OTTAWA – The longer it takes the federal government to buy 1,500 new replacement trucks for the military, the fewer vehicles it will be able to afford, the Department of National Defence warned in 2012.
The unusually frank assessment of the medium support vehicle program, cancelled twice since 2006, came in a memo to former deputy defence minister Robert Fonberg just weeks after the Department of Public Works pulled the plug for the second time.
It was part of a series of internal documents, obtained by The Canadian Press under the Access to Information Act, that show the decision to halt the program was the direct result of budget cuts at National Defence.
Fonberg, who has since moved on to another position in the government, was told by officials that the $800 million set aside by the Conservatives for that portion of the program was being eroded by inflation at a rate of two per cent a year.
“The potential impact of schedule delays … is that for every year of delay, it is estimated that (censored) fewer vehicles can be procured,” said a briefing dated Nov. 27, 2012.
It was also costing the department $10.5 million per year to keep the project office open, the briefing noted.
The program was quietly restarted last year — bids closed just last week — but a contract award is not expected until the summer of 2015, just weeks before the next federal election — a delay that could chew as much as $48 million of buying power out of the program.
New Democrat defence critic Jack Harris said the timing of a relatively straightforward purchase of trucks has been hijacked by politics.
“It’s pathetic,” said Harris. “What else can you say? It’s pathetic.”
The briefing and a series of other documents paint a picture of how National Defence had painted into a corner over the program. Budget cuts from 2010 were trickling down to front-line programs and planners were being left in the lurch.
Defence officials were advised midway through 2012, just as final bids were about to be submitted by contractors, that “as a result of ‘expenditure review measures’ there could be a reduction in the current financial cap” allocated to the truck program, a series of Public Works emails shows.
Officials scrambled during the first weeks of July 2012 to salvage the truck plan, which was described as being an “urgent priority” when it was first announced because of safety concerns with the existing 1980s-vintage fleet.
Harris said the political imperative of balancing the budget clearly took priority over safety hazards.
“The government wanted to put themselves in a position of having to declare a surplus in time for an election, where they can announce tax breaks,” he said.
The army has started parking some of the vehicles and using them for spare parts in hopes of saving money.
The Public Works documents show defence planners considered ditching the requirement for extra armour protection — individual kits that can bolted on to vehicles to help them withstand roadside bombs. They looked at doing away with utility trailers and even cutting the number of trucks.
“The other option would be to keep the (armour protection) and trailers and reduce the number of everything else,” said a July 9, 2012, email from the project’s senior director at Public Works.
Contract officials looked at extending the tender deadline by a couple of weeks and giving contractors the opportunity to “update their bid,” but in the end they decided to park the entire procurement just minutes before the competition closed.
In a statement at the time, Public Works soft-pedalled the reasons for the cancellation, saying “economic, marketplace and budgetary circumstances have changed since the solicitation process began.”
The department said the government had to “reassess this procurement to ensure that the right equipment is acquired for the army at the best value for Canada.”
There was no direct mention of the role budget cuts played in the decision.
A spokeswoman for National Defence largely stuck to that line on Wednesday and insisted the program needed to be reviewed.
“Since the Medium Support Vehicle System (MSVS) project was launched in 2006, there have been significant changes in the Standard Military Pattern (SMP) truck marketplace and to fiscal circumstances,” Jocelyn Sweet said in an email.
“The estimates for this project did not reflect this new reality. Therefore the (request for proposals) was cancelled until a re-evaluation of this project had been completed.”
Sweet insisted that with the newly re-launched program, the government will still get the same number of vehicles and they “can be procured within the existing budget.”
She explained the discrepancy by saying that officials have consulted within the industry and been reassured that their numbers are solid.
Sweet was asked directly what strategies National Defence had used to address safety concerns with the existing fleet, but she would only say the government was committed to “procuring modern equipment.”
Wednesday, January 15, 2014