Searching for a deal

The Canadian press is full of stories this week about Canada's decision to purchase new search and rescue aircraft (SAR). Here's a representative column. In short the issue is whether the decision should be made by using a competitive bid process or whether the government should make the decision without using a bid process. Few commentators are unbiased on this one, politicians are weighing in based on partisan belief. Liberals and the NDP are shouting abuse of power. Conservatives are stating that they are supporting the brave men and women in uniform. Lobbyists, depending on who they lobby for are saying 1) what a great decision!, 2) outrage!, or 3) Canada should buy in Canada!

I'm biased as well, my bias is that the procurement process should be designed to deliver best value, and then that process should be respected. I've previously written that the bid process is often flawed, imposing time and cost that often is not rewarded with better value. Canada is not a major player in defence procurement - as one writer said in response to an article in the Globe and Mail, there were three times as many SAR aircraft sitting outside his window at a base in Washington as Canada was buying for the entire country. The procurement process I found that usually delivered the best value was to piggy-back on larger orders from our allies.

The best known program is the US' Foreign Military Sales program, but our other allies including the UK and Australia run similar programs (as should Canada). This procurement process meets the public policy objectives of open bidding, though the bidding is run by an ally not by a Canadian. The real value is that it dramatically speeds up the procurement process, lowers the adminstrative cost of the program (which can add 30% or more to the real cost of a procurement), and normally delivers the equipment sooner and at a lower cost.

So why is the program so little used? I suspect its because it would make the military sales lobby groups ineffective, reduce the role of politics in procurement decision, and it would also eliminate large numbers of miltary (though desk-bound military) and public service jobs.

Cheers,

David Rotor