address is exactly how will Canada do procurement better/faster.  This decision does not fill me with confidence that they have figured out how to do stuff better.

Which gets me to the fun part--the Screw Boeing clause.  The government has decided that it does not want to buy big, expensive stuff from companies that hurt Canadian businesses--which is Boeing which has pushed the US government to penalize Bombardier (the most favored Canadian company) for dumping planes into the American market.  Sure, they can say it is aimed to incentivize any company to treat Canadian firms well, but this has Boeing written all over it.  The smart play, one they seem prepared to do, is to have this policy apply to all major purchases from now on.  Still, how does this get operationalized in a non-lawsuit attracting kind of way?  No idea.

I still hate the idea of an interim purchase, and I don't really buy the need to fill the gap with temporary planes which pushes the calendar for buying the permanent planes.  But all this stuff is part of a pattern well named Charlie Foxtrot (military for clusterfuck).  Situation Normal All Fucked Up (SNAFU) works as well.

I am glad a decision has been made.... but I am wondering if it will get re-made again and again.

Canadian Fighter Plane Complications

Student Art from class long ago

I was not thrilled with the rollout of the new decision regarding the next Fighter for the Royal Canadian Air Force.  Turns out that the Canadian government was not entirely thrilled with my take, so I got to chat with someone who sought to clarify the decision to decide eventually while buying some interim planes.  I cannot identify my source, but, like the Lockheed and General Dynamics folks I have chatted with in the past, they know these files far better than I do.  My research is neither on these systems nor on defence procurement, so take everything I say with a grain of salt.

Let's check my assertions from the post to what I learned/what I was told this morning:

• Will buying 18 Super-Hornets and all of their stuff game the eventual decision?  I was told probably not as it is one squadron, so all of the gear/weapons/simulators/etc that go to this one squadron will probably not be enough to make a big dent in the calculations as they make the bigger decision.  
• The real revelation in the conversation was this: the 18 planes are not supposed to be around when the eventual fleet of new planes is ready.  The idea is to fly these 18 F-18 E/Fs (or whatever their designation will be) until early 2030s and no further.  They are supposed to be interim and not more than that.  So, the 18 would only fly for Canada for 12-15 years.  I wonder why this has not gotten more attention.  Of course, what this government does and the government of 203x does are two different things--I doubt that the future government will have to get rid of the planes just because a prior government bought them as interim planes. But I am not a lawyer who knows government contracts well, so perhaps the future's hands will be tied.  But I doubt it.
• Five years?  I was told it really does take five years to do a serious competition.  That the Conservatives never really did a serious competition but an options analysis, which is not the same thing.  I just don't know, but I really don't buy it that it takes five years.  Someone else I know told me that a competition could take five years because of reasons, but again, it looks like kicking the can down the road until the next election to me.
• What capability gap I asked?  There are two answers to this question of why Canada needs more planes soon: the Conservatives underfunded maintenance/operations (yes, I and others were critical and had guessed this is where the magic defence savings were coming from) and they had a different notion of risk tolerance.
• Does Canada have enough planes to do all the RCAF is supposed to do?  To patrol Canadian skies as part of NORAD and to participate in the very regular multilateral commitments--patrolling over Iceland and the Baltics, the occasional mission such as Libya and Iraq?  We know that Canada has 77 CF-18s right now, of which maybe 1/5 are entirely out of commission being refurbished/renovated/repaired/re-somethinged.  
• The actual number needed to do everything is not public (more on that below), but I had mentioned 65 F-35s as the Conservative plan.  It was pointed out to me that the Conservative plan built in a greater tolerance of risk--that anytime the RCAF is deployed elsewhere, it may not be quite as able to respond to events over Canada.  That the 65 plane figure was not bottom up from what Canada needs to meet its commitments, but calculated from what Canada could buy given the budget envelope.  This I absolutely believe.
• Which leads to this: the number of planes and the attitude towards risk are political decisions, not military ones.  The military will surely say we can do the job no matter what we have (within reason), but if you give us less planes, we have more risk and if you give us more planes, we will have less risk.  How serious the risks?   I have no idea.  Because I am not an expert and because I have none of the information.  
• Which leads me to the same conclusion, but might be driven by confirmation bias due to the big current project: what Canada really needs is a serious defence committee that can ask tough questions, get answers, and assess whether the government is b.s.-ing, how much of what is going on now is due to bad Conservative decisions, and all the rest.  But that will not happen now or anytime soon.  The parliamentarians prefer to ask simplistic questions at question period to score points rather than actually learn stuff.   

In sum, I am confused.  I am not an expert, and the experts keep telling me conflicting stuff.  There have been op-eds by smart people who have criticized this decision, and the person on the phone today knows this stuff far better than I do.  I just wish we had a better oversight process that might adjudicate this a bit.

NATO Spending and Doing

Yesterday, NATO put out its report on spending by its members.  It sets some of the context for the summit later this week.  By the traditional measure, the aspiration to eventually spend 2% of GDP on defence, Canada is, um, not doing well.  Canada is now under 1%, and there is no chance that it will double its defence budget in the near, medium or distant future. 

A closer look at the report suggests that Canada does not suck as much as it appears:

• Yes, Canada is below 1% and ranks fifth worst on % of GDP.
• Canada is close to the NATO standard on percentage of budget spent on equipment.  Of course, if one spends a lot on getting a little, that is a problem (which I return to below).
• If one focuses on the total amount spent on defence, controlling for exchange rates and all that, Canada is behind the US, UK, France, Germany and Italy.... and that is it.  So, total spending does not look bad.
• If one focuses on total amount spent per person (controlling for population size), Canada is about the average for non-US members of NATO.

But this exercise does raise questions and concerns. 

• That spending is a lousy measure since it is a measure of inputs, not outputs or outcomes.  This is a relatively new but constant theme here at the Semi-Spew--that folks tend to measure what is easily measurable.  Spending is easy to measure, but what does it mean for capability or impact?  Um, not sure.  
• Spending compared to one's ability to pay (GDP) makes sense as a way to measure the effort to share the burden, but again, Greece does really well on this, and no one thinks Greece ranks highly as reliable/useful ally.  Greece ranks highly because its denominator (GDP) is small. So, if one's economy does well, the measure here can be deceptive.
• Spending on what? Canada tends to pay a lot for whatever kit it buys because it does so slowly (defence inflation always bites), it always requires Canadianization for whatever is purchased (making stuff fit Canadian military standards--some of this is reasonable but is all of it?), and the desire for "industrial benefits" means protectionism.  And protectionism is always inefficient, leading to higher prices and lesser quality (yes, I am a Classic Liberal when it comes to trade).  

I am a big believer in focusing on the doing more than the spending, so Canada did Kandahar and it is doing Latvia while others are not.  BUT it is not clear this is sustainable--all these operations plus the relatively fixed costs of procurement (well, commitments that only seem to grow in cost) and personnel (the Minister of Defence has promised not to cut the size of the force despite having an extensive Defence Review) means that there will be less training and maintenance.  And that will mean a hollow force that is of whatever size, but not so sharp.  And a dull knife is far more dangerous to the user than a sharp one, alas.

So, we can read a lot into the NATO report.  The good news is that Trudeau can use the Latvia mission as a shield against criticisms this week.  The bad news is that Canada is not spending enough or spending smartly enough.  The Navy is facing that crisis right now.  The rest of the CAF will face it soon enough.

Plane Speculation

The news reports have the Liberal government planning to buy a bunch of Super Hornets to bridge the gap as the current CF-18s fade out and before some other plane is ready.

First, there is no official new policy unless I missed something while flying to and from DC, even as I happened to be near the Lockheed offices.

Second, let's repeat the first: no policy announced yet.

But third, damn!  Yes, the Conservatives blew this big time by sole-sourcing, by perhaps letting the RCAF game the requirements, by kicking the can down the road--hoping to make the decision after the 2015 election even though they had all the data/info they needed from the Independent Panel and elsewhere long before that election, etc.  But, as the old saying goes, two wrongs don't make a right but two Wrights do make an airplane....

Sole-sourcing the next plane after being so critical of that is a problem.  One thing to sole source a quick purchase of a needed supply ship or a lease of helos in mid-war.  But to do this dramatic of a reverse needs much explaining.

The big problem here is that everyone will see through this: that buying Super Hornets to bridge the gap is really a decision to buy the Super Hornets and not buy the F-35.  Why?  Because a mixed fleet is expensive--different maintenance equipment, different simulators, different training of pilots and on and on.  Canada would have to have two different systems.  The US could afford such stuff, but stupidly chose not to for the lure of the economies of scale of one plane--the F-35.  Path dependence means going back and reversing that decision is hard for the US and hard for the allies who bought into the plane because they thought that a massive buy would mean lower costs.

I am not a fan of the F-35 as the entire process has been ill-conceived.  Maybe it will prove to be a decent plane, just as the F-22 ended up being a better plane that expected, once folks figured out how to keep it from killing its pilots. And the stories of the previous generation of planes is also one of problematic development.  The difference here is that the F-35 is being mass produced before it shakes out its problems, so that many planes may have to be fixed later on.  On the other hand, the Super Hornet is not as cheap as originally conceived either, so the price gap is not as wide especially when one considers the shorter life-span of the plane.

I don't buy the claims made by either Lockheed or Boeing since they are slick salesfolks with a lot at stake--why expect either one to be anything but biased advocates?  I also don't trust pieces that depend on one anonymous source (sorry, Matthew Fisher).  I have a good friend who has been deeply involved in the Canadian vetting of this stuff, but he is unable to talk to me about it since much of the stuff is classified.  So, what do I think?  I am confused.  I skimmed the Danish report, which suggests that the F-35 is the better choice (and is much clearer than the Canadian panel's report).  But then I hear that certain bombs cannot fit inside and if they are outside the plane, kiss stealth goodbye.

I am not a plane expert.  All I can really conclude is that if the Liberals follow through on this bridging approach, they are basically contradicting damn near all of their stances on how procurement should work.  And the best way to illustrate that is:

New Oversight Styling: The Independent Review Panel

This week, the Canadian government announced the "Independent Review Panel for Defence Acquisition." The Terms of Reference specify what the panel is and is not.  The panel is an effort to improve the Canadian defence procurement project, but is only one part of a larger effort.  I am interested in this panel for a few reasons:

1. These days, I am obsessed with oversight as that is the key issue at the core of the big project for the next five years (thanks SSHRC!).
2. I have long been critical of Canadian defence procurement.  But to be fair, all democracies mess this up, so it will be interesting to see how much this panel "fixes" it.
3. My friend and co-author, Philippe Lagassé, is one of the panelists, so I will have much fun teasing him, trying to get him to spill the various beans.

Anyhow, over the past week, I have conversed with a number of people about this to figure out this thing, as it is not entirely clear what it is supposed to do.  Expectations may be set on high, when they should be set on "huh?"  Let me explain.  The basic idea is that this panel will review procurement projects at the beginning, not at the middle or end.  They will assess the gaps that the Canadian Forces identify--we need x capability.  Really?  And then they will assess the options being proposed to deal with that gap.  They will not be looking at defence projects that have already made it through those steps (unless the Minister of Defence or Deputy Minister asks).

The reason why this panel seems to be needed is that there is a credibility gap between the Canadian Forces and the government/parliament/public/media/etc: that the military has previously stated requirements it needs and has done so that has limited the options for procurement.  My guess is that this panel is in part driven by F-35 regret--that perception that the Air Force had a particular outcome in mind and then designed the requirements to lead to that outcome.

This panel is designed to examine and challenge the assessments of the military long before it gets to contracts and the like--is there a real capability gap?  What are the ways to fill it?  Which leads to one of the big problems that this panel cannot fix: that the reigning policy statement that defines the threat environment and the basic missions of the Canadian Forces--the Canada First Defence Strategy [CFDS]--is obsolete.  It has been overcome by events--most importantly the fiscal crisis that reduced funding for the military and the government's desire to fund the military.  Other intervening events include the end of the Afghanistan mission, the new ISIS missions, and, oh yeah, the new Cold War with Russia (you can call it whatever you want, but Russia is not the friendly partner that folks might have been imagining in 2008 but an opportunistic, aggressive country engaged in provocative land grabs).  But the panel's job is not to evaluate the threat environment nor how the government intends to deal with the threat environment but the capabilities and the lack of same in dealing with such threats. [Nor is the Panel revising the implications of the Jenkins report that makes industrial benefits (jobs/votes) a key priority in making decisions]

Back to item #1, I have found the various discussions very interesting and very relevant for the Steve/Phil/Dave project on legislatures and militaries, as this is very much about oversight.  That the government has decided that the agent (the military) needs to be overseen better, given the procurement problems of the past and present.  The innovation here is to have an independent panel (some retired public servants, some folks from industry who have severed any ties that might produce conflicts of interest, and one not so random academic) shine a spotlight on the early stages.  The idea is not just investigate problematic statements of requirements but also to cause the military to anticipate the spotlight and thus compel the military to do a better job of developing their requirements and explaining them in non-military-ese.  It also is somewhat an indictment of the parliament's ability to do oversight (which they often say is not their job).

The good news is also the bad news.  The panel has the ear of the Minister as it is a creature/creation of the minister.  Their reports will be advice to the Minister/Cabinet.  This means they can be blunt.  Which is good.  The bad news?  An effort to build confidence and trust in the procurement process will be entirely behind closed doors.  Advice to ministers is the stuff that Access to Information Requests go to die--that these things do not come to light.  Panelists can refuse to answer the questions of the Defence Committee as they are obligated to report only to the Minister.  The members of parliament can ask the Minister what the panel said, but they cannot ask the panel what they tell the Minister.

So, the only way that the media, the public, and the parliament will develop more trust and confidence in the procurement process is if this panel does such a good job in scrubbing the statements of requirements and the options analyses that Canadian defence procurements stop having heaps of overruns, delays, and the like.   Since the panel is only involved at the very start and much can go wrong even if they do a terrific job, it will be really hard to tell if this process works.  

Still, the idea seems to be a good one, and the people chosen are sharp, responsible folks.  I think it will improve Canadian procurement processes, but I am not sure that we (the public, random academics, etc) will ever be able to discern the impact of this panel given that this is a complex process and one that is still covered in secret sauce that parliamentarians cannot penetrate.

Reading Assignment for Canadian Defence Fans

Today, those of us who follow Canadian defence issues have a new reading assignment.  It is another batch of informed reason from Dave Perry, with a wonderful rollout by the CDAI folks and the McDonald-Laurier Institute with stories in the news.

I have not read it yet but will so soon. The highlights as presented in the media include:

• a series of governments has gutted procurement expertise, 
• this has meant slower and dysfunctional procurement, 
• asking people to do much more with less staff is broken,  (see my post on dismissing what govt workers do)
• the Canada First Defence Strategy is dead (again). 

I may have reactions later today when I get to the document.  It is already clear that this should be assigned reading for the government, but that would require having enough staff so that people can actually read stuff.

Here is my research assignment for anyone/everyone:

All democracies seem to have trouble with defence procurement.  Does Canada do it worse?  Are there are common problems or is every democracy a snowflake with its own uniquely messed up procurement processes?

Bad Military Argument Week?

Something seemed to become a trend this week--really dumb arguments about Canadian defence stuff.  Part of it was the timing of when I read stuff as opposed to it being published this week, but as a card-carrying member of the military-industrial-academic complex, I am embarrassed. 

Before I get going, I need to make my biases clear:

• I am ambivalent about the F-35--it is too expensive and not that good of a plane but the alternatives are none too spiffy.
• On the other hand, I love subs.  I spent much time in my teens and then since reading about the real exploits of American subs in Pacific during WWII and fictional exploits during/after the cold war.  
• I am often seen as a hawk because I think that militaries are instruments of national policy.
• I am often seen as a dove because I am skeptical about the use of force--it has limited utility.

Ok, with those, ahem, caveats out of the way, let's start with this piece on Canada's non-need for fighter planes:

"New Canadian fighters would almost certainly never be involved in serious strike or aerial combat operations"

Um, the current batch of fighters participated in the aerial campaign against Serbia in 1999 and over Libya in 2011.   Given the likelihood that air power will be the first step in any future NATO effort anywhere, it is likely that strike aircraft of some kind will be the asset that NATO commanders will seek to deploy.

"The only credible aerial threat to Canadian territory, sovereignty and populace is a copy-cat “9/11” attack – a danger that essentially cannot be defeated by fighter aircraft."

Actually, fighter aircraft are exactly what you want to have to trail a hijacked airliner and even, dare I say it, shoot one down if necessary.

While the author is correct that Canada would barely make a dent in a US-China or a US-Russia war, having an advanced aircraft would be handy against lesser opponents as anti-aircraft weapons spread.

"Fighters simply cannot contribute anything substantial toward the achievement of the six Canadian defence objectives." 

While I agree that Canada needs to re-assess the objectives and prioritize, fighter planes would be handy for three of the priorities--NORAD/continental ops, respond to terrorist attack, lead/conduct major international operation, deploy forces in reponse to crises elsewhere in the world.  The last perfectly describes the current Canadian deployment to Romania and its turn in the Baltic Air patrol this fall.

I also happened to read anti- and pro-Canadian sub arguments that contained some similar doozies.

The pro-sub argument, by Paul Mitchell, starts from a very weak spot: challenging the lemon reputation of the current Victoria class subs: "largely because of a series of unfortunate incidents."  Holy Lemony Snicket!  That the subs in 2013 had something like 265 operational days at sea might sound impressive if that were the average per sub, but that was the total for all four subs.  That is, the subs averaged less than seventy days at sea each.  The article blames it on tight budget constraints, but it is obviously more than that.  Plus if you cannot operate under tight budget constraints, then good luck as those constraints are not going away.  Indeed, my primary argument against Canadian subs is that the budgets are and will always be tight, so that the capability will never be enough to be more than symbolic.  And lots of money for symbolic capability would be fine if there not serious tradeoffs ahead.

That the subs share features with British nuclear subs is seen as a feature, a plus, when it turns out that this bit of reality meant that the British would not share much info with the Canadians about the subs and how to fix them.

Much of the debate about subs, like about planes, is whether they can help out in the far north.  These subs cannot breathe under the ice, alas (nuclear subs can and some with special systems but Canada can't afford them any time soon).  The good news, according to the author, is that the arctic will be ice free so who needs to breathe under the ice?  The problem is that by the time the ice is gone, the subs will be too.  They simply will not last beyond 2030 without a heap of luck and duck tape.  And that drives home the real problem.  The main argument for keeping Canada in the sub business is that once out of it, it is hard to get back in.  But my guess is that Canada will be out eventually anyway.  The next batch of subs will be far more expensive than the current batch, because that is how military inflation works especially when one does not manage procurement well.  So, will Canada invest in six or eight new subs?  No.  Four?  Maybe, but then we are stuck with a purely symbolic force again.

The main claim to keep subs is to stay in the intel sharing business with the US, but that seems like something that can be negotiated regardless of subs or no subs.  The funny thing is that the article takes shots at the anti-sub argument's take on UAVs and ignores the other possibility--underwater unmanned vehicles.  They exist and will be developed much further.  Why not invest in those and not in more subs?

The best arguments for subs are mostly that some of the anti-sub arguments, by Michael Byers, are quite lame.  For instance, arguing that China might be deterred from war due to its dependence on international trade is amusing/ironic/historically blind.  Japan was quite dependent on international trade--especially oil and iron from the US--before WWII and yet went to war.  It turned out that its need for imports became a huge weakness as American subs destroyed most of the Japanese merchant fleet.

Ultimately, I side with Byers not because I don't think subs can be handy.  They can be.  I just don't think that the benefits of having a symbolic fleet of four semi-broken subs are worth the cost in a time of flat/declining defence budgets.  I don't expect Canada to ever be that serious about investing in subs.  If they were to do so, then it would mean cutting elsewhere, and that is a tradeoff that the Canadian defense establishment refuses to face.

Regarding the F-35, I am still unsure.  I tend to think the Super Hornet is a better idea because it is a proven technology.  While there will not be the same economies of scale in the upkeep down the road, I am guessing it will need less upkeep than a plane that is being produced even as it is being tested.  Of course, I could be completely wrong, and Canada might start buying French stuff. 

Prof Receives Homework Request

In the course of testifying about Canadian defence, I received some homework from the Chair of the Committee:

"We're talking about large purchases, such as ships and aircraft, if we purchase an aircraft other than the F-35 to which we belong to a consortium of nations and we can benefit by building parts for it, with the realization that we have arguably the world's fourth- or fifth-largest aerospace industry, and we have no shipbuilding capability, and we used to have and so we want to build that up. So from the standpoint of building jobs, building the economy, maximum benefits to Canadians in the long term, could you submit in writing the pros and cons of both of those issues that I did, because I don't want to take up much more time"

I am not a fan of defence spending as industrial policy.  Then again, I am against protectionism in general.  So, I am making a crowsourcing request: if you can give me your pro's and/or con's, I can use them as I do my homework.

Thanks!

New Paradigms in Fighter Planes?

One of the dangers of twitter is that one can end up pontificating about something which is outside of one's expertise.  Latest example: I was RT-ing a piece that was critical of the F-35 and got this reaction:

@smsaideman @drfarls Once again the flawed assumption is that the F-35 is a hardware rather than a software project.
— Henry Cobb (@henrycobb) January 10, 2014

At first, I was flummoxed.  Isn't the F-35 a plane made of various materials, one that can be broken if one drops something sufficiently heavy on it?  Yes, but much of the special-ness of the plane is not the design of the structure of the plane but the code that is going into it, that will allow it to do special stuff.

Ah.  Well, I get that.  Of course, this raises all other kinds of problems, which I always remember when I get a new computer (woot!)--that the new computer has new and different software issues.  It is faster and better than my old machine but is still buggy.  Making a plane so heavily reliant on complex software makes me very nervous.  Again, I am not an expert, but defense contracting over the past twenty years does not fill me full of faith.  Will the promises be kept?  Will the adversaries figure out ways to mitigate the advantages?

Of course, the argument is that if the adversary comes up with ways to fight the F-35, the code can be written and improved without having to build new planes.  Maybe.

All I really know is that this plane is very expensive, that its procurement process is very flawed, and that providing the adversary with only one plane to figure out does not seem that "strategic" to me.

Perhaps the fact that we have two competing faiths here--those that resolutely believe in the plane and those that resolutely do not believe in the plane--is the real problem.  Defense procurement should not be a matter of faith, right?

Defence Salesfolks Are Damned Good at Their Job

Yesterday, during the coffee break at the Atlantic Council of Canada event on Afghanistan, I was chatting with someone and somehow raised the question of whether the Canadian government should spend more for ships built in Canada (after a 20 year or so lapse in any shipbuilding, which means raising shipyards from the dead) or buy ships from abroad.  And, what do you know, this guy turns out to be a former naval officer and currently employed by a major defence contractor.  Kind of like last year when I got braced by an F-35 salesman. 

The good news is these guys are good at their jobs--they are damned persuasive.  However, I also know that they are not impartial dispensers of the facts about defence procurement, so I talk everything they say with a huge dose of salt.  It simply has to be cheaper to buy ships abroad than starting up long-dead shipyards.  Canada simply does not have the expertise.  In a time of austerity and as each defence procurement project spirals upwards in costs, choosing to build in Canada seems to be a bridge too far.  Perhaps when things are flush, this would make sense.  But they are not flush right now.

Soon, the Canadian Navy and the Canadian government will face the same choice here as with planes--getting less with more or not.  The F35 is very expensive, so it means Canada will have to buy fewer (unless it ignores basic math and denies reality).  Buying expensive ships means buying fewer ultimately. 

The problem is that I am not an expert on defence procurement or on the specific weapons programs.  I am just a scholar of politics and have seen this show before.  So, I cannot debate well with the expert salespeople on this.  I know that what they are saying contains a dose of b.s. but I cannot articulate the specifics of alternative programs.  I do think the media has been doing a pretty good job on conveying the problematic choices that have been made and the alternatives that have been left behind. 

Building ships in Canada makes sense for politics--it means jobs in places where folks might vote for the Conservatives.  It does not make sense for the timely and cost efficient replacement of the current batch of old ships.  I tend to be a realist and a free trader when it comes to defence procurement--that I want my tax dollars to go to the shipyards that could best do the job, even if it means employing Danes or South Koreans.  I don't like to see defence policy become industrial policy--where the government subsidizes the private sector.  I don't like it when the US does that with Boeing, and I don't like it in Canada when very scarce dollars are being spent on shipyards that have not proven they can do the job.  But I understand it.

Will this make me more careful about speaking up when chatting with retired military folks who are likely to be working for a defence contractor?  No, careful about speaking up is not in my nature, just as it is not in the nature of defence salesfolks to admit that their company's products may be too expensive.

The Ship Has Sailed

J.L. Granatstein has a strong piece arguing that Canada should not be resurrecting the long dead ship-building industry via the recapitalization of the Royal Canadian Navy and Coast Guard.  He is dead on, arguing both buying foreign-made ships will be far cheaper and that future governments are likely cancel expensive programs.  So, better to buy the cheaper foreign stuff and get good replacements now than spend years and billions of dollars on ships that may not be completed.

A key point he makes is that if Canada bought foreign ships, there would still be Canadian jobs to be had for putting into the ships various technologies.  The problem is it is one thing to say: new foreign-built ships with a few thousand domestic jobs.  It is another thing to say: let's cancel the contracts which have 15k jobs attached and then buy cheaper foreign ships with a few thousand domestic jobs.  Path dependence is a bitch, and reversing course now would be very costly politically. 

What makes sense for Canada does not make sense for the Conservative Party, alas.  So, while Granatstein is right in his analysis, it really does not matter.  Defence procurement as industrial policy--propping up Canadian industry--means more wasted tax dollars on less capability.  The government that claims to be careful stewards of Canadian tax dollars is going to make the choice that is best for them politically--getting votes in British Columbia and Nova Scotia--and bad for teh budgets of tomorrow.

Raising the Stakes: When Defence Contractors Suck at Math

Lockheed Martin may be getting nervous about Canada's review of the next fighter purchase.  The company has indicated that $10.5 billion of potential work for Canadian companies would disappear if the Canadians didn't buy the plane.  Oh my gosh, let's run out and confirm that we are buying this plane right now, or they might then kill the hostage!!!

Or not.  First, let's do some simple math: $10.5 billion over 40 years is about $250 million a year.  Which is not peanuts, but in defense spending terms, it is not that huge of a deal,

Second,  there are heaps of budgetary consequences if the government buys the F-35.  This Lockheed Martin calculation ignores "opportunity costs" as the money that might be saved by the government can then be spent elsewhere if the F-35 turns out to be way, way more expensive than the alternatives.  Indeed, the government could just spend $250 million a year for the next 40 years on industrial policy and not buy the plane, and it might just be better for the Canadian economy.  Or not.

Third, this "threat" ignores the reality that if Canada purchases a different plane, that company will almost certainly be spending some money on Canadian co-production.  Indeed, I am pretty sure it is one of the sets of factors being included in the decision process, especially with this government suddenly looking at defence spending as industrial policy.

So, this effort at blackmail reminding the Canadians what they might lose by choosing another plane is very lame.  I am beginning to understand why so many defence programs have over-runs--these guys suck at math.

F35 in Numbers

The F-35 is a wonder to behold.  Ok, the costs, not so much the plane:


Damn.  Ok, this raises a few questions:

1. Which five states are not getting any F-35 money?  What does it say about their senators?  Hmmm.
2. I wonder what the over/under should be on the total buy.  Cut from 2,852 to 2,443 so far.  I would have to guess that the over/under would be set at 2100.  And I would probably bet the under.  But if set at 2000, I might bet the over.  Hmmm.  Any guesses.
3. I bet that the actual number of jobs is lower than 260k.  Why should we believe Lockheed on those numbers when every other number has been, ahem, revised?  
4. Does the F-35 revise the old government calculation: a billion here, a billion here, soon you are talking about real money?

Oy.