Smoke and Mirror Budgeting from the Reformists

John Ivison: We knew Defence Department procurement was a mess. Now we know how much of a mess

When auditor general Michael Ferguson looked at the F35 purchase three years ago, he found “significant weaknesses in the decision-making process” at the Department of National Defence.

Now we know how significant. A new study by the Macdonald Laurier Institute and the Conference of Defence Associations Institute suggests that nearly one-quarter of the money Parliament allocates for defence procurement in any given year remains unspent.

Since 2007-08, exceptional delays in the defence capital program means an average of 23% of available money — $7.2 billion — was not spent as intended. Dave Perry, the report’s author, said the problem is “historically unprecedented” — the historical average, dating back to 1973, is 2%.

The problem with not spending the money is that changes in costing procedures mean that purchasing power is eroded by inflation, which runs at around 7% for military gear. Mr. Perry estimates that buying power is being reduced by 20-25% over the project life of multi-billion-dollar procurement projects. He pointed to a recent report by the Parliamentary Budget Officer that suggested delays in the Arctic Offshore Patrol Ship procurement could result in one fewer ship per year of delay.

READ MORE: http://news.nationalpost.com/2015/01/14/john-ivison-we-knew-defence-department-procurement-was-a-mess-now-we-know-how-much-of-a-mess/