Modernizing the Defence Procurement Ecosystem: Opportunities for Canada

In today's rapidly evolving world, where technology is advancing at an unprecedented pace, it has become increasingly challenging for the defence sector to keep up with the fast-changing landscape. To maintain their technological superiority, defence agencies need to adopt a more agile approach to procurement that can keep pace with the speed of innovation. The Canadian Department of National Defence (DND) and the Canadian Armed Forces (CAF) recognize this need for transformation and are actively exploring ways to modernize their procurement practices. In this blog post, we will explore some of the opportunities that exist for Canada to revolutionize its defence procurement ecosystem.

The Need for Procurement Modernization

To understand the need for procurement transformation, it is essential to recognize the limitations of the current procurement methods, processes, and contracting vehicles. These methods were put in place with good reason, but they are more appropriate for acquiring legacy hardware systems built via waterfall methods. In today's world, where technology is advancing at a breakneck pace, such methods are no longer suitable for procuring modern, software-centric capability.

To digitally transform the defence ecosystem, procurement methods, processes, and contracting vehicles must match the pace at which DND/CAF need to buy. This means accelerating outcomes-focused sourcing and adopting an understanding of capabilities as a service. In other words, instead of acquiring products or services, the focus should be on acquiring capabilities that can be rapidly deployed to meet the needs of the end-users.

Contracting Vehicles for Rapid Prototyping

One way to achieve this is through the use of contracting vehicles that are more flexible than your average contracting vehicle. Other Transaction Authorities (OTAs) are an example of such vehicles that do not need to adhere to standard federal acquisition regulations. The US has already seen an increase in the use of OTAs, and other Five Eyes (FVEY) nations have equivalent schemes in place.

OTAs are particularly useful for rapid prototyping, experimenting with new technologies, and working with non-traditional vendors. They enable DND/CAF to work with industry partners to develop and deliver new capabilities at a much faster pace than traditional procurement methods allow. By adopting OTAs, Canada can accelerate its acquisition of innovative technologies and maintain its technological edge.

Agile Acquisition

Another approach to procurement transformation is Agile Acquisition. This method emphasizes the need to define requirements and procure in shorter cycles to buy relevant capability faster. Instead of defining all requirements upfront, Agile Acquisition enables DND/CAF to procure capabilities in smaller, more iterative cycles. This approach allows for greater flexibility and agility in adapting to changing user needs, as well as ensuring that the technology procured remains relevant for longer.

Partnership Approach with a Diverse Supplier Base

One of the key challenges in maintaining a diverse supplier base while also embracing a partnership approach is the need to coexist with a competitive landscape. The good news is that there are several ways to achieve this balance.

Software Factories and Digital Marketplaces for Defence

One opportunity is to emphasize the value proposition of the cloud for procuring capability from independent software vendors (ISVs) in an "app store-like" environment, right on the existing (and accredited) platform. This approach brings commercial tech into the defence tech stack and diversifies the defence supply base. By embracing the benefits of increased competition and innovation among ISVs, Canada can maintain its technological edge while also fostering a diverse supplier base.

Build Low, Deploy High

Another way to address the challenge of maintaining a diverse supplier base is to adopt a "build low, deploy high" approach. This means developing as much as possible on the unclassified side to make use of uncleared talent. By leveraging uncleared talent, DND/CAF can tap into a much larger pool of potential suppliers, which helps to address capacity gaps. Indeed, with a third of defence procurment positions currently unfilled, there is clearly a need for a new approach.

Overall, the government needs to focus on modernizing procurement methods, processes, and contracting vehicles to match the pace of modern technology development. This will enable the government to acquire the necessary capabilities to protect national security and ensure that Canada remains at the forefront of defence innovation.