The Defence Department had received government approval in 2009 to move forward with the $430 million purchase of 1,500 off-the-shelf medium-sized trucks. But in subsequent years department and military officials began adding more capabilities to what they wanted in the vehicles, bumping the estimated cost to between $730 million and $800 million.
And in an unprecedented move DND officials continued on with the acquisition without going back to Treasury Board for approval to cover the extra $300 million to $370 million in costs, according to industry, military and government representatives.
When Treasury Board and Conservative government officials discovered what was happening they intervened, shutting down the project last week just minutes before bidding was to close.
The decision to take such action was aimed at avoiding another publicly embarrassing military procurement for the Conservatives.
The government has faced intense criticism in the Commons and scrutiny from the parliamentary budget officer and Auditor General over the increasing cost of the F-35 stealth fighter the Conservatives want to buy.
They also faced criticism from the auditor general for their purchase of Chinook helicopters, which will be based in Petawawa. That deal was supposed to cost $2 billion but the price tag ballooned to almost $5 billion according to the auditor general, after military officials started adding more capabilities.
Asked to comment about concerns about DND’s management of the truck procurement, the department issued the following statement: “Since the MSVS Project was launched in 2006, there have been significant changes in the SMP truck marketplace and fiscal circumstances. The estimates for this project did not reflect this new reality.”
The request for proposals from industry has been cancelled and the project is now being re-evaluated “to ensure that it fits these new realities and the authorized expenditure levels,” according to the email.
“We anticipate doing a focused re-evaluation of the Canadian Army’s purchase for trucks and ensuring we move quickly to acquire the right equipment at the best value for taxpayers,” it added.
DND officials privately acknowledge the acquisition will only fuel the image some parliamentarians have that the department has gone “rogue.” But they say their intention was to go back and request more money from government after the truck bids were in.
They also argue the department had overall approval to buy the trucks since the government announced the purchase in 2006.
NDP defence critic Jack Harris said there seems to be a culture at DND where department officials don’t believe they have to follow the same rules set out for other federal organizations.
“It’s another example of procurement run amok,” said Harris. “It’s obviously part of the culture within DND to feel they can do what they want.”
Harris said that doesn’t bode well for taxpayers since the Conservative government has committed to spending tens of billions of dollars on new military equipment in the future.
He also questioned why Defence Minister Peter MacKay doesn’t seem to have control over his department, pointing out the procurement was able to proceed almost to the point where bids were being taken before Treasury Board intervened.
MacKay’s office responded with an emailed statement: “Jack Harris and the NDP may not care about how we spend taxpayer dollars, but this government does,” the email noted. “We have already delivered 1300 trucks through the MSVS project, and we continue to make progress on our commitment to give the men and women of the Canadian Forces the tools they need to do their important work.”
But Harris said it appears that MacKay is not challenging DND bureaucrats on how they spend money or run procurements. “It’s his responsibility to provide oversight and that’s what’s missing here,” he added.
In an email, Public Works and Government Services acknowledged that as the deadline for bids on the truck project approached, concerns were raised about funding for the program. “It was determined on the bid closing date that it was not possible to resolve the potential funding issue associated with the quantities of vehicles that were outlined in the requirement,” Public Works noted. As a result the decision was made to cancel the bidding process.
Although that was done with minutes to spare, the companies involved had, at DND’s request, shipped their trucks to a test range in Nevada as part of the procurement process.
“Canada will be contacting you shortly to arrange for the return of your vehicles,” Public Works informed the companies last week.
“The Government of Canada would like to thank you for your interest in being a supplier to the Government of Canada,” the email added. “Your participation is appreciated, and we hope that you will continue to bid on procurement opportunity offered by Public Works and Government Services Canada.”
There is no indication from the government when the project will be restarted.
But the last-minute move left some defence industry representatives stunned. The preparation of a bid can take months and cost as much as a $1 million.
This is the second time the truck competition, announced with great fanfare in 2006 by the Conservatives, has been derailed.
The trucks, known as standard military pattern vehicles, were supposed to be delivered in 2008. The project was considered a priority because the vehicles they were to replace had become a safety hazard, with faulty brakes and excessive rust.
But the program has run into a number of delays. In December the Citizen reported the government decided to go back to square one and re-open the bidding process. At that time government representatives told company officials that there had been “further refinements in the technical specification” for the trucks.
In addition, the Citizen reported last year the project had been delayed because government officials didn’t translate into French the equipment specifications and paperwork to be provided to bidding firms.
In 2008 and 2009, infighting between Army and DND officials over the requirements for the trucks led to a series of delays. At the time, DND issued an email statement: “The project is not in trouble.”
The truck program isn’t the only military procurement project to run into trouble lately. Several months ago another of the Conservative government’s multi-billion dollar military equipment programs went off the rails and had to be restarted.
Companies vying for the $2-billion Close Combat Vehicle (CCV) program were told their bids had been rejected and they would have to submit new proposals. Those are due in September.
It was the second time the candidate vehicles, some of which are in service with allied nations in Afghanistan, were rejected.
Original Article
Source: ottawa citizen
Author: DAVID PUGLIESE
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