How Many Dollars and How Many People for DND

[Kirkhill]

We don't have 24 Billion to spend - at least not on new equipment.

Core Responsibilities and Internal Services	2019–20 Expenditures	2020–21 Expenditures	2021–22 Forecast spending	2022–23 budgetary spending (as indicated in Main Estimates)	2022–23 Planned spending	2023–24 Planned spending	2024–25 Planned spending
Operations	1,044,514,772	1,028,857,684	1,112,553,924	794,902,544	794,902,544	806,647,190	814,971,524
Ready Forces	9,875,229,209	11,719,160,120	10,292,348,934	10,453,990,709	10,453,990,709	10,458,121,831	10,637,852,995
Defence Team	3,365,827,143	4,057,640,230	3,859,083,052	3,738,769,207	3,738,769,207	3,752,774,854	3,798,539,154
Future Force Design	758,767,328	836,173,606	754,558,732	820,654,966	820,654,966	818,760,419	821,095,511
Procurement of Capabilities	3,298,055,560	4,119,915,713	4,195,092,477	4,792,013,007	4,792,013,007	5,127,882,945	3,894,787,550
Sustainable Bases, Information Technology Systems and Infrastructure	3,651,639,001	4,185,750,629	3,988,447,423	4,129,651,499	4,129,651,499	4,105,845,151	4,107,345,584
Subtotal	21,994,033,013	25,947,497,982	24,202,084,542	24,729,981,932	24,729,981,932	25,070,032,390	24,074,592,318
Internal Services	845,405,324	879,539,855	993,206,227	1,220,365,624	1,220,365,624	875,321,829	888,996,604
Total	22,839,438,337	26,827,037,837	25,195,290,769	25,950,347,556	25,950,347,556	25,945,354,219	24,963,588,922

Core Responsibilities and Internal Services	2019-20 actual full-time equivalents	2020-21 actual full-time equivalents	2021-22 forecast full-time equivalents	2022–23 planned full-time equivalents	2023–24 planned full-time equivalents	2024–25 planned full-time equivalents
Operations	2,647	2,156	3,078	2,144	2,145	2,151
Ready Forces	45,797	45,431	46,716	45,920	45,957	46,052
Defence Team	20,407	18,902	18,059	19,127	19,123	19,166
Future Force Design	1,930	1,883	2,086	1,914	1,887	1,885
Procurement of Capabilities	2,427	2,525	2,843	2,429	2,419	2,427
Sustainable Bases, Information Technology Systems and Infrastructure	15,974	15,944	16,493	15,526	15,455	15,503
Subtotal	89,182	86,841	89,275	87,060	86,986	87,184
Internal Services	4,070	4,342	4,470	4,284	4,277	4,296
Total	93,252	91,183	93,745	91,344	91,263	91,480

-	2022–23	2023–24	2024–25
Primary Reserve	29,250	29,550	30,000
Cadet Organization Administration and Training Service	7,250	7,500	8,000
Canadian Rangers	5,680	5,680	5,680

Planned spending and human resources - Canada.ca

The plan’s focus is on the work the Defence team will do in the year ahead to serve Canada.

www.canada.ca

Defence Budget - Canada.ca

March 2020 - Essential information to familiarize the Minister with the Department.

www.canada.ca

Presumably missiles and ammunition come out of the Operating Budget and not the Capital Budget
Just like presumably spares come out of the Operating Budget and not the Capital Budget

But both ammunition and spares are carried by the Capital Budget of any new project - for a limited time.
How long is that limited time stretched by people slowing the use rate when they can so that replacements are procured later if at all?

• The largest portion of the budget is allocated to Personnel (37%), Operating (36%) and Capital (17%)

• DND’s Main Estimates 2019-20 are $21.9 billion, comprised of various votes as well as statutory funding (mainly comprised of funding related to employee benefit plans totalling approximately $1.4 billion). The votes are:
  • Vote 1 – Operating Costs ($15.8 billion);
  • Vote 5 – Capital ($3.8 billion);
  • Vote 10 – Grants and Contributions ($200 million);
  • Vote 15 – Payments in respect of the long-term disability and life insurance plan for members of the Canadian Forces ($400 million);
  • Vote 20 – Protecting Canada’s National Security ($2 million);
  • Vote 25 – Renewing Canada’s Middle East Strategy ($199 million);
  • Vote 30 – Supporting Veterans as They Transition to Post-Service Life ($19 million); and,
  • Vote 35 – Reinforcing Canadaʼs Support for Ukraine ($34 million).

 

[KevinB]

The way DND, or well the GoC explains the CAF budget is all very odd to me.
For an allegedly representative democratic constitutional monarchy, it isn't very transparent.
Compared to what DoD has to report to Congress down here.

$4.8B Projected for 22-23 on Capital Equipment is criminal for a G7 Nation like Canada, and 23-24 at 5.1 isn't much better.

 

[KevinB]

Quarterly Financial Report (QFR) for the Quarter Ended September 30, 2022 - Canada.ca

Read the National Defence Quarterly Financial Report (QFR) for the Quarter Ended September 30, 2022.

www.canada.ca

 

[Humphrey Bogart]

Well, given inflationary pressures atm, the actual budget is declining and significantly!

 

[KevinB]

I mean almost 1/4 of Q4 was dedicated to Sexual Harassment Lawsuit payments…

 

[Fabius]

The National Procurement allocations are atrocious and the CAF knows it but can’t seem to fix it either internally or externally.

There keeps being a focus on “readiness” perhaps best understood to be operational readiness but I am not convinced people understand how the underfunded National Procurement and lack of modernization both equipment and structures are limiting our operational and structural readiness.

Even the US Army has consistently recognized it can’t do operational readiness and modernization both as Pri 1 yet the CAF and DND think we can.

 

[FJAG]

@dapaterson . On this general topic, there's a recent Wavell Room article here: The Problem of Resource Account Budgeting (RAB) for the Army.

How much similarity is there between the Brit system and ours. My limited understanding seems to equate these roughly to Vote 1 and 5 spending.

Am I right in thinking that with our staffing shortfalls that we are now also underspending Vote 1 as well as Vote 5?

 

[dapaterson]

I did quick review of the article, and need to read it in more detail.

My initial impression is that (a) accounting is complex, and needs competent individuals to perform it; (b) leaders need good communicators to explain what things do and do not mean; (c) MBAs can be terrible in the public sector, as the outputs of the public sector do not necessarily align with business objectives; and (d) blaming accounting for a military's lack of readiness is scapegoating, since responsibility for a lack of readiness ultimately lies with commanders who made decisions, usually to protect their petty little empires at the expense of the institution.

re: vote 1 vs vote 5: It's complex. Projects can be vote 1 or vote 5. A vote 1 project can underspend by tens of millions - for example, if a Foreign Military Sales agreement delivers a dozen AMRAAM missiles in mid April instead of late March, that's $18M (CAD) in vote 1 that suddenly slipped from one FY to another.

That said, stupidly aggressive project schedules do no one any favours - well, no one but the operator who promised timings that were unachievable, but that wouldn't materialize until after they were posted. (APS is the bane of good management, but that's another rant for another day.)

 

[dapaterson]

The National Procurement allocations are atrocious and the CAF knows it but can’t seem to fix it either internally or externally.

There keeps being a focus on “readiness” perhaps best understood to be operational readiness but I am not convinced people understand how the underfunded National Procurement and lack of modernization both equipment and structures are limiting our operational and structural readiness.

Even the US Army has consistently recognized it can’t do operational readiness and modernization both as Pri 1 yet the CAF and DND think we can.

ADM Mat lacks the staff to properly prosecute NP. Throwing them more NP without growing their workforce won't work.

Most NP activity is multi year / outyear, so it lacks the heat and light to make proper fixes. Today's panic normally outweighs strategic planning; the CAF promotes sub-tactical individuals to positions of senior responsibility, and suffers as a result.

 

[captloadie]

One of the greatest issues I see day in and day out is the lack of procurement expertise in our uniformed ranks, thus relying on a civilian workforce (both DND and contracted personnel) who lack the operational experience to understand what they are doing. PDs get so wrapped up in getting the shiny new toy that they whitewash anything that may slow down the process. We need informed senior leaders who make decisions based on the entire requirements of a project, and not rely of project staff descoping anything that poses a problem. On the RCAF side, we have a habit of funding and procuring the airframes, the spares, maybe the ammunition stores, possibly the training environment. We often make things like support equipment, infrastructure, IT requirements, and personnel outside the scope, or put them in later phases because either funding or planning in lacking. I would love to see the day that the Commander, forced to make a choice due to funding constraints, says procure less airframes, and make sure everything else is in place to maximize the capability.

 

[Navy_Pete]

ADM Mat lacks the staff to properly prosecute NP. Throwing them more NP without growing their workforce won't work.

Most NP activity is multi year / outyear, so it lacks the heat and light to make proper fixes. Today's panic normally outweighs strategic planning; the CAF promotes sub-tactical individuals to positions of senior responsibility, and suffers as a result.

Don't worry we are also 'improving processes' to 'streamline things'. In reality that seems to mean it takes more work to acheive the same effect. So it's not even just HR shortages it's things actually take more LOE individually.

Bit of a simple example, on every NP buy we have to indicate if it's a GBA+ or Indigenous buy. It's a one page form, but still take a few minutes to process and get the couple of signatures to put down that it 'doesn't apply' when you are buying spare parts for existing equipment. But that is required for every single buy, so probably thousands of them are done every year for no actual purpose. A top level exemption would have sorted that.

Or now every procurement over 20M requires a 'supply business case analysis (SBCA)', which involves DND, ISED PSPC and others. It's a new process that is just being figured out, but there is no off ramp for cases where there is a simple path forward, or consideration that 20M for through life costing is really quite low. That one adds potentially years onto a procurement, and also impacted by the lack of HR within DND, ISED and PSPC to actually support it.

ANd add to that the amount of time spent figuring out work arounds for immediate issues is being done by the same person supposed to be doing projects cumulatively we are probably a decade behind, with hundreds of obsolete individual items as well that all need some investigation.

On the Navy side we're also adding in certification with class societies, which is also bringing in a lot of net new work for the same group of people.

 

[Fabius]

We need a C.D. Howe type person to reorient our system from process to result writ large.

In terms of the staffing within Adm (Mat) on the military side, it would be interesting to pull up the VCDS staffing priorities and see where the military positions in Adm (Mat) fall.
Its one of those items that in terms of immediate tactical/operational readiness for tomorrow might make sense to deprioritize for personnel in favour of tactical units but that decision comes at the expense of strategic and structural readiness in 2-5 years.

 

[Kirkhill]

One of the greatest issues I see day in and day out is the lack of procurement expertise in our uniformed ranks, thus relying on a civilian workforce (both DND and contracted personnel) who lack the operational experience to understand what they are doing. PDs get so wrapped up in getting the shiny new toy that they whitewash anything that may slow down the process. We need informed senior leaders who make decisions based on the entire requirements of a project, and not rely of project staff descoping anything that poses a problem. On the RCAF side, we have a habit of funding and procuring the airframes, the spares, maybe the ammunition stores, possibly the training environment. We often make things like support equipment, infrastructure, IT requirements, and personnel outside the scope, or put them in later phases because either funding or planning in lacking. I would love to see the day that the Commander, forced to make a choice due to funding constraints, says procure less airframes, and make sure everything else is in place to maximize the capability.

Perhaps that is a place that the Regs could reach out more to the Reserve community for expertise?

Uniformed members, in my understanding, aren't given many professional opportunities to develop negotiating skills. Not surprising in an organization where the entire organization is built on command authority. Negotiation is not a primary requirement.

Conversely many members of the Reserves negotiate supply contracts on a daily basis. And some of them even understand some of the needs of the soldier. Or at least understand the environment well enough to be able to take instruction from those with the needs.

A civvy fleet manager that is also a Captain in the Air Force Reserve might be a good candidate for a Project Manager or Director.

 

[Kirkhill]

Don't worry we are also 'improving processes' to 'streamline things'. In reality that seems to mean it takes more work to acheive the same effect. So it's not even just HR shortages it's things actually take more LOE individually.

Bit of a simple example, on every NP buy we have to indicate if it's a GBA+ or Indigenous buy. It's a one page form, but still take a few minutes to process and get the couple of signatures to put down that it 'doesn't apply' when you are buying spare parts for existing equipment. But that is required for every single buy, so probably thousands of them are done every year for no actual purpose. A top level exemption would have sorted that.

Or now every procurement over 20M requires a 'supply business case analysis (SBCA)', which involves DND, ISED PSPC and others. It's a new process that is just being figured out, but there is no off ramp for cases where there is a simple path forward, or consideration that 20M for through life costing is really quite low. That one adds potentially years onto a procurement, and also impacted by the lack of HR within DND, ISED and PSPC to actually support it.

ANd add to that the amount of time spent figuring out work arounds for immediate issues is being done by the same person supposed to be doing projects cumulatively we are probably a decade behind, with hundreds of obsolete individual items as well that all need some investigation.

On the Navy side we're also adding in certification with class societies, which is also bringing in a lot of net new work for the same group of people.

As Project Manager I have had up to 15 departmental signature blocks I have had to get filled in order to advance a project. If it is not GBA+ and Indigenous participation, if it is not Carbon and Energy, or Industrial offsets, it will be something else. That is the art of being an effective Project Manager - managing the maze.

 

[Navy_Pete]

As Project Manager I have had up to 15 departmental signature blocks I have had to get filled in order to advance a project. If it is not GBA+ and Indigenous participation, if it is not Carbon and Energy, or Industrial offsets, it will be something else. That is the art of being an effective Project Manager - managing the maze.

These aren't projects; this is buying spares. Imagine o-rings, POL, valves, motors, etc etc etc.

All those are RFPs. All RFPs require a GBA+ review.

No issue with doing that for projects, but when hundreds of us spend an extra few hours a year doing that on routine procurements with zero added value. GBA+ can be genuinely useful for replacement projects, or reviewing current equipment for suitability of the end user (especially for things like sizing of clothing) but is totally irrelevant to buying (sometimes literal) nuts and bolts. This particular one is a form that has to get filled out every single time and added as part of the procurement documentation, where you could avoid it entirely by selectively employing the policy better.

Within ADM(Mat) it's the same people working on projects that are also doing in service support, and managing NP projects is far more LOE intensive than capitol projects due to the differences in how the finances work.

 

[Halifax Tar]

These aren't projects; this is buying spares. Imagine o-rings, POL, valves, motors, etc etc etc.

All those are RFPs. All RFPs require a GBA+ review.

No issue with doing that for projects, but when hundreds of us spend an extra few hours a year doing that on routine procurements with zero added value. GBA+ can be genuinely useful for replacement projects, or reviewing current equipment for suitability of the end user (especially for things like sizing of clothing) but is totally irrelevant to buying (sometimes literal) nuts and bolts. This particular one is a form that has to get filled out every single time and added as part of the procurement documentation, where you could avoid it entirely by selectively employing the policy better.

Within ADM(Mat) it's the same people working on projects that are also doing in service support, and managing NP projects is far more LOE intensive than capitol projects due to the differences in how the finances work.

The nausea that is required for simple unit level procurement is absolutely ridiculous. And completely out in left field.

I can't imagine how silly it is for higher level stuff.

 

[Kirkhill]

These aren't projects; this is buying spares. Imagine o-rings, POL, valves, motors, etc etc etc.

All those are RFPs. All RFPs require a GBA+ review.

No issue with doing that for projects, but when hundreds of us spend an extra few hours a year doing that on routine procurements with zero added value. GBA+ can be genuinely useful for replacement projects, or reviewing current equipment for suitability of the end user (especially for things like sizing of clothing) but is totally irrelevant to buying (sometimes literal) nuts and bolts. This particular one is a form that has to get filled out every single time and added as part of the procurement documentation, where you could avoid it entirely by selectively employing the policy better.

Within ADM(Mat) it's the same people working on projects that are also doing in service support, and managing NP projects is far more LOE intensive than capitol projects due to the differences in how the finances work.

Seen. But I have also sat through civvies arguing about whether to accept the Technical Director's preferred supplier or that of the QA Director who has the support of the Technical Director's youthful, ambitious Western manager.

And that supplier argument does get us into the weeds of Chinese or Swedish, EPDM or NBR, on demand or in bulk for inventory.

I'm not discounting your frustrations at all. Far from it. Just saying that the civvy world doesn't provide any different environment. And, in my opinion that makes some civvies worthwhile considering for their skills that might be applicable in the military world - beyond their abilities as trigger pullers, or radar repairers or the abilities to read the clouds.

How much of second, third and fourth line work in the CF could be done by civilians are employed as civilians but also required to be Reserves?

Why the Reserve requirement?

1 - to learn the community using the kit, their needs, and learn how to use the kit.
2 - to confront the prospect of being ordered to join the colours and use the kit you just bought.

 

[Navy_Pete]

@Kirkhill most of the folks are civilian with military positions as well. I think some may already be reservists filling reg force positions, and we tried that route ourselves but had no takers.

I may not be following what you are getting at though, but was just sharing my personal observations that there are a lot of new inefficiencies added to every day work, as well as larger projects, so takes more time to do something. So when you add on HR shortages, as well as a massive experience loss (we lost about 100 years of collective experience in the last 2 years in a small section due to a few retirements) it means we have a lot less real capacity.

So things take longer because there are more steps and people are learning, and we have less people to do things. I'm sure that results in a lot of direct costs for the workarounds with old broken stuff, as well as indirect cost (even just inflation as buying a widget next year instead of this year will cost more).

Travel is actually another good example, there is so much oversight/approval that it can take 2-4 weeks or more, with a high LOE, so I'm sure between the staff work and late booking costs we spend huge amounts more on travel than if we let managers approve things within their budget.

Not unique to the CAF, or even the GoC, but when the expectation is that we somehow increase the output, it just doesn't actually work. Most places are 1-deep as well, so when someone is on leave, traveling etc we basically just do the best we can, but there are big gaps in expertise/knowledge.

Like a lot of big places, the policy weenies don't talk to the worker bees, but the problem seems to be the MBA types (and 3rd party SMEs) get a lot more visibility, so we seem to be creating a lot of monitoring, dashboard, KPI type things but less actual sausage being made.

 

[Fishbone Jones]

We should wait until trudeau is out of office before we buy anymore equipment.

He'll give it away before we get the cardboard floormats out of it.

 

[Kirkhill]

@Kirkhill most of the folks are civilian with military positions as well. I think some may already be reservists filling reg force positions, and we tried that route ourselves but had no takers.

I may not be following what you are getting at though, but was just sharing my personal observations that there are a lot of new inefficiencies added to every day work, as well as larger projects, so takes more time to do something. So when you add on HR shortages, as well as a massive experience loss (we lost about 100 years of collective experience in the last 2 years in a small section due to a few retirements) it means we have a lot less real capacity.

So things take longer because there are more steps and people are learning, and we have less people to do things. I'm sure that results in a lot of direct costs for the workarounds with old broken stuff, as well as indirect cost (even just inflation as buying a widget next year instead of this year will cost more).

Travel is actually another good example, there is so much oversight/approval that it can take 2-4 weeks or more, with a high LOE, so I'm sure between the staff work and late booking costs we spend huge amounts more on travel than if we let managers approve things within their budget.

Not unique to the CAF, or even the GoC, but when the expectation is that we somehow increase the output, it just doesn't actually work. Most places are 1-deep as well, so when someone is on leave, traveling etc we basically just do the best we can, but there are big gaps in expertise/knowledge.

Like a lot of big places, the policy weenies don't talk to the worker bees, but the problem seems to be the MBA types (and 3rd party SMEs) get a lot more visibility, so we seem to be creating a lot of monitoring, dashboard, KPI type things but less actual sausage being made.

Sorry I misunderstood "Pete". I'm hearing you now.

I can see that if you have spent a career in uniform managing contracts that your experiences are not much different than those of a civilian that has spent a career managing contracts.

But perhaps that goes to my point? If you are short of qualified bodies in the procurement field how do you find suitable, military friendly, candidates to fill the gaps?

I agree entirely with your point on MBAs and not talking to the plant floor - and that is a nation wide, if not a First World problem (a real one).

McKInsey et al keep telling the bosses that they can get you to 95% efficiency. And I keep telling whoever will listen that 70% is a much more realistic planning horizon. I don't make what McKinsey makes.