The Federal Auditor General’s Fall Report for 2012 has an especially important section in Chapter 5, which is entitled “Real Property – National Defence.” The Auditor General (AG) states very clearly the importance of this issue:
"Real property infrastructure is essential to the Canadian Forces’ ability to undertake core missions in Canada and abroad. It is one of four pillars of the Government’s 2008 Canada First Defence Strategy to build an effective military."
The litany of deficiencies cited in the report are summarised by Lee Berthiaume in an article published in the Ottawa Citizen on 23 October. The article is entitled “Crumbling military property may pose future health hazards, auditor says.” But the scope of the problem is even greater than that provided by Berthiaume and interested readers should look through the report for the full story.
The AG’s report highlights repeatedly that the 2008 Canada First Defence Strategy understood having an efficient military meant that adequate resources had to be put into maintenance and renewal of real property. The strategy commits the government (from FY2008–09 to FY 2027–28) to spend eight percent of DND’s total budget in that period (approx. $40 billion) on new construction, recapitalization, plus maintenance and repair. So far, they are not even coming close to that target.
The AG’s report shows that for FY 2010–11, DND spent about three percent of its $22.8 billion budget on real property. DND’s target was 1.4 per cent of each military base’s budget for maintenance and repair. The report tables this spending in Exhibit 5.4. Of the 19 bases in the table, only CFB Kingston met that target by spending 1.43 percent (+2.1%). All others were below the target level, with the average level of expenditure at just .74 percent. The lowest-spending base was CFB Esquimalt at .39 percent (-72.1%). CFB Halifax spent just .51% of its budget on real property (-63.5%).
There is worse news in the report. It found that DND has not yet put in place a real property management framework or national strategy for managing real property. While it notes that both have been drafted (although it does not say how long ago), neither has been approved and issued. Moreover, there are major gaps in the department’s management practices for acquiring, maintaining, and repairing capital assets. There can be little doubt that real property has no real priority at DND.
One bright spot is that the RCN came in for special praise in the report. Exhibit 5.2 states, “[S]ome bases have developed information management tools.” In fact, it is only the naval bases at Esquimalt and Halifax that have done this by purchasing commercial software to help manage their real property portfolios. The AG notes that this type of software is widely used in the private sector and helps the property managers assess their portfolios and determine the relative importance of needs by “systematically recording information about individual buildings and works, and their internal systems, to provide a comprehensive assessment of each asset’s condition.” The information provided can be used to “cost and schedule infrastructure maintenance and repair investments several years in advance.” So, somebody in the navy is using their head and taking advantage of best practices elsewhere to help make tough decisions. BZ to you! Apparently, DND’s R&D agency has reviewed the navy’s use of the software and recommended its full integration into base engineering and construction organizations.
The bigger problem is that there is an immense pent up demand for maintenance work and the budget allocations are inadequate. All of the deferred work due to “higher priority demands” has created a situation where the infrastructure is crumbling out from underneath the institution. I can remember senior staff discussions from as far back as the 1980s that identified the need to defer infrastructure work so as not to ‘jeopardize’ major capital programs for the fleet (CPF) and upgrade projects (TRUMP and SOUP). The naval platform-centric focus of that age has deferred a terrific debt onto the current generation of admirals, something that is antithetical to the concept of stewardship, which is referred to repeatedly in the AG’s report. Even if the eight percent target figure for real property spending was met, it would likely take decades to bring things up to a reasonable standard. To do more will cost much more. With a fixed funding envelop, it is hard to imagine how a change will be implemented, but the miserable results of past practices are now public knowledge thanks to the AG's report.
Support for fleet operations is critical to the navy’s capability to generate and sustain force. This has been axiomatic since the very earliest days of naval strategic thinking. When the fleet or single units deploy, it is able to do so because the maintenance and repair effort at the main operating base has put the ship into a fit condition. Operational support, supply and sustainment can do much to keep a deployed ship active and effective, but at some point both the deployed unit(s) and operational logistics forces must return to restart the cycle of maintenance and operations. Longevity in command would help to make this clear, but the ‘ticket-punching’ race to make higher rank leaves the problems behind for somebody else to deal with upon promotion and posting. Again, this is not stewardship. It is not even ethical professionally, but it is a reality.
While low spending on real property is problematic, the lack of a strategy and management plan is systematic. It reveals how little the senior leadership really cares about the institution as a whole and how focused they are on tactical capability. This is a classic case of a ‘means-ends inversion’, which I wrote about in the summer issue of Canadian Naval Review (Making Waves: “Government Cutbacks Threaten Shipbuilding Program: RCN Threatens Itself.”) Not even the government’s direction in the Canada First Defence Strategy can force the admirals and generals away from their platform-centric approach to force development and generation. You have to wonder what it will take to bring about change. Does the roof literally have to cave in on someone’s head before the practical, operational and strategic consequences of this ‘cheap’ attitude become apparent. Or, will the AG’s report ‘sting’ someone into action.
Don’t count on the AG’s report being the answer. On 24 October, a news report by the Canadian Press, entitled “Defence cuts weren’t deep enough: Stephen Harper in leaked letter to Peter Mackay,” recounted the PM’s direction to the MND to stop protecting operational capabilities, to increase cuts to administrative ones, and to consider “unloading some of its surplus property.” The Leslie Report on Transformation was used to shield tactical forces from the budgetary axe, which then brought the brunt of the cuts down onto the administrative and civil branches of the department. With a long history of deferring maintenance on real property, you can imagine how easy it must be fall back onto that old logic and to offer up saving there instead of on tactical forces, even though the logistical organization that makes them operational and keeps them that way is crumbling into decay.
I have said it before and its worth saying: Amateurs study tactics. Professionals study logistics.
