Defence Renewal Annual Report - 2013-2014 - Strategic Summary

Alternate Formats

Department of National Defence and the Canadian Armed Forces — 24 September 2014


The Department of National Defence and the Canadian Armed Forces is a dynamic institution charged with defending Canada and protecting Canadians and their interests – the highest responsibility of government. This unique duty is a source of pride for all members of the Defence Team, civilian and military, and is executed with excellence at home and abroad. Indeed, the Canadian Armed Forces has deployed on operations in all corners of the globe in recent years – from Afghanistan and Haiti to Kosovo and South Sudan – projecting leadership abroad and contributing to international peace and security. Here at home, the Forces protect the sovereignty of Canada and stand ready to answer the call to assist civil authorities when crisis strikes, whether through search and rescue operations or by providing disaster relief following floods, forest fires, and other natural disasters.

These complex and varied operations are enabled by what is referred to as the “business of defence” – the multifaceted processes that deliver the tools and resources needed to get the job done. With the largest operating budget in government, the Defence Team is the largest federal government employer, with vast infrastructure holdings and significant economic impact on communities across the country. The defence enterprise also has substantial impact on the Canadian defence industrial sector, which supports the military’s extensive equipment and infrastructure needs. The nature and scope of the business of defence, coupled with the sheer size of the defence enterprise, creates particular management challenges – most notably the need to think and plan for the very long term, given the lead times required to develop military capabilities. It also requires careful attention to sound financial stewardship, effective administration, and commitment to transparency and public accountability.

The Defence Renewal initiative embodies this commitment and builds on a history of effective adaptation to changing circumstances and lessons learned. Over the last decade, the Defence Team has demonstrated its ability to adapt its structures and processes, and to maintain the agility and responsiveness necessary to meet government expectations. In 2006, for example, the Defence Team recognized the increasing complexity of deployed operations and the need to better organize for missions in Canada. As such, separate operational commands were stood up for domestic operations, international operations, Special Forces operations, and operational support. This foresight and adaptability positioned the Defence Team to execute an exceptionally high operational tempo with excellence – the high mark of which took place in 2010 with simultaneous operations in Afghanistan and Haiti, as well as across Canada (security support to the Vancouver 2010 Olympics and G8/G20 Summits, daily domestic sovereignty operations, and disaster relief following a hurricane in Newfoundland).

Concurrent with this effort, the Government was also managing the effects of the global economic downturn and launched a number of initiatives to restore budget balance. The Defence Team had undoubtedly benefitted from substantially increased investments since 2006 but, like all federal departments and agencies, did its part to reduce the deficit. The Defence Team contributed $1 billion annually to Strategic Review through the purposeful elimination of low performing programs, again displaying a commitment to institutional change and continual improvement. During this period, the Defence Team also absorbed wage increases as part of the operating budget freeze.

Subsequently, as part of the Deficit Reduction Action Plan in 2012-2013, the defence budget was reduced by an additional $1.1 billion (~7%), targeting business process renewal and lean management reforms. The Defence Team drew extensively from recommendations in the Transformation Report, commissioned by the Deputy Minister and Chief of the Defence Staff in 2011, in shaping renewal initiatives. On top of these measures, the Defence Team was asked to cover some incremental costs for operations, generating significant budgetary pressures.

Over the course of 2011 and 2012, the Defence Team again responded to changing circumstances and adapted the military command structure to new realities and lessons learned. With the end of the combat mission in Afghanistan and a need to respond to calls for budget restraint, the Defence Team initiated a new round of transformation to reduce the size of Canadian Armed Forces command structures and eliminate redundancies. This resulted in a single, leaner operational command still well suited to conduct multiple, global operations – the Canadian Joint Operations Command.

Throughout these years of continuous adaptation and improvement, the Defence Team has consistently worked to identify opportunities to optimize business processes and to maintain a focus on our primary mission – to privilege operational readiness and maximize operational effectiveness. This spirit permeates the Defence Renewal effort and, in fact, reflects broader Government of Canada renewal initiatives, most notably Destination 2020 and related activity.

Approach to Defence Renewal

In October 2013, the Minister of National Defence formally launched the Defence Renewal initiative, an internally-driven, whole-of-Defence Team effort that goes even further to seek institutional change. This effort is led by the Deputy Minister and Chief of the Defence Staff, who are spearheading the initiative and emphasising the need for an integrated approach across the Defence Team, coordinated by the newly- created Defence Renewal Team. The experience of multiple rounds of transformation, punctuated by budget reductions, made clear that the Defence Team must fully examine how it conducts the business of defence in order to maximize operational output.

Since the launch in October, momentum has been slowly building, both at National Defence Headquarters and at bases and wings across the country, with each individual empowered to embrace innovation and push forward changes to improve his or her working conditions and, thus, productivity. Over the course of 2013 and early 2014, the Defence Renewal Team conducted 15 visits to bases and wings across the country, generating much discussion and information sharing that greatly informed the scope of the Renewal initiatives. All members of the Defence Team are encouraged to continue to play a role in the long term success of Defence Renewal and must embrace a growing culture of continual improvement. The Defence Renewal effort is being conducted according to several key guiding principles. Chief among these is the commitment to redirect all resources extracted through Renewal to operational capabilities and readiness. This means taking a close look at institutional overhead – some very necessary for operational success – and ensuring there is no excess. Distinguishing between essential and non-essential supporting structures requires a keen application of performance metrics to measure improvements, guide resource allocation decisions, and ensure accountability. Finally, Defence Renewal strives to embrace technological innovation to foster process improvements. At times, this may require up-front investment to bring about long term opportunities, a reality the Defence Team is continuing to manage through its robust Defence Renewal governance structure.

The Vision

The Defence Team is striving for a lean and efficient organization that continuously finds ways to conduct the defence business smarter, frees up resources that can be reinvested in operational capabilities and readiness, and delivers the best military capabilities at the best value for Canadians.


By 2017-2018, the Defence Team will generate between $750 million and $1.2 billion annually that will be reinvested in military capabilities and readiness, including the internal reinvestment of between 2800-4800 military and civilian personnel towards higher value work."

Progress to Date

In the relatively short period since the Renewal roll-out, the Defence Team has produced $74 million in reinvestment gains this fiscal year. This is an early, tangible success on which we will build toward the ultimate goal of $750 million - $1.2 billion in the coming three years.

Defence Renewal comprises a comprehensive and ambitious suite of 30 initiatives broken down into nine themes. The first six themes are focused on improving performance and will generate the whole of the reinvestment opportunities. These include:

Operations and Training (3 initiatives)

The operations and training portfolio aims to improve the management of operational readiness and those activities in direct support of readiness, such as training and equipment maintenance. These initiatives have the potential to generate $100 million - $190 million in reinvestment opportunity by 2017-2018, and intrinsic benefits to the Defence Team’s preparedness to execute operations. The three specific initiatives concern managing and reporting on readiness, expanding the use of simulation for Royal Canadian Air Force (RCAF) training, and improving equipment maintenance processes across all services. Readiness reporting has made significant strides and is now more clearly linked with resource expenditures. The RCAF simulation project is moving rapidly through the capital project approval process, with a Treasury Board Submission projected for March 2015. While the equipment maintenance process has experienced some challenges, the Canadian Army has already gained 32,000 technician-hours for reinvestment in repairs, and even greater progress is anticipated over the next twelve months.

Maintenance and Materiel (4 initiatives)

This portfolio of initiatives involves renewing the maintenance and materiel program from end-to-end, beginning with changes to how business is conducted both at headquarters and at units. The four initiatives relate to optimizing inventory management, right-sizing warehousing and distribution, and implementing best practices for both maintenance program design and departmental procurement practices. All four initiatives are progressing well and are poised to deliver significant reinvestment opportunity ($282 million - $450 million). The Defence Team has already realized $62.2 million in cost avoidance by reducing cumulative overbuy in the supply system, which allowed for more strategic application of funds to higher priority requirements.

Information Management/Information Technology (IM/IT) (3 initiatives)

The IM/IT initiatives are designed to allow the Defence Team to better plan and manage IT resources and investment while increasing efficiency. These initiatives are similarly maturing and progressing and have the potential to generate $38 million - $68 million in reinvestment opportunity, largely by optimizing service management and rationalizing service provision. For example, 11 standardized IT support desks were established this year as a first step towards regionally centralizing over 120 help-desks across the department.

Infrastructure (4 initiatives)

Infrastructure renewal will provide the Defence Team with an opportunity to reinvest in modern, operationally relevant infrastructure and reduce the annual management and operating costs. This basket of initiatives ranges from centralizing real property management to rationalizing the property portfolio to optimizing facilities management and service delivery to improving real property project delivery. All four initiatives are progressing and have the potential to generate $104 million - $179 million in reinvestment opportunity. A major milestone was reached this year as the department transitioned from nine custodians of real property management to four, moving toward an end state of a single custodial model by 2016. This generated $2.5 million in personnel costs that have been reinvested to core business functions. The Defence Team is also currently developing a National Real Property Development Plan to guide a comprehensive effort to rationalize property holdings, which should be ready for approval by December 2014. Early divestment opportunities have already generated $2.3 million in reinvestment opportunity. Further, in the past 6 months, $1.5 million has been reinvested through optimization of facilities management services.

Personnel (5 initiatives)

There are five initiatives included in the personnel category, all designed to optimize personnel recruiting, training, and management, with the potential to generate $43 million - $73 million in reinvestment opportunity. All five initiatives are progressing well, with early gains in modernizing the military career management process, which has generated $0.6 million in reinvestment opportunity and saved over 9,000 hours of staff time that has been directed to core tasks. Gains have also been made in modernizing the military recruiting process, particularly by increasing use of online tools, reducing administrative burden, and more effectively reaching Canadians across the country. Notably, following the launch of the e-application system, over 37,000 applications were received, marking a significant increase. The renewal of the Cadet and Junior Canadian Ranger Programs is also progressing well, with $4.5 million achieved and reinvested in Army Cadet Field Training uniforms and greater support for local physical fitness activities.

Management systems (3 initiatives)

This basket of initiatives concerns rationalizing the number of managers at National Defence Headquarters and modernizing management practices. The intent is to expedite decision making by streamlining oversight and approval processes and empower staff to accomplish their assigned tasks. The three initiatives have the potential to generate $176 million - $207 million in reinvestment opportunity.

Ongoing analysis, for example, has revealed that changes to the project approval process within National Defence could save 40-60% of time for constructions and equipment projects, while doubling throughput. In the coming months, work with an independent contractor will also begin to launch the “Lean Headquarters” initiative, which may generate upwards of 1,000 personnel for reallocation by streamlining spans of control and improving business processes.

The final three themes of Defence Renewal are focused on improving practice and are intended to advance the management and administration of the Defence Team. While these initiatives are not designed to generate material savings, they will foster a cultural change across the institution, enabling the Defence Team to accept and thrive in an environment where continual change is the norm. These include:

Strategic Clarity (3 initiatives)

These initiatives include the effective articulation of strategic priorities into tangible goals and actions in clear and compelling terms. The bulk of effort will be focused on ensuring that strategic intent is clearly understood and articulated by senior leadership, renewing top-level governance structures, and instituting a program to internally communicate change across the Defence Team so that all members understand their role in executing the mission. By 2014-2015, this initiative will produce a clear framework of strategic documents in order to facilitate common interpretation of strategic intent. It will also produce clarified guidance on the authorities, accountabilities, and responsibilities of senior leaders and introduce a revised governance structure to streamline decision making.

Disciplined Business Execution (3 initiatives)

Together, these initiatives will institute a performance management culture and business practices that use clear objectives and closely monitor progress. This initiative will build on the good work that has already been undertaken to produce a new Program Alignment Architecture (approved by Treasury Board) by developing key performance indicators and a performance management framework. Additionally, the Defence Team is reviewing its policy and procedure systems in order to reduce unnecessary bureaucracy and administration. In the past six months, for example, over 40 redundant institutional policies have been eliminated. Finally, through this initiative, the Defence Team will strive to encourage and leverage front-line innovation.

Openness and Trust (2 initiatives)

These initiatives are aimed at sustaining the transparency, goodwill, and knowledge transfer upon which performance and continuous improvement depend. While progress to date has been limited, the Defence Team will develop a knowledge sharing program in the coming year based on comparative programs within the public and private sectors and existing best practices. Development will also soon begin on an integrated program for coaching on leading transformational change.

Proposed New Initiatives

These thirty initiatives are only the beginning of the Defence Team’s journey toward basic and continual institutional improvement. The Defence Renewal effort is encouraging and inspiring grass-roots innovation and change across the Defence Team that is, in turn, prompting new Renewal initiatives.

Through town halls and other engagements, ideas have been presented and two concepts have been identified for potential inclusion in the Defence Renewal portfolio. These include improving the governance and management of the Ammunitions and Explosives Requirements and the rationalization and potential centralization of the Emergency Communications and Dispatch Services across Canada. Further work will be undertaken on establishing the frameworks to move ahead with these two new important ideas.

Outside of the formal Defence Renewal portfolio, senior leaders across the Defence Team have been embracing the spirit of renewal and are leading over 100 additional change activities which they are each managing within their organizations. Some notable examples include:

  • National Defence Headquarters Transformation: The Carling Campus project will consolidate National Defence Headquarters organizations within the National Capital Region in a modern facility, introducing improvements in office conditions through Workplace 2.0, innovative IT solutions, and more efficient support services.
  • Materiel Group: The Materiel Group, responsible for defence procurement, is undergoing a series of important reforms over and above what it is already contributing to Defence Renewal. Over a dozen discrete initiatives will improve the conduct of day-to-day business, including in the areas of global supply, procurement processes, and equipment and ammunition management.


The Defence Renewal effort was designed as a five year program, with the intent to instill a culture of continual change. While still in early stages, the Defence Team has already identified $74 million in reinvestment opportunity and is working steadily toward the goal of $750 million to $1.2 billion of annual reinvestment space.

Defence Renewal Reinvestment Framework

To manage the reallocation of this savings, the Defence Team has established a Defence Renewal Reinvestment Framework. This framework is designed to enable broad organizational engagement in the Defence Renewal program and provide incentives to participant organizations to embrace change. The incentives principles are designed to allow organizations to keep a percentage of Defence Renewal gains, encourage other change and transformation activities, reward cross-organization cooperation and goodwill, and balance investment and accountability All retention of resources must be tracked and reported on through the Business Planning process and must privilege operational readiness and capability development.

Using the incentive principles as guidelines, the currently identified reinvestment gains will contribute to such things as improving vehicle readiness in the Canadian Army, sustaining operational material stocks by the Material Group, increasing engineering effort to improve infrastructure on bases and wings, and to procure field training uniforms for cadets in support of their training.

The Canada First Defence Strategy Renewal

The Defence Team is concurrently working on the renewal of the Canada First Defence Strategy (CFDS). This process is fundamental to recalibrate Defence Team priorities given changes in the strategic and fiscal context since the Strategy was first released in 2008. The CFDS renewal will be undertaken within existing resources and predicated on carefully prioritized internal reallocation of funds and people. As greater savings are accrued through the Defence Renewal program, funds and people will be reallocated to the priorities identified through the CFDS renewal process and approved by Government.


Since the Minister of National Defence launched the Defence Renewal project, the Defence Team has responded with enthusiasm and genuine desire to produce meaningful change. All members of the Defence Team – military and civilian – are proud to serve their country and sincerely want to continue to deliver operational excellence at home and abroad. This attitude reflects the longstanding adaptive nature of the Defence Team and has enabled substantial progress on many Defence Renewal initiatives, with fulsome plans for future work. Savings have already been realized through a myriad of improvements and streamlining efforts of various scope and undeniable impact. Though challenges remain, confidence is high that the Defence Renewal project will yield further results, improve morale, and sharpen the ability of the Defence Team to execute its ultimate task – defending Canada and Canadian interests.