Report on Transformation 2011
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No organisational model can work unless its senior leadership takes the tough
decisions that reconcile ambition with reality. Some of the perceived problems of the current model are simply symptoms of the friction caused by the lack of such decisions in the past. We have not identified a silver bullet to the financial challenges that Defence faces today. Resolving them means some unavoidably tough choices about priorities. We believe our proposals should provide a better framework to make those decisions. But they will still need to be made. If they are not, this model will fail too.
Lord Levene of Portsoken, KBE, Chair - UK Defence Reform Steering Group
Chapter 2: Laying the Foundation:
Section 2.1: Unfinished Business: Historical Analysis of Transformation
Section 2.2: External Factors – Preparing for an Era of Discontinuous, Disruptive Change
Section 2.3: Internal DND/CF Factors
Section 2.4: So What?
Chapter 3: The Status Quo: Years of Growth
Section 3.1: The Personnel View
Section 3.2: The Financial View
Section 3.3: The Combined View
Section 3.4: Status Quo Deductions
Section 3.5: CFDS and Initial Transformation Targets
Chapter 4: Design and Theory: Options Development
Section 4.1: Initial Design Approach – Activity Modelling
Section 4.2: Preliminary General Options – The Centralized, Hybrid, and Decentralized Models
Section 4.3: The Genesis of the Seven Thrusts: Methodology & Process
Chapter 5: Synthesis of Cross-Cutting Transformational Themes & Key Recommendations
Section 5.1: Thrust 1 - Optimizing Command and Control for Force Employment
Section 5.2: Thrust 2 - Integrating Force Generation for Joint & Common Capabilities
Section 5.3: Thrust 3 - Delivering Future Capabilities through a Revitalized Force Development Structure
Section 5.4: Thrust 4 - Consolidating Force Support to the CF
Section 5.5: Thrust 5 – Strengthening Force Management Today to Better Integrate Civil-Military Defence Governance in the Future
Section 5.6: Thrust 6 - Protecting Front-Line Units by Reducing Administrative Overhead
Section 5.7: Thrust 7 - Achieving Gains in Defence Productivity through Process Reform
Section 5.8: The Blended Organizational Model – An Option for Transformative Progress
As announced by the Minister of National Defence, the transformation team was established in 2010 to develop ideas to increase efficiency and effectiveness, and to act as the driving force behind organizational changes needed to reposition the DND/CF for the future. For the last ten months the team has had the privilege of taking a comprehensive look at the organization; to amass, collate and study the structures, people, money, and areas of growth that have occurred, to track the outputs, and to think about what the future may hold in store. We saw tens of thousands of people working hard in the service of their country, be they regulars, reservists, civil servants, rangers or cadet instructors. We saw a CF that has matured in the crucible of combat, and a Department that has produced results in rushing urgently needed and life-saving equipment into service in record time. Together, the DND/CF is an organization that is growing increasingly responsive and focused, that has a great deal of self-confidence, and which has become a world class military. Supported by the civil servants who see themselves as part of a winning team that has earned the respect of its citizens (Annex O, Appendix 9 – IPSOS Survey Presentation June 2011), the CF is admired by its allies and those we have been assigned to help.
The triumphs of today do not, however, guarantee the successes of tomorrow. The international economic climate is grim, and what happens out there has an impact at home. Resources are finite, and the DND/CF can expect to contribute a proportional share to better ensure our financial security as a nation by helping to eliminate the deficit. Not only are we going to have to continue to live within our means and balance our books, we are going to have to carefully reallocate from within to meet the new and emerging defence demands of tomorrow (some amongst many that include the Arctic, more part time reservists, cyber, special forces, and sailors going to sea) that will drive us to be even more agile, more deployable, more ready to respond. Our vital ground is our people, their equipment and their training; all of which is increasingly expensive and has to be focused on producing capability for wherever the government chooses to send us. We are going to have to reduce overhead and invest in output; we have to become slimmer, to trim the top and middle while protecting and investing in the various systems that result in the people in the ships, battalions and squadrons of aircraft doing the tough and often dangerous work that Canadians are so proud of. In short, we are going to have reduce the tail of today while investing in the teeth of tomorrow.
What you will find in this report is an unprecedented level of research into and around the DND/CF, based on facts and numbers made possible by new information technologies. This has led us to consider new ways of blending like organizations with like so as to achieve potential efficiencies, to streamline ourselves while maintaining the required operational focus. We have identified areas that will lead to about $ 1B in potential yearly administrative savings. At the same time, we have laid out how we think we can reduce overhead while protecting deployable forces (both regular and reserve), along with their associated equipment, training and infrastructure needs from potential reductions. In doing so, we have identified how to make the Canada First Defence Strategy more achievable within the resources available. This will require a determined, collective effort to reduce headquarters and overhead, and will involve the re-rolling and re-investing in the order of about 11,000 military and civilian people. As well, it will require us to restructure and blend existing organizations, further rationalize process and priorities, and ruthlessly focus on reducing some of the $2.7B we spend each year on professional services, consultants and contractors. All of these ideas will take time to implement, as the organization is big, complicated and our people need to be trained and prepared so they can understand where they will fit into the future.
Very few of the recommendations to get to where we think we have to go will be easy, popular or risk free. All of the recommendations need a transparent second and third order consequences study, with input and discussion from and amongst the various stakeholders to flesh out the many details that the team could not resolve with the caveats, time and resources available.
Whatever decisions are eventually made will require a unified and coherent defence team pulling in the same direction under firm and dynamic leadership at all levels. Not everybody will agree – indeed, our historical review has shown us that in previous transformation efforts there has always been significant resistance to change that has manifested itself in a classic passive/aggressive style; instead of seeing the collective as a future winner with the new, in the past some have looked at themselves as individuals who may lose status, resources or power. Or else they have delayed making the hard choices, passing the issues on to their successors.
The key is leadership. Leaders at all levels must have their say, and compromises and common sense alterations must be adopted, but eventually people have to be told what to do. Whether under our control or not, transformation will occur; the times are changing, and we have to change with them. If we don’t, the history of previous transformation efforts shows that our front line output will suffer while the overhead continues to grow. Canadians deserve better. The great news is that we have leaders at all levels, military and civilian, regular and reserve, to move us forward. Are we ready?
In closing, I would like to extend my deepest thanks and appreciation to the outstanding work done by the team, a blend of military and civilian professionals whose dedication, sense of humour, willingness to think outside the box and passion for both the DND and CF knows no bounds, and whose support and willingness to tackle difficult and complex issues has been nothing less than inspiring. A most sincere thank you is also extended to all those who participated in the advisory working groups and the larger transformation network. If the ideas are good, it comes from them. The not-so-good are all mine.
Lieutenant-General Andrew Leslie, CMM, MSC,MSM, CD 6 July 2011
Since its inception, the fortunes of the DND/CF have waxed and waned according to the domestic and international context of the times, as tempered by the philosophical beliefs of the different national leaders and their key stakeholders. Often, spending on the CF has been viewed as discretionary, couched mainly in terms of the minimum that the nation could afford. When the economy was in decline, the resources allocated to defence usually decreased and we relied more on friends and allies for collective security. When driven by dangerous international circumstances, and in the context of a sound economy able to support a national vision of Canada’s place in the world (such as the Canada First Defence Strategy), defence has been a higher priority. The point is that throughout DND/CF history there have been constant cycles of transformation; of growth and contraction, and of changes mandated by new threats, new technologies, fiscal cycles or new ways of doing business. All of our NATO partners and allies are undergoing the same sort of activity, but in the Canadian context it is currently a label for one part of the process that seeks to help the DND/CF transition from where it has been to where it must go.
From the outset the team pursued guiding principles in line with ideas articulated in the Canada First Defence Strategy: the need to make every dollar count in terms of the pursuit of operational efficiency; the need to ensure that the essential current and future outputs of the CF (well trained, well equipped and agile front-line forces of regular and part-time reserve personnel) are insulated from possible reductions; and the need to accurately quantify the full extent of the overhead within the DND/CF so as to remove (as much as possible) uninformed opinion and bias from the ensuing debates around structural options for the future. To establish trend lines, we used three data points in time: 31 March 2004, 2007 and 2010 (the end of the respective fiscal years). We have not included data from 2011 as the books have not yet been closed off and the information is not publicly available.
Guided by the intent of the Minister of National Defence (Annex A, Appendix1) and our terms of reference (Annex A, Appendix 2), the explicit goal of the transformation team was to identify areas where we could reduce overhead and improve efficiency and effectiveness, to allow reinvestment from within for future operational capability despite constrained resources.
In a complex and increasingly networked world that has undergone some very serious fiscal setbacks, our closest friend and largest trading partner (which has carried the lion’s share of the West’s defence burden for many decades) is nearing financial culmination. Canada’s economy has done remarkably well in comparison to almost all others, but to preserve our financial security the current deficit must be eliminated, and the DND/CF can expect to contribute a fair share of such reductions. At the same time, the world is proving to be more complicated and potentially unstable than yesterday, and we have increasing demands for the CF to help domestically (security, sovereignty, natural or man made disasters) as well as internationally (Afghanistan, Libya, Coast of Africa, Haiti, UN or other NATO missions). We have been able to meet these needs through a generous increase in funding (a nominal 51 % from 2004 to 2010) which has been translated into more people (18% from 2004 to 2010), numerous new equipment deliveries, and more resources for training. But every tax dollar has to count - more so than yesterday - and duplication and overhead has to be minimized so as to preserve the output that actually does the work of which Canadians are so proud, and to allow us to invest in the future from within.
No matter how well things are going, however, every organization should have the will and fortitude to learn from what has happened, to make better use of what we have, to become more agile and efficient, to study areas where friction has occurred and to learn from those examples; and thus this report.
Throughout almost all of the previous transformation efforts there have been recurring themes. These include reducing duplication, increasing efficiency by reducing headquarters and staffs, protecting future equipment purchases by reducing numbers of people or training levels and doing more with less. These various efforts have resulted in hundreds of recommendations, some of which are innovative and first class, some of which are not. A number are quietly buried in the bowels of filing cabinets as being too hard or too threatening of the status quo. The eventual result was usually not what was originally intended, and in far too many instances the headquarters and other overhead grew while ships were decommissioned, regular and reserve battalions were disbanded and whole aircraft fleets cashed in. Each of the previous transformation efforts had context and specific circumstances, as we do now.
The Friction Space
As mandated, we sought areas where improvements might be required or suggested, and to nobody’s surprise we found some. We saw a certain degree of administrative incoherence where not everybody really understood or appreciated the legitimate emphasis on accountabilities, financial authorities and doing the right thing the right way with accurate cost estimates; and we noted obstacles to accepting risk and making timely decisions that would permit resources to be managed without going through an increasingly cumbersome and even confusing degree of interdepartmental process, especially in delivering the capital program outside of the urgent operational issues. When taken together the issues of stifling process, blurred authorities and accountabilities, as well as some reluctance at all levels to accept managerial risk – not unique to DND - go a long way in explaining a disturbing and increasing trend as to why many hundreds of millions of dollars have remained unspent, starting in FY 06/07 and growing to this day; money that was originally planned to support the troops for the year in which it was approved, but was not.
In a similar vein we also found a significant increase in military and civilian headquarters personnel (46%) from 2004 to 2010, a figure which does not include the thousands of contractors, consultants and professional services people - mainly in Ottawa – that are needed to manage the increased volume of process and work between the various headquarters and supporting organizations; and to compound the issue, there are a series of information technology stovepipes - built over the last two decades - that have evolved under a highly decentralized model that is both expensive and counterproductive to expediting the right information getting to the right decision makers for them to make the right decisions at the right time, despite the sterling work of those who are doing their best to bring resolution to this issue. And, as pointed out by the Auditor General, there are several recent examples where we were not as efficient as we could have been and where we need to improve.1 These are symptomatic of old processes, new overhead layered on old, lots of committees, and in certain areas a sometimes bewildering number of steps - not all of which are within the sole purview of DND - to actually achieve a government directed spending outcome; this has often frustrated the best intentions of civil servants, the military, other supporting Departments and Canadian industry, all of whom should want the best value for the tax-payers dollar in support of the deployable forces.
In the absence of being formally assigned specific targets for our work, an understanding of what pressures the government and DND/CF were likely to face by FY 2012 and beyond was needed. In other words, how deep did we think we had to dig to help position the organization for future success? There was little doubt that a very high priority was going to be assigned to reducing the federal deficit, and that DND/CF was going to have to contribute a proportional share of this requirement. The conclusion was that there would be no new money coming our way beyond that which had already been announced, and we could reasonably expect to undergo another strategic review process roughly equivalent to that which had just concluded in FY 2010, which was about $ 1B.
Most importantly, we then had to try and figure out what was needed to invest in the future, what to reallocate from within to meet the demands of tomorrow. The most important and expensive pillar of the defence program is people (there are four pillars outlined in CFDS, comprising people, readiness, equipment and infrastructure), so amongst other things we knew we had to take a really hard look at the various levels of overhead and find the people to move or reinvest into where they were going to be needed.
As well, we knew that we were going to have dig even deeper to free up resources to invest in the future equipment needs of the CF within the context of CFDS, with the intent of trying to make the overall capital program more achievable within assigned resources, and to do so we had to identify the demands of the future.
1 Report of the Auditor General of Canada to the House of Commons. Chapter 5 - Financial Management and Control—National Defence. (Ottawa: Public Works and Government Services Canada, Spring 2009), at http://www.oag-bvg.gc.ca/internet/English/admin_e_41.html.
The Demands of the Future
In conjunction with our analysis of CFDS and listening closely to the priorities of the government, in conjunction with the Force Development experts we identified future investment areas for DND/CF. These include new people and capabilities for the Arctic, an air expeditionary wing, the Canadian Rangers, investments in cyber defence, space, special operations forces, deployable all source intelligence centres, human intelligence, counter IED, nuclear/biological/chemical defence, returning sailors to sea, returning reserve supervisors from full-time headquarters employment to part-time leadership roles on the armoury floors, and deployable support personnel. The total bill for personnel investment in the future amounts to about 3,500 regulars, several thousand reservists and an appropriate number of civil servants. The point is that our people are hard at work today, but they are not all necessarily doing what is needed to position us for tomorrow. In terms of making the capital program - the future equipment purchases - of CFDS more achievable, there are very few options; these include reducing the program, receiving more money or re-allocating funds from within, and it was this latter that we saw as the only logical option consistent with the stated intent and what the fiscal climate is telling us. If we are serious about the future - and we must be - the impact of reallocating thousands of people and billions of dollars from what they are doing now to what we want them to do to position us for tomorrow will require some dramatic changes. The consequences of not doing so will lead to eventual mission failure of the CF, as our output will suffer degradation while the overhead continues to grow along the established trend lines in Chapter 3.
In terms of methodology the first priority was to figure out what we had, where it was, how much did it cost and what the trends could tell us once we examine the information in terms of several data points. Using some new tools based on agile business intelligence, the team was able to gather information to an unprecedented level of fidelity. We looked at every major organization vertically, and then conducted cross-sectional or horizontal reviews of every major activity and architecture within the larger collective of the CF and DND, two indivisible halves of the same family that have to work together at every level to realize the maximum return on investment that the defence of our nation demands.
As our remit was to suggest areas for improving efficiency and effectiveness while doing all that we could to reinvest in the front line or deployable units that comprise the CF, we consciously chose to accept that both the planned capital programme and the deployable output - the ships, the regular and reserve battalions and regiments, the flying squadrons and the ranger patrols - as beyond detailed examination. In a similar vein the increased demand for well-trained and agile forces that are ready to deploy, be it at home or overseas, led us to protect those funds allocated to training, equipment repair and sustainment. In other words, we will not further discuss the idea of reducing the deployable output at tactical level - regular or reserve – as they are our vital ground.
We then took a look at what our allies were up to, and where applicable tried to learn the lessons of those who have gone before (Annex E). All of our NATO partners, allies and friends are wrestling with much the same issues, and most of them have been assigned very aggressive and specific reduction targets (in certain cases up to 20 %) at the start of the process and before the detailed work could be done to explore options; this has made it very difficult, if not impossible, for most of them to preserve or reinvest in future operational output. In the case of the UK, the decision was made to turn directly to a blue-ribbon panel to review the operations of the Ministry and the Armed Forces from the outside in, and to suggest reforms from an independent perspective.2 Though many of the ideas that issue from the superb ‘Levene Report’ parallel the findings and recommendations described later, one additional lesson to take away was that we had to come up with some answers, ourselves, on how to reduce overhead and invest in teeth before it became a national crisis and others decided to do it to us. The final point of commonality with our allies was the need to mitigate against internal flat taxes, which our review has shown always end by impacting disproportionately on operational forces and readiness, rather than overhead.
Based on a series of brain-storming sessions over the winter with a network of some of the best and brightest officers and civil servants destined for more senior leadership roles, a variety of organizational models were discussed and some big ideas were developed to realize efficiencies and new ways of doing things. Some of these were presented at a large meeting in December 2010 involving the generals, admirals and senior DND civil servants, and it became apparent that the tendency was to argue for the preservation of the status quo within any one particular organization, which is perfectly natural. Though grimly amusing, these interactions proved that consensus has not and will probably never be achieved on any significant change as we are large and complicated, and the different organizations that make up the whole do different things, each of which is believed to be very important by those who are in them. Once again, perfectly natural and probably true. We found ourselves constantly going back to the intent of the Government for guidance, namely to reduce tail and invest in teeth.
Developing an Organizational Model for the Future
The team developed an activity model that permitted the mapping of approximately 400 key activities across the DND/CF, broken down into five broad categories that included Force Development, Force Generation, Force Employment, Force Management and Force Support. In proposing what became to be known as the ‘5F’ model, the team sought to re-situate discussion of what the DND/CF should be doing, how it should be doing it, and how it should be structured, away from traditional organizational notions of process and output, and into a more capability-oriented frame of reference. In its most fundamental form, the 5F model describes the full span of military activities necessary for the CF to achieve operational effects. This model was then refined to incorporate commensurate and integrated departmental functions such as policy formulation, communication, acquisition, material, infrastructure, financial and human resources management.
The team proposed three high-level organizational models for consideration. These models, centralized, de-centralized, and a hybrid, bracketed a broad range of possible approaches. The relative pros and cons were examined in the context of how they would contribute to the potential resolution of the myriad of issues facing the DND/CF.
2 Defence Reform: An independent report into the structure and management of the Ministry of Defence, Lord Levene of Portsoken KBE, Chairman, UK MoD, June 2011. Lord Levene and LGen Leslie met in London and exchanged many ideas in the Winter of 2011.
Seven Thrusts – A Framework to Move Forward
What emerged from the various discussions was a deep-seated divergence of opinion on the need to transform, and an understandable and obvious reluctance to develop any concrete options prior to budget 2011. To address this difficulty and to try and maintain momentum the team reformulated and re-scoped its work around three basic tasks: developing organizational options, developing supporting concepts, and developing action items that could be initiated within the allotted time, but whose resolution would require longer term focus. Using a functional model, seven thrusts were developed and generally accepted. These thrusts, although identified numerically, were not intended to be implemented in sequence. Instead, they represented an interconnected series of ideas that form part of the larger mosaic representing a possible solution set.
Thrusts one, two and three focused on developing organizational structure and process options in the domains of Force Employment, Force Generation, and Force Development. Thrusts four and five were to involve concept development around Force Support and Force Management, the latter of which was broadened to Defence Management to more accurately reflect the highly integrated nature of civilian and military functions in this area. The ideas underlying these thrusts clearly embody significant potential to realize process improvements and cost savings, particularly through the realignment of major support / service-delivery activities, or streamlining NDHQ functions. Thrusts six and seven were focused on action items related to administrative review and process reform – interrelated yet distinct areas of inquiry oriented on achieving concrete gains in productivity and direct resource savings.
Based on the terms of reference and on the notion that the impacts of some of the 2005 re-structuring needed re-examination in order find the capacity to deliver on other important priorities, a significant focus of the overall effort was on headquarters. Designed to command, control, oversee and enable the development, generation and ultimate employment of military capabilities, headquarters constitute a significant portion of the overall size of the DND/CF.
Ultimately, the intent of these related initiatives were to: rationalize the number of organizations and people involved in the planning, conduct and oversight of operations; bring coherence and efficiency to the management of the many diverse and disparate military capabilities that are spread across the entire organization as they don’t fit neatly or naturally into the existing structures; improve the emphasis on, and effectiveness of, joint operations and joint capability not just as enablers but as key future capabilities; and, to improve the coherence of the analysis, prioritization and delivery of future capability requirements.
Two Halves of the Whole – The DND and the CF
A key and recurring theme throughout the work of the team was the overall integration and inherent interdependencies of the DND/CF. This starts right at the top with a diarchy of command responsibility (CDS) and fiscal accountability (DM), and the extent to which the integration and intersection of accountabilities and responsibilities affects the overall functioning of the DND/CF. Without looking for integrated solutions that reflect this diarchy, any attempts to change one part of the structure or related process could have a potentially adverse and unpredictable impact somewhere else. The extent of this integration is represented in some of the analysis that identifies, for example that as of March 2010 approximately 64% of the civilian workforce of DND is actually employed within a military structure, and several thousand military personnel are employed in the performance of departmental functions. Neither of these examples is an issue in and of themselves; they simply speak to the integrated nature of the DND/CF relationship.
The need for fully integrated solutions was, therefore, central to the work of the team and is examined in detail in the report and suggested structure(s) of the future. There is, however, a disproportionate degree of fidelity in the proposals presented. The level of detail represented in the analysis and recommendations related to the predominantly military structures is much greater than that of the comparable civilian structures, as the team was directed to stop further work on the civilian structures in late November. At that point we had only examined the senior levels - levels 1 and 2 - and had not yet had the chance to drill down below level 2. We have been told that this will be addressed in the future by the upcoming development of institutional alignment options. In the interim there are several high-level proposals related to the departmental structures that show significant potential for increased efficiencies and warrant further analysis.
Key Findings and Recommendations
The following are the broad and most compelling findings of the trends from 31 March 2004 to 31 March 2010 (financial data for 2011 has not been included as all the various returns and books have not been closed off yet, though initial returns for 2011 personnel data are consistent with 2010 figures):
Overall DND/CF people grew (Regulars / Reserves / Civilians) by a total of 18%; and overall funding has increased by a nominal 51%;
- Regulars grew by 11% or 6,524 people, about half of which went to the Army, most of the remainder to non-Army headquarters. Reservists grew by 23% or 6,651 people, most of whom are full time reservists in headquarters and administrative positions. Civilians grew by 33%, or 7,318 people, most of which went to headquarters;
- The ‘tail’ has increased by about 40% (personnel in headquarters and in non-operational jobs);
- The ‘tooth’ has increased by about 10% (personnel in operational and / or deployable jobs);
- Consultants, contractors, and professional services contracts consume about $2.7B annually and growing (with at least 5,000 people, many of whom are in Ottawa);
- The DND/CF employs about 9,000 full-time reservists (Class C, Class B and full time Class A) mainly in headquarters and support functions at an approximate cost of $1B annually; and
- The Department is an organization with multiple layers of military and civilian bureaucracy that mitigates’ against the required managerial agility and flexibility to efficiently and effectively prosecute the totality of its assigned resources as indicated by the growing trend of unspent money.
- The executive leadership, as defined by Treasury Board, grew at a rate higher than that of overall growth of lower ranking personnel within DND/CF. Regulars (2%), Reserves (75%), Civilians (25%); for a cumulative increase of 19%.
In terms of recommendations, the overall intent of the CFDS can be better achieved - as well as catering to emerging requirements - if the following high-level measures are implemented:
- Implementing cross sectional administrative efficiencies in the amount of about $1B for either reinvestment or to pay whatever reductions are assigned to DND as part of the overall Government intent to pay down the deficit;
- Reducing overhead and reinvest in the future by:
- Reducing the numbers of headquarters and staffs by grouping like functions or accepting risk in the entire elimination of certain organizations;
- Identifying and reallocating approximately 3,500 regular force personnel into those areas identified for future growth or investing the funds elsewhere;
- Demobilizing the number of full-time reservists back to a baseline of approximately 4,500, and convert these back to part-time service working at units, in armories and investing the funds elsewhere;
- Reducing by up to 30% over several years the $2.7B spent on contractors, consultants and private service providers and investing the funds in future capital programs as outlined in CFDS;
- Reinvesting approximately 3,500 civil servants into higher priority activities or investing the funds elsewhere;
- Reducing the numbers of headquarters and staffs by grouping like functions or accepting risk in the entire elimination of certain organizations;
- Minimizing duplication and inefficiencies in support services and systems by establishing a centralized Joint Support Command with a dual civilian/military structure catering to the diarchy of command responsibilities and financial accountabilities, charged with reducing personnel and administrative support costs by 4% per year over three years for a total of 12% in personnel and another 12% in operations and maintenance costs, and reinvest these funds in the capital program;
- Refocusing the corporate military (VCDS and CMP) and civilian organizations on strategic management and policy, and parsing out their service delivery activities to other organizations better suited to do so where efficiencies can be realized;
- Grouping the strategic and common enablers within the existing Services or within Joint Support Command to achieve efficiencies and to act as a forcing function for a more joint approach; and
- Adopting the proposed command and control structure, or an equivalent, as outlined in chapter 5 section 5.8.
The intent of this chapter is to provide details regarding the provenance of this round of transformation; specifically, what the transformation team was directed to do and to achieve, the broad approach used to guide the development and production of recommendations, and the key issues encountered throughout the conduct of this effort.
The Minister of National Defence announced on 30 April 2010 that Lieutenant-General Leslie would assume the role of Chief of Transformation later that summer.3 The Minister stated that his intent for the role of Chief of Transformation was to “act as the driving force behind organization changes and re-positioning the Canadian Forces for the future. Specifically, the Chief of Transformation will be responsible for increasing organizational efficiency and effectiveness.”4 In August 2010 a modest number of hand-picked military and civilians were stood up to assist with the transformation effort. They were assigned a one-year term.
Terms of Reference
The Chief of Transformation terms of reference were co-signed by the CDS and Deputy Minister in September 2010. The key details of these are:
- The Chief of Transformation was responsible directly to the CDS for CF structural options and to the Deputy Minister for DND structural options;
- Conduct a broad examination of DND/CF;
- Develop options to optimize CF organization/structure and processes to invest in front line units and rebalance between the CFDS pillars of people, equipment, infrastructure and readiness;
- Develop options to increase organizational effectiveness and efficiency;
- Deliver options for decision and subsequent implementation; and
- The Chief of Transformation mandate was expected to change over time due to the evolutionary nature of the transformation process.
At the outset it was made clear that the mandate was to make recommendations, and that the Chief of Transformation would not have the authority to make the required decisions. As well, the recommendations were to be shaped by Strategic Review outcomes5 , aligned with the Canada First Defence Strategy,6and must reduce overhead and increase efficiency.7 Recommendations were to be informed by analysis of the future security environment as well by current and emerging employment models and concepts. The original intent to produce a Master
3 DND/CF News Release 30 April 2010, Annex A, Appendix 1
5 At the time of writing this report in May-June 2011, the outcomes of the Strategic Review has not been announced.
6 Canada First Defence Strategy 2008.
7 VCDS Initiating Directive 26 July 2010, Annex A, Appendix 3.
Implementation Plan by 1 April 2011 was impacted by several unforecast challenges mainly outside the control of the Department.
Transformation Pillars / Principles
Building on the work that had gone on before, the CDS wanted to maintain the same principles for this round of transformation that were used to underlie the 2005 effort. These were:
- Canadian Forces Identity: First loyalty is to Canada and all service personnel identify with the CF beyond individual environments;
- Command Centric Imperative: Line and staff functions are clearly delineated, with a distinct and unambiguous chain of command;
- Authorities, Responsibilities and Accountabilities: Commanders are provided with a clear articulation of their assigned authorities, responsibilities and accountabilities;
- Operational Focus: Operations and operational support take primacy over all other activities and considerations;
- Mission Command: Mission command articulates the dynamic and decentralized execution of operations guided throughout by a clear articulation and understanding of the overriding commander’s intent; and
- Integrated Regular, Reserve and Civilian Personnel: All personnel are closely integrated to ensure the best utilization of skills and experience.
In addition to the above were the emerging requirements of balancing the Canada First Defence Strategy pillars to best effect, and to find several thousand mainly regular force personnel to fill new and emerging front line requirements. These include new people and capabilities for the Arctic, an air expeditionary wing, the Canadian Rangers, investments in cyber defence, space, special operations forces, deployable all source intelligence centres, human intelligence, counter IED, nuclear/biological/chemical defence, returning sailors to sea, returning reserve supervisors from full-time headquarters employment to part-time leadership roles on the armoury floors, and deployable support personnel (list all)
Transformation in the Broader Strategic Context
Our work has benefited greatly from several previous transformation, restructure and resource studies conducted by DND/CF. In particular, the detailed investigations of potential efficiencies carried out during the 2009-2010 Strategic Review, including the Headquarters Rationalization Study (Annex O, Appendix 8), have been very helpful in providing both data and context for the transformation team. It will therefore be apparent to those who are familiar with these studies that there are enduring themes and key ideas that are consistent across these different efforts.
Looking forward, this report will provide a solid starting point for the strategic initiatives that are just beginning. The Strategic and Operating Review announced by the Government in Budget 2011 will be able to draw upon the extensive data and recommendations offered in the report. More specifically, the recommendations regarding Administrative Reviews and potential efficiencies contained in Chapter 5 Section 6 should prove to be helpful. In addition, much of the work will be directly applicable to the ongoing evolution of the DND/CF Force Capability Plan, which has been identified as a key input to the development of the 2012 Investment Plan.
In addition, the report identifies several areas for further development and investigation. One of these is the critical task of process renewal, seen in Chapter 5 Section 7, of the CF Transformation framework. This thrust links directly to the emerging Defence Business Management Program that is being spearheaded by VCDS, with the aim of bringing coherence to the many process improvement initiatives that have been initiated across the Department. The Defence Business Management Program will be able to draw upon the insights gained in the report, which highlights those areas that offer the most potential for benefit.
Once the terms of reference were signed, work proceeded on two parallel streams: one dedicated to assembling a coherent and comprehensive picture of the financial and personnel status of the department, and a second focussed on identifying structural and process issues that needed further investigations. The work effort of both streams ran concurrently, within the following broad approach:
- Conduct a thorough review of previous internal transformational initiatives to assess the efficacy of the various approaches;
- Review the work of and consult with Allies, partners and selected corporate leaders to better understand how change is being directed and implemented in their organizations;
- Leverage newly-developed and extremely powerful data aggregation technologies resident in the Department to create a strong quantitative foundation for the recommendations; and
- Pursue a consultative process with advisory teams composed of senior military and civilian participants to generate new ideas, approaches and organizational structures to better position the DND/CF for success.
The consistent guidance to the team was to focus on developing options that would reduce the tail in order to increase the teeth, a goal repeatedly articulated by senior government officials and the CDS. This analogy was used to convey the intent to seek out opportunities to improve Defence productivity, to reinvest in operational capability, and to maximize the operational return on taxpayers’ dollars.
Historical and External Analysis
Since the post World War II (1939-1945) restructuring of the Department, the 1953 National Defence Act, and more specifically unification in 1968 and the creation of the integrated DND/CF HQ in 1972, a variety of initiatives and post mortem studies have been conducted with the intent to optimise the DND/CF command structure, improve Departmental stewardship, and find more efficient and effective means of delivering strategic effects and operational capability. Most of these were related to controlling personnel growth in various HQs, achieving efficiencies due to the resources available to maintain and develop future operational capability, and to maximize the effect of the DND/CF output while reducing overhead.
Concomitantly, global governments and militaries have been undergoing various levels of transformative activities over the past several years. With a need to better inform the team regarding ongoing transformational efforts by Allies and defence partners around the globe, the team conducted various studies and exchanges with key allied militaries to ‘get smarter’ on what, why and how other nations were approaching defence transformation. Chapter 3 outlines the results of these efforts.
Consultation, Liaison and Networking
From the outset, the team approached all of the work to develop options in an open, transparent and consultative manner to the extent possible. Due to the sensitivity of many of the issues, there were several instances where the appropriate authorities decided to restrict some of the information exchanges so as to avoid misinterpretation or unnecessary tension. Numerous exchanges of ideas with allies, partners, NATO Transformation Command and Canadian corporate leaders were initiated so as to learn from others. Contact was regularly made with senior leaders, both military and civilian, through various forums. The large senior leaders Seminar in November-December 2010 was focussed primarily on the Transformation effort to date, and most civilian senior executives were in attendance.
“ A number of countries have found that one of the hardest parts in a centralization effort is designing the precise division of responsibilities and interfaces between the centralized service and the various military services... To ensure the success of a centralization effort, a defense organization must address mind-sets and behaviours.”
- Lessons from around the world: Benchmarking Performance in Defense, Scott Gebicke and Samuel Magid, McKinsy & Company, 2010
Teams and working groups of senior, experienced military and civilian leaders and managers were established specifically to provide sober second thought and alternate ideas to developing options. A transformation advisory network was established with a dozen each of hand-picked Rear-Admiral/Major-Generals, Commodores/Brigadier-Generals, Captain(N)/Colonels, and equivalent senior civilian executives, and provided a review and challenge function for option development. A series of Working Groups with senior Level 1 representatives were conducted in January through March of 2011, specifically to review and provide feedback and ideas as required.
Sources of Transformation Data/Information
In his direction to the Defence Force Structure Review Team in July 2009, the CDS emphasized the need to develop an understanding of the ground truth with respect to the DND/CF structure, in order to enable informed decision-making in the restructuring and Strategic Review processes that lay ahead. After a careful study of the information access capabilities available within the DND, they found a solution provided by software that specialized in faceted data search, and this became the Defence Force Structure Review Information Access Portal.
This development used cutting edge technology that was able to rapidly data-mine the human resource and financial systems of the Department, specifically manning and budgeting trends over several years. This helped to inform the Strategic Review process; as well providing key data for the Headquarters Rationalization Study (Annex O, Appendix 8).
More recently, software advances have allowed us to expand the areas of research to include the contractor, infrastructure and materiel databases. With these latest developments, we have achieved what is now known in the industry as agile business intelligence. This means that the Defence Force Structure Review Information Access Portal can rapidly respond to almost any information query on any part of DND business, on any part of the organization. This allows for more rapid decision-making based on access to reliable evidence. As a result, this round of transformation has been better informed, with more substantial fact and evidence-based analysis, than in the past.
Throughout the history of both the CF and the Department of National Defence, we have demonstrated both the capacity and willingness to change. Too often, however, our historical review has shown that the process of change has been reactive, halting, and even grudging. Even as our predecessors acknowledged the advantages of agility, flexibility, and being proactive, the natural human and organizational tendency has been to move cautiously, to preserve the status quo, and to seek to maintain the equilibrium until circumstances either forced change on us, or to stall until the agents of change have moved on.
Most of the previous rounds of transformation have been driven by budget reductions without the organization having the time or ability to think through what was needed to invest in the future by additional reallocations from within. Instead of taking advantage of the opportunity to evolve, to leverage the lessons of today and looking to tomorrow, most of the energy was focused on keeping as much of the status quo as possible. In the absence of the appropriate research based on facts, established trends and a clear understanding of a long term future vision for DND/CF, every subordinate organization was assigned the same reduction target as was assigned to the DND/CF as a whole, an approach now known as a flat tax. Everybody was treated the same way, and every subordinate organization within the larger collective shared an equal amount of pain. This had several perceived advantages that included the following; below the level of the elected officials, there was not any one person(s) within CF/DND that could be identified as making the hard choices, thereby avoiding the potential wrath of the affected stakeholders; nobody had to do the detailed and time consuming work to decide between overhead or ships, battalions and squadrons of aircraft; and no one type of organization could be viewed as a winner or loser.
The interesting result of this flat tax approach is that in almost all previous transformation efforts most subordinate organizations have done their very best to preserve their structures, their internal funding (what they need to take care of themselves) and their process. The flat tax has flowed through the various levels of headquarters and supporting organizations and been passed on to the customers, those consumers who actually use the product and are at the lower end of the chain of command or the lines of accountability. Within our context, this means that flat taxes usually result in overhead staying much the same while support to the front-line deployable units is cut far more than originally forecasted. If this support is truly important to the front line unit then the unit Commanding Officer has no choice but to reallocate from within, to take money away from training or spare parts and allocate it to wherever it is most needed. This explains how an apparently modest strategic level flat tax without limitations or restrictions has resulted in ships being tied up, battalion exercises being cancelled or aircraft being grounded. This is neither productive nor desired.
Targets are absolutely necessary, but a strategic level flat tax is not. Targets should not be completely arbitrary and should instead fall out of research, based on quantifiable data that is tempered by a desired end-state (for example, cut overhead and invest in the teeth of tomorrow). Limits and restrictions are equally critical - the simple expedient of identifying certain units and organizations by Unit Identification Code (UIC) as out of bounds is an approach that might have avoided previous instances where the default position was to cut operational capability while preserving administrative inefficiencies.
There are avenues that could be explored to drive change more productively in the future. First, we must agree to stop transforming as a distinct and set-piece activity. Gathering a small team, assigning them a one-time mandate and carrying on as usual until whatever report is produced has not always worked well. In the past if the results were benign, some changes have occurred. If the results were likely to cause institutional angst a variety of options existed, from waiting until the team disappeared, to conducting lengthy reviews of the recommendations and, finally, to classifying the work to an extent that only a few could see it. As change is constant, DND/CF should formally institutionalize the necessary planning, data aggregation, organizational design, and analysis capabilities necessary to operationalize high-level transformative activities, and align those activities with complementary process in the domains of strategic performance measurement and financial and establishment oversight. Much as with any military capability, we must build proper competencies in this area, leveraging the strength of the civilian / military defence team dynamic. We should formally establish a small but powerful team that is constantly looking for opportunities to transform, to embrace institutional change by institutionalizing the change agents.
“...to engender change among people in an organization, it’s important to keep attention focused on the desired end-state, not on avoiding problems... the most effective way to achieve this is to set up practices and processes that make it easy for people to do the right thing ...”
- That’s the Way We (Used to) Do Things Around Here, Swartz, Gaito & Lennick, strategy + business magazine, issue 62 (reprint 11109), Booz & Company, 2011
Finally, consideration must be given to creating incentives to change – tangible examples that reward organizations for adopting transformative behaviour. Whether it is increased access to reinvestment capital (either people or funding) or the flexibility to make desired and justifiable internal changes more easily and in a self-directed manner, creating tactical incentives is an approach that DND/CF appears not have used well in the past Accordingly, the following are recommended:
- Regularize and Professionalize Transformation: Create and empower a standing capability to carry out strategic reform in response to internal and external remits; rather than carrying out transformation as a punctuated and periodic set-piece, use the new organization to make true strategic change an ongoing and normal institutional activity.
- Derive Rather than Define the Problem and Associated Targets: Make specific and tailored targets an essential early deliverable of transformation initiatives, and use techniques in addition to targets to create incentives for organizations and individual to support change.
This chapter looks at previous transformative efforts within the Department, reviews the future security environment, analyzes the current transformative work of NATO and some key Allies, explores the higher level direction and intent external to the Department, and provides some observations on current structures and processes within the Department.
Since the end of World War II, at least 15 studies, reviews and commissions have examined DND/CF activities, structures and organization. A comprehensive analysis of the broader listing of various initiatives and reports is at Annex D, Appendix 1. A number of consistent themes were discovered in the review of the results of these initiatives. Perhaps the most significant is that after nearly 40 years and many initiatives, numerous constantly reappearing recommendations were not implemented, despite appearing time and again. “Many successes were short-lived, becoming victims of momentum loss when action teams were stood down.”8 In addition to the record of unimplemented recommendations, there were six key areas identified in the analysis, of which two are of particular relevance to this section: Authority, Responsibility, and Accountability, and civil-military relations:
ARAs. The extant ARA document for the highest positions in the Department - now titled Organization and Accountability - has not been updated since 1999, and is therefore outdated and of limited relevance. A third edition has been under development since 2002, and the new version developed in 2010 has not yet been signed. The deduction is that Departmental ARAs guiding senior officials within the department continue to be less effective than they should, or could be resulting in systemic inefficiencies due to excessive duplication and redundancy in process and activities.
Civil-Military Relations. Though National Defence Headquarters is integrated - insofar as military and civilians work beside one another - there are clear delineations between the Canadian Forces (led by the CDS) and the corporate/departmental side (led by the Deputy Minister). These competing dimensions have challenged NDHQ with a series of challenges that cannot be ignored if one wants to rid the Department of its inefficiencies while not diminishing operational capability.
As the largest department in the federal government, DND is very complex. Despite success in some areas, Defence has “an inconsistent track record in implementing strategic-level change.”9 Michael Jeffery succinctly assesses that the “demands of organizational change are considerable – more so for military organizations – and require the change leader to maintain the energy for the change initiative and to manage the perceptions and expectations of many…all while maintaining institutional stability and balance.”10 The apparent reality for DND/CF is that change leaders must maintain the change initiative guided by specific targets. While a difficult path, it should not be a reason to follow the path of least resistance or trod heavily on the brake pedal.
“...the current state of strategy and leadership alignment in defence is weak... (and) is often hindered by traditional bureaucratic inertia and resists change and inhibits measurement... this manifests itself in a strategic misalignment between a military commander’s drive for immediate action in life-and-death operations and the “back-office” activities that directly, or indirectly, support it.”
- Agile Defence, PricewaterhouseCoopers LLP, 2011, p22, commenting on leadership strategy alignment in the US DoD
The bottom-line is that the record of implementing major defence reform in Canada has been intermittent . Indeed, it can more aptly be described as one of ‘unfinished business’ and missed opportunities rather than enduring success. Previous efforts to change defence management, administration, and command and control relationships were either focussed too broadly or not narrowly enough with defined objectives and deliverables..
This section discusses several dissimilar but important aspects to this transformation effort. These include the global security environment, ongoing transformational efforts and approaches by our NATO allies and partners, and recent Government of Canada direction and intent.
The Changing Global Security & Economic Environment
Traditional static and stable defence organizations and bureaucracies were well matched to the stability and predictability of Cold War threats. However, defence planners today face a spectrum threats from weapons of mass destruction, ballistic missiles, terrorism, cyber attack, piracy, failed states, illegal trafficking, natural disasters, disease, and limited energy and natural resources – all on top of the more conventional military threats.11 The shift to a multi-polar power struggle produces increasingly diverse potential security challenges for Canadian defence planners. With more actors on the world scene than ever before, new nation states, non-governmental organisations, multilateral alliances and treaty organisations, as well as global corporate entities abound and continue to multiply. Despite generally rising global wealth, the
9 Department of National Defence. Achieving Administrative Efficiency. (Ottawa: Advisory Committee on Administrative Efficiencies) 2003, p. iv.
10 Jeffery, p. 17.
11 Price Waterhouse Cooper, Agile Defence, http://psrc.pwc.com/html/gbclient/content/premium/communities/psrc/publications/agile_defence.html, 4
widening gap between the rich and the poor fuels discontent, and is often exacerbated by shifting demographics, in turn encouraging protest, large scale migrations, and rebellion. Aggravating factors include the increasing scarcity of potable water, and increased international competition for natural resources, especially carbon-based fuel sources and minerals required to fuel growing economies. Within existing states, the desire for ethnic, cultural and political sovereignty is frequently fuelled by religious fundamentalism, presenting security challenges well beyond their own borders.12
This is not to suggest that the sky is falling. Rather, this is intended as a pragmatic, balanced view of the future geopolitical possibilities that could threaten Canadian security and prosperity. Taken individually or together they indicate that there are risks for the interests of all nations, especially those that desire to develop and grow their economies in this highly interconnected world. The varied and rapidly changing nature of security threats demands an equally dynamic defence strategy and supporting processes and organization. “Such organizations must be smart, fast, adaptive, collaborative, and accountable – in a word, agile.”13
Trends in Allied Approaches to Transformation
The recent global financial crisis has caused most G20 governments and many others to increase their national budget deficits primarily through increased government spending, specifically in the delivery of significant stimulus packages.14 Quite simply, our allies are facing massive deficits coupled with the prospect of a slow economic recovery. This, in turn, is causing an increase in budget allocations to service national debt. As a result, many nations are in the throes of reviewing military spending and the related methods of getting more for less, most of this through targets determined by each nation’s highest authorities.
A closer examination of the transformation strategies and methods being implemented by our allies illustrates a number of interesting characteristics and common themes. In order to protect front-line units as much as possible, our defence allies are focusing on achieving internal efficiencies that can be reinvested to higher defence priorities. All NATO and allied countries are trying to create military command and control structures that are more efficient, sustainable and lean. All appear to be trying to find innovative ways of creating the same amount of military capability at a much reduced cost. A key component involves structural realignment with a view towards eliminating top level positions and reducing spending on non-deployable administrative headquarters, whilst preserving core military functions and capabilities in a resource constrained environment. Most of our allies are placing an emphasis on capabilities that will yield responsive, adaptive and multi-purpose military forces that are able to project power abroad and participate in a wide range of missions and campaigns for an extended period of time.
12 George Friedman, The Next 100 Years: A Forecast for the 21st Century (New York: Doubleday, 2009), pp 1-64.
13 Price Waterhouse Cooper, Agile Defence, http://psrc.pwc.com/html/gbclient/content/premium/communities/psrc/publications/agile_defence.html, 4.
14 Robin Bew, ‘Not So Fast’, Economist, The World in 2010, p 22.
There are valuable lessons to be learned from these examples. Among the most mature and consolidated of the reform efforts, the UK MoD’s recently released “Levene Report”15 parallels many aspects of the transformation team’s general approach and arrives at similar conclusions in a number of key areas - not a complete surprise as we have had several discussions with them on a host of parallel issues. That said, the team was careful to avoid over-generalizing based on specific examples, in recognition of the fact that the business of defence in Canada has distinctly national characteristics that differentiate it from that of the UK. Key points of similarity that emerged from discussions included: the emphasis on making the head office smaller and more strategic by parsing out service delivery functions; creating a Joint Force Command but taking the idea to a more complete level by including pan-DND/CF support elements; adopting the idea of a single Joint Force Employer; creating a single defence service delivery authority (the Commander and the senior civilian executive within Joint Force Support Command); empowering the service chiefs with more control and available expertise to manage within the accountability framework by assigning a senior civil servant to each service; and, grouping defence business services (in the Canadian context, certain of the civilian Assistant Deputy Ministers) into coherent and streamlined structures, where we think it makes sense to do so.
In 2007 the Government of Canada introduced a new expenditure management system which included Strategic Reviews to assess existing spending over a four year cycle to ensure alignment with priorities, and effectiveness, efficiency and economy. As part of that four year review cycle the DND/CF was chosen to complete its Strategic Review in 2010, year 4 of Round 1. The target for reallocation was 5% of the department’s appropriated budget or $1Billon. Unlike the three previous years of Strategic Review, which averaged departmental reallocations of between 2.5% – 3%, DND’s target hard target was 5% or $1B and was announced in Budget 2010 which also highlighted that the military, like the rest of government, would experience significant restraint in resource allocations over the coming decade.16
Budget 2010 also announced that departments would be responsible for absorbing contractual wage increases over the next 3 years instead of being paid from a centralized fund. The implications to the DND/CF are in the order of $450M by 2014. Another key outcome of Budget 2010 was a restriction on the conversion of Vote 5 resources (Capital) to Vote 1 (Operating) historically had been used to meet operational demands.
Budget 2011 stated that the Government will conduct a comprehensive one-year Strategic and Operating Review across all Departments in 2011–12. This review will focus on improving the efficiency and effectiveness of government operations and programs to ensure value for taxpayer money and will replace the next cycle of strategic reviews.
The Strategic and Operating Review will examine the $80B direct program spending budget with the objective of achieving at least $4B in ongoing annual savings by 2014–15 or 5 per cent of the review base. There is the possibility that departments will be asked to consider a 10% scenario
as well. The review will place particular emphasis on generating savings from operating expenses and improving productivity, while also examining reductions in low priority program areas as previously done with Strategic Review.
With slightly more than one tenth of all Canadian Public Service employees residing in the Department of National Defence, it is clear to see that any transformation and renewal of the Public Service will impact the Department of National Defence. Indeed, the fifth report of the Prime Minister’s Advisory Committee, released 22 March 2011, recognizes that today’s changing environment will require different ways of operating to achieve greater efficiency while striving for excellence in serving Canadians today and into the future, and also urges longer-term thinking to help position Canada for success in the 21st century.
In addition to the historical DND/CF experience of transformation, and the obvious need to continually adapt to external pressures, a number of observable internal factors (both positive and negative) support an argument for continuing to transform.
Over the past decade and in particular during the years after the 2005 Transformation, the dramatic upswing in domestic and international military engagement has been a pervasive driver of internal Defence culture. More than any other factor, real-world operational demand has fundamentally and perhaps permanently altered the internal landscape of what the DND/CF does and how it does it, largely in a positive manner.
At the same time, the scope and breadth of our ongoing missions, the rate of introduction of new platforms and equipment, and the speed and responsiveness we have shown with our many successful engagements internationally and at home has raised expectations regarding the sustainability of our operations and the overall capacity of our existing management and governance systems to keep the machinery of Defence functioning smoothly. Compounding this is the organizational penchant for adding new activities without due consideration of their long term resource implications, and failing to give older activities the attention they deserve.
The overriding need to sustain and support a strong operational military focus within the DND/CF is a pervasive theme that touches upon all aspects of the accompanying analysis. Overall, this directly supports the perspective that we must sustain the current DND/CF focus on operations, and that transformation should specifically exclude consideration of tactical level activities, processes and structures until all options for positive reform at the strategic and operational levels (largely in headquarters) have been thoroughly and properly explored.
From this series of diverse but interconnected studies and analyses, some key takeaways were recognized. First, it was abundantly clear that over 40 years of initiatives and studies intended to reshape, reform, transform or change the Department and the Canadian Forces consistently raised many of the same issues, with a large portion of those issues being unheeded or not actioned. Changes that were carried out were most often done to the tactical, deployable front line units which were the most easily sacrificed while the headquarters staffs often expanded. Second, bottom-up, consensus-based transformation efforts do not succeed. Third, the future cannot be predicted but there is fair certainty in knowing that future operations will be challenging, will be plentiful, will run concurrently and will cover the spectrum of military capabilities at home and abroad. Fourth, the Government remains committed to reducing the deficit and all recent indications are that the DND/CF will be part of the solution to reduce the deficit with alacrity. This means that the growth of the Defence Services Program will almost certainly slow, thus reducing the flexibility of conducting business as usual. And finally, the organization of the Department can be viewed as a machine with three key moving parts: activities, processes and structures. All three can be viewed together or individually when considering and designing options for transformational change.
Recommendations that fall out of the problem definition include the following:
- Pursue Savings Through Administrative Efficiencies: To meet potential Strategic Review follow-on requirements, aggressively explore options for reform of administrative activities, processes, and structures, with the goal of achieving approximately $1B in savings, in line with recommendation 36 (DND/CF Process Audit Function).
- Focus Transformation on Overhead: To ensure DND/CF transformation remains focused on preserving operational capability, and to avoid the historic tendency of reform efforts to devolve adverse resource impacts to the tactical level, it is recommended that any follow-on activity, process, and structural reform efforts should specifically exclude tactical level organizations from consideration until overhead has been sufficiently rationalized.
At sea, the navigator of a ship ‘takes a fix’ to plot its current position before proceeding along the next stage of the voyage. This shows exactly where the ship is in relation to its originally intended course and provides the basis for developing a course in the direction of a new destination. Likewise assembling a coherent and comprehensive picture of the status quo was an essential precursor to discussing and selecting transformative options for the DND/CF, and would allow us to validate the reasons for pursuing refocused, realigned Departmental structures, activities and processes. Further, it was considered important to understand the status of personnel and overall expenditures not just for a single snapshot in time, but in terms of how they have changed over a period of several years, such that a trend could be seen. This has been the goal of this portion of transformation, and the material in this section is intended to provide quantitative facts upon which options for transformative change can be founded.
This chapter provides the analysis of unique views of personnel numbers and expenditures as a trend over a six year period from end FY 03/04 to end FY 09/10. Using some new technological tools based on agile business intelligence, significant data sets were gathered and analysed. Every major organisation within the Department was analysed through the views of personnel numbers and expenditure of funds. The data was validated by each of the respective organisations. This foundational analysis of the Department’s Status Quo was deemed vital before the transformation team could begin to develop options for improving efficiency and effectiveness that would insulate the front line forces – those soldiers, sailors, airmen and airwomen who ‘do’ the tactical level business for our nation every day – from cuts and reductions. It was also seen as an important adjunct to understanding with greater fidelity the extent to which transformation could and should be expected to increase the achievability of the CFDS, within the Department’s current and expected resource allocation.
“...the substantive growth of headquarters and support bureaucracies, and simply meeting the needs of a bigger Army at war have created a voracious demand for mid-level staff officers... One hoped-for effect of these reforms is to reduce the number of personal staff and support positions, and in turn alleviate somewhat the demand on the military services to produce field-grade officers to fill those billets.”
- Robert M. Gates, Secretary of Defense, West Point Address, 25 February 2011
The data analysis revealed that considerable growth occurred outside of front-line, deployable, and operational units: the number of people employed in headquarters grew four times faster than the Regular Force did over the review period. The total number of civilian employees grew three times as fast as the Regular Force, and the number of civilians employed in the National Capital Region surged by 61%. Likewise the research indicates some anomalous, unintended situations that have coalesced over time. For example, the number of Navy Regular Force personnel decreased by 11%. On the expenditure side, some organizations have predictably had their expenditures increase much more than the DND/CF average. The Army and ADM(Materiel) are two key examples, while other organizations have experienced nil or
minimal financial growth in real terms over the period – ADM(Infrastructure & Environment) and the Navy, in particular. DND/CF personnel became relatively more expensive over the six-year period of review. A large proportion of full-time Reservists have been employed in senior positions at headquarters, and the proportion of Indeterminate civilian employees increased substantially, by almost 50%. As a result, the proportion of Term employees declined. These are but a few examples of the findings that arose from the data analysis. This chapter will provide other pertinent findings that have shaped the development of transformation options. The key foundational data charts and tables are included at Annex F.
Detailed research and analysis has gone into understanding the changes in disposition of DND/CF’s most vital asset – its people - as well as for changes to overall expenditures. Taken together, this data not only ‘fixes the ship’s position’ but describes how DND/CF got to where it is, thereby providing a solid basis for developing and choosing the way ahead.
Personnel and financial data were drawn from the Defence Force Structure Review Information Access Portal, which provided full access to current and recent-past Departmental data holdings across major corporate systems. The financial data was supplemented by departmental expenditure data from ADM(Finance & Corporate Services) and Chief of Programme staffs. Personnel data were reviewed and validated by Level 1 organisations. All financial data were reviewed by ADM(Finance & Corporate Services). It is also important to note that personnel numbers are population-based, sometimes referred to as ‘bums in seats.’ In other words, personnel numbers reflect individuals, not Establishment, nor Full Time Equivalents, nor Average Paid Strength numbers.
For both the personnel and financial research, three snapshots of end-of-fiscal-year data were used: 31 March of 2004, 2007 and 2010. Selected personnel data was available for the year ending March 2011 (see Appendix 6 to Annex F), though as the year-end financial accounting has yet to be completed and reported to Parliament, it was not included. These three dates were selected because:
- 2004 was the earliest validated data entry available to the Defence Force Structure Review Info Access Portal when the transformation team research began in August 2010;
- 2007 was the period after the 2005-06 Transformation effort and just prior to the release of the Canada First Defence Strategy; and,
- 2010 was the end of the most recent fiscal year where full data was available.
Percentage changes to personnel and expenditure were calculated based on 2004 data. Except where specifically noted, all financial growth is nominal, not real in that it is raw growth that does not reflect inflation. The confidence level for the personnel data is 98%, based on the review and validation of this data by the corresponding Level 1 organisations.
This section provides the results of the analysis of DND/CF personnel changes over a significant span of time at a key moment in its history. The data are focused on the changes to Regular Force, Reserve Force and Civilian personnel; however, data was also gathered for personnel in the Rangers and serving as Cadet Officers (officially Cadet Officer – Administration and Training). Due to the nature of the Cadet organization as a non-military institution and the relative stability of the Ranger organization, the analysis that follows is restricted primarily to Regular, Reserve and Civilian personnel. When reviewing the Reservist data and related findings, it is necessary to understand that Reservist (Full-time) are Reservists who served 180 days or more and Reservist (Part-time) served 179 days or less. As well, when considering Civilian data and related findings it is important to remember that 64% of civilian employees work within CF (i.e. military) organizations.
Table 1 - DND/CF Overall Personnel Growth
18% Overall Growth. On 31 March 2010, DND/CF employed 144,744 people including 67,857 Regular Force, 35,665 Reservists, 29,348 Civilians and 11,874 Rangers / Cadet Officers. Between 31 March 2004 and 31 March 2010, the population of DND/CF grew 18%, or by 20,493 personnel.
Table 2 - Personnel Growth 2004 to 2010
Relative and Absolute Growth. Over the review period, growth of Regular Force personnel was the least in both absolute and relative terms, growing by 6,524 personnel or 11%. Civilian personnel growth was the highest in absolute and relative terms, growing by 7,318 personnel or 33%, or three times as fast as the Regular Force.
This Regular Force growth of 11% serves as a useful benchmark when comparing levels of growth across the Department and CF. A point to keep in mind, therefore, are the departmental priorities in place during this period of mandated growth of Regular Force personnel.
Table 3 - Personnel Growth in Headquarters
Headquarters grew by 46%. The total number of personnel in Headquarters above the level of Brigade, Wing and Fleet grew by 4,803 people, an increase of 46 %.
Another way to look at this: personnel serving in higher Headquarters’ grew at a rate four times faster than the overall CF Regular Force over the same six year period.
Table 4 - Personnel Growth in the NCR
Growth in the National Capital Region. Personnel in the National Capital Region grew by 38% overall. Of this growth, civilian employees grew by 3,368 or 61%.
Table 5 - Personnel Growth in the Navy
Growth in the Navy. Personnel in the Navy (officially Chief of Maritime Staff and Maritime Command) grew overall by 3%, including a 11% decrease in Regular Force personnel, an increase in Reserve Force of 11% and a 30% increase in Civilian employees.
Table 6 - Personnel Growth in the Army
Growth in the Army. Personnel in the Army (officially Chief of Land Staff and Land Force Command) grew by 28% overall, including 22% increase in Regular Force, 34% increase in Reserve Force and 25% increase in Civilian employees.
Table 7 - Personnel Growth in the Air Force
Growth in the Air Force. Personnel in the Air Force (officially Chief of Air Staff and Air Command) grew by 4% overall, including a 2% increase in Regular Force, a decrease in Reserve Force personnel of 3% and a 21% increase in Civilian employees.
The data also shows that a few organizations experienced relatively anomalous growth over the period. The Vice Chief of the Defence Staff organization grew by 300%, mostly as a result of transferring-in of ‘orphan organizations’ as a result of the 2005 Transformation and the related National Defence Headquarters re-organization. ADM(Information Management) and ADM(Finance & Corporate Services) shrank significantly: 27% and 40% respectively, primarily due to the transfer out of large sections. For example, the Communications & Signals Reserve was transferred out of ADM(Information Management) to the Army, and Canadian Forces Support Unit (Ottawa) and J8 were shifted out of ADM(Finance & Corporate Services) into the Vice Chief of the Defence Staff group and CANOSCOM respectively.
Table 8 - Trending Growth of Executive Levels
Shift from Term to Indeterminate. Throughout the period analyzed, Indeterminate Civilian employees increased by 44%, while Term / CasuaStudent Civilian employees decreased by 22%. Due to their relative costs, and the comparatively higher level of salaries and benefits they are due, the large increase in Indeterminate employees will have broad, long term financial repercussions for departmental personnel costs.
Senior Management Growth. Growth of the executive level and equivalent personnel in DND/CF grew overall by 19%, including a 25% increase in civilian members of the Executive Group (EX Group), including equivalents, and a 75% increase in Executive level Reservists (Colonel/Captain(N) & Generals / Flag Officers).17
Table 9 - DND/CF Personnel Totals 31 March 2010 & 2011
Personnel Growth Levelling Off. After the end of Fiscal Year 2010/2011, an additional data query was analysed for the entire DND/CF population to confirm that the results from 31 March 2010 had not become stale-dated. The results were considered to be consistent with the previous trending data and are depicted here.
17 As per TB guidance, Senior Management includes members of the EX Group (EX-1 and above), other civilian equivalents, and military personnel at or above the rank of Colonel/Captain(N). Further detail on exact rank disposition can be found at Annex C, Appendix 2A.
Relative Growth by Grouping. In summary, personnel data was also examined in relation to occupational groupings in which military trades, and civilian occupations were grouped ‘like-with-like’ in order to better understand the changes in numbers of personnel who performed similar types of jobs. The data charts and table describing those groupings is at Annex F. While not all the data are replicated here, a broad range of data points are shown to depict where personnel growth has been either predictable, such as Land Operations personnel growing by 21%; unexpectedly high, such as Administration and Finance Personnel in the National Capital Region growing by 57%; or surprisingly low, such as Naval Operations personnel shrinking by 1%. The table detailing this information is below.
Changes to DND/CF Population. Two months after 31 Mar 10, Regular Force numbers had increased by roughly 1,000 due to recruiting intakes, while Reserve Full-Time numbers decreased by almost 2,000 due to the end of major domestic operations, in particular support to the 2010 Winter Olympics. Incorporating these changes, the data show, overall, in the Fiscal Year 2010/2011, the Regular Force increased by 118 personnel, Civilian employees increased by 377 personnel and the Reserve Force shrank by 1,719 personnel.
Contractor Personnel. Two approaches were used to attempt to account for Contractor personnel: the first was a count of names based on an extract of Defence Wide Area Network addressees that had “contractor” or “agent” in the address field; the second was an analysis of funds expended on Contracted Professional Services. The former method indicated that the total number of individuals working for DND/CF as contractors was in the order of magnitude of 5,000, thus it was deemed appropriate to investigate further the facts surrounding this significant part of the workforce.
In Fiscal Year 2009/2010, $2.768B was spent on “Professional Services and Special Services”, accounted for as “Standard Object 04”, or those General Ledger entries beginning with ‘zero-four’. This same group of funds was described in the Deputy Minister’s Business Planning Direction to the Vice Chief of the Defence Staff as “…one of the fastest growing areas of HR in recent years and now account for about 13% of the Defence Services Programme.”18 Indeed, the sheer volume of the Defence Services Programme spent on Contracted Services has resulted from major efforts to contract out work and, in particular, as a result of the Alternate Services Delivery approach undertaken since the 1990’s.
There has been recent discussion within the Department regarding whether or not all or even some of the $2.768B in FY 2009/10 of Professional Services contracts qualifies as a true ‘Personnel’ expenditure. In order to better understand this large portion of the Defence Services Programme, research was conducted into Contracted Professional Services (Standard Object 04). More research is required to fully understand it and develop an analysis similar to that undertaken for DND/CF core personnel and funding for this report. Further research and analysis on this issue is currently being undertaken by Chief of Program as directed by the Vice Chief of the Defence Staff and Deputy Minister.19
It has been determined, however, that the $2.768B spent on Professional Services includes two broad categories of contracted service: firstly, organizations providing contracted services, such as equipment or building maintenance and procurement; and secondly, individuals working in the place of and usually augmenting either military or civilian employees in order to provide specific deliverables. The essential difference between the two is that in one case an organization is contracted as an alternate service delivery provider (eg; maintenance contracts) as compared to personal services contracts for the provision of specific time-limited subject matter expertise (eg; project support). In keeping with this, the DND/CF General Ledger contains several categories specifically containing the phrase Contractor in the title; indeed, these Ledger entries provide some simple insights into who falls within each category.
This report recommends a due diligence approach toward understanding and accounting for contractors. DND/CF uses the services of well over 5,000 individuals on an on-going basis at a significant expense, but there is no clear picture of the disposition of these people or how much they actually cost the department. The department needs to track and understand how many contractors there are in DND/CF and how much they actually cost. In the interim, the costs associated with Contractors should be considered and reported as Personnel costs.
Untrained Personnel. The CF has a significant untrained personnel issue with highly elevated levels of personnel on the Basic Training List (BTL) – personnel who are not fully trained and therefore not part of the Trained Effective Strength. The ‘hollow force’ problem reported by operational commanders - manifested in the form of insufficient established billets filled by trained personnel – results not just from having too many personnel in HQs and from the number of personnel on deployment / preparing for deployment / returning from deployment. It also results from having too many sailors, soldiers and aircrew awaiting training vice being employed at operational units.
During the review period, the CF underwent a significant and highly successful recruiting drive to grow the Forces in general and the Regular Force in particular, in accordance with the mandated personnel levels laid out in CFDS. As a result, the Regular Force grew quickly, slightly ahead of the planned schedule. Although the intent was to achieve a higher level of operational capacity, the CF has not yet benefited fully from this increased level of personnel.
The mandated establishment for the Basic Training List is approximately 7,700 personnel.20 The data shows, over the period of April to December 2010, the total number of personnel deemed “Not Effective Strength,” which included untrained personnel as well as other categories of Canadian Forces personnel, remained in the order of 12,000. Within this large group, there are a number of personnel, in the order of 1,000, deemed “Non Effective Strength” that includes unfit status, Maternity/Parental Leave, and Service Personnel Holding List (medical). As a result, the total number of personnel on the Basic Training List has been consistently at or about 11,000 personnel, or over 3,000 personnel above the mandated establishment level of 7,700. Thus, while the successful recruiting campaign has grown the regular force to the CFDS level, front line positions will remain under strength until these extra personnel complete their training.
Regular Force Strength vs. Regular Force Trained Effective Strength
Table 11 - Non Trained Effective Strength Trend
This chart shows the overall levels of the Regular Force in comparison to the total number of Trained Effective Strength.
As the chart shows, the average amount of Regular Force personnel not “Trained Effective Strength” was 17.6%, or just over 12,000 personnel.
Macro-View: CF Personnel Outlook
The effect of such large numbers of non-effective personnel was twofold. First, the backlog of personnel awaiting training is simply inefficient and does little to develop the morale and esprit de corps in new recruits. Second, the more than 3000 non-effective personnel left a void that was frequently filled with full time Reservists (growing from roughly 7000 in 2004 to 9000 in March 2011), which in many cases meant the CF was paying twice the Human Resource bill it should have.
20 The appropriate size of the Basic Training List is a function of the size of the Regular Force as a whole and predicated on anticipated attrition (and thus recruiting) rates, with the aim of securing a healthy flow of new members replacing those who leave.
Table 12 - Recruiting Intake vs Regular Force Strength
However, as the overall manning of the CF approaches steady state, there is an opportunity to decrease the reliance on full time Reservists to fill Regular Force positions. As indicated in the chart below, success in recruiting, combined with low attrition rates, has resulted in recruiting targets dropping from a high of 7,700 to roughly 4-5,000. Fewer recruits means less demand on training organizations and thus the 3,000 personnel backlog on the Basic Training List should be reduced or even eliminated, producing trained Regular Force members available to fill some of the positions previously occupied by full time Reservists. While this should assist in the reinvestment of full time Reservists, and in the reallocation of Regulars to emerging capabilities, the absorption of new members will not, in and of itself, rebalance the tooth to tail ratio. To that end, hard choices are still required, and some important but not necessarily essential Headquarters functions (performed by Regulars, Reserves, and Civilians) will need to be reinvested in front line forces. Given the predominantly senior ranks of Headquarters staffs, this may require targeting some of the most senior members of the Defence Team for reduction.
- Reduce Senior Management: Initiatives to reduce overhead should target the disproportionate increases in Senior Management (both military and civilian), aiming to restore civilian and military EX Group populations to roughly 2004 levels, save where CFDS mandated expansion of the CF warrants commensurate increases in EX Group leadership.
“…the change in the size of an organizational bureaucracy is largely unconnected to change in the size and operational capacity of the of the organization that the bureaucracy is nominally charged with administering”
-Parkinson's First Law - C. Northcote Parkinson
The analysis of DND/CF expenditures provides a number of insights into the relative priorities of the DND/CF over the review period, with predictable results and some surprises. Army expenditures, expectedly, grew significantly (62%) as did ADM(Mat)’s expenditures as a result of the expanded Capital Program. ADM(IE) grew the least of all L1 organizations, while the Navy grew the least of the Environments.
The following chart depicts the nominal growth rates of expenditures by Level 1 and Equivalent organizations:
Initial Findings – Expenditures by Level 1 & Equivalents
Table 13 – Expenditure Growth Fiscal Year 2003/04 to 2009/10
Overall DND/CF expenditures nominally grew by 51%.
- * Vice Chief Of Defence Staff Group grew 316% as a result of unit transfers into the group (this data point would skew the graph, and is therefore not included).
- CMS/MARCOM grew the least of the three Environments: only 20% nominally, from $1.4B to $1.7B.
- CANADACOM growth spiked due to the amount of domestic operations at the end of Fiscal Year 2009/2010.
- ADM(Fin CS) growth was offset in part by transferring out large numbers of personnel, e.g. CFSU(O).
- CLS/LFC and ADM(Mat) experienced relatively large growth due to expansion of their programs: training for Afghanistan and capital equipment acquisition respectively.
- ADM(IE) experienced nominal growth but when inflationary and other factors applied, experienced a real decline of -7%.
Personnel, Equipment, Infrastructure and Readiness
The categories used in the Financial Overview table represent a best effort to attribute respective L1 organization expenditures with the major categories contained within CFDS. While the chosen groupings do not necessarily comply exactly with the definitions of Personnel, O&M, Infrastructure and Capital used in the Strategic Review / PAA / CFDS, the data provide a broad understanding of Human Resource costs across the Department. Limitations to the attribution of expenditures across these categories include:
- Personnel costs – the expenditures related to Personnel in the Financial Overview table incorporate both salaries and benefits for Regular Force, Reserve Force and Civilian personnel. However, there is a significant amount of the Defence Services Programme that is allocated to contracted professional services that is not specified in the CFDS breakdown, which is deemed, within this report, to be departmental personnel costs;
- Capital Equipment – Expenditures attributed to this category were associated with procuring and upgrading major equipment, including Information Technology equipment. Moreover, the Capital Equipment funding includes Vote 5 Personnel GLs associated with Project Management personnel costs, as well as Vote 5 National Procurement. The bulk of Capital Equipment is assigned to ADM(Mat) who is tasked with these procurement activities on behalf of the Environments. The data, therefore, show only overall growth of Capital Equipment expenditures across the review period;
- Operations and Maintenance – this category was considered as roughly equivalent to Readiness in the context of the CFDS pillars. Expenditures attributed to this category are primarily associated with Operating and Maintenance expenditures not directly involved in domestic or expeditionary operations, but including continuation training and advanced training for operations; and
- Infrastructure – Infrastructure costs and attributions are relatively well understood, well tracked and non-controversial. Expenditures attributed to this category were associated with the management, construction, operations, maintenance & repair of real property and the environment. The Infrastructure costs consist of a blend of Vote 1, Vote 5 and Vote 10 funds, but do not include personnel related costs.
Financial Overview data by Category
This chart and the related findings detail expenditure growth across several major categories: Personnel (Regular Force, Reserve Force and Civilian), Operations and Maintenance, Infrastructure, Capital Equipment and Professional Services (for which data were compiled separately). Professional Services growth is shown in this chart for comparison only, as these expenditures are contained within the categories of Operations and Maintenance, Infrastructure and Capital Equipment in the Financial Overview data at Annex F, Appendix 4c.
Table 14 - Nominal Expenditure Growth FY 2003/04 to 2009/10
Overall Growth. The DND/CF budget grew from $13.2B to $19.8B, an increase of $6.6B, or 51% nominally.
Least Growth. Infrastructure budgets only grew by 3% (from $864M to $889M); over this time, Infrastructure expenditures shrank as a total proportion of the Defence Services Programme from 7% in FY 03/04 to 5% in FY 09/10.
Most Growth. Procurement of Capital Equipment, predominantly spent by ADM(Mat), on behalf of the major Environmental Chiefs of Staff, increased the most over this period, from $1.6B in FY 03/04 to $2.9B in FY 09/10, an increase of $1.3B, or 81% nominally.
Reserve Personnel Cost Growth. The total cost of Reserve personnel grew by 69%, from $0.6B to $1.0B. However, the end of FY 09/10 represented a unique spike in both international and domestic operational activity. The end of FY 09/10, saw the largest number of Reservists employed on a full-time basis for many decades. Immediately after and since then, the total number of full-time reservists decreased, reducing the total by roughly 2,000 personnel. As noted in the Status Quo - Personnel section, the overall level of Reserve employment remains higher than historical averages.
Having looked at the data from the ‘people’ and ‘money’ perspectives, it is illustrative to examine the same information simultaneously. This combination-view shows which organizations have experienced above-average growth, which ones experienced below average growth and which ones experienced large discrepancies between their personnel and financial growth over the review period.
Combined Personnel and Expenditure Changes Chart
Table 15 - Personnel and Expenditure Growth FY 2003/04 to 2009/10
The attached chart displays personnel and expenditure information for most L1 organizations.
Vice Chief of Defence Staff and the Operational Command organizations have been left out of this chart – Vice Chief of Defence Staff growth was in excess of 300% for both personnel and expenditures, primarily as a result of section transfers. This level of change skews the graph; the Operational Command organizations did not exist in 2003/2004 and their percentage changes appear quite anomalous in this format.
Three Level 1 and Equivalent organizations grew by more than the DND/CF average in both Personnel and Expenditures over the review period:
- CLS/LFC (personnel grew by 27% and funding grew by 62%),
- Level 0 and Special Entities: (personnel grew by 23% and funding grew by 78%), and
- ADM (PA): (personnel grew by 66% and funding grew by 89%).
Four Level 1 and Equivalent organizations grew by less than the DND/CF average for both Personnel and Expenditures, over the review period:
- CMS/MARCOM: significantly lower than average growth for both personnel and expenditures,
- CAS/AIRCOM: only a small increase in the number of personnel but close to the average increase in expenditures, and
- ADM(IE): although the ADM(IE) workforce grew by an average amount, total expenditures did not increase substantially.
A number of L1 and Equivalents experienced large discrepancies between their personnel and expenditure changes over the review period:
- ADM(Fin CS) lost many personnel due to transfers out but overall expenditures still increased
- ADM(IM) also lost many personnel due to transfers out but still experienced expenditure growth
- ADM(Mat) gained very few people but experienced one of the largest increases in overall expenditures. This is accounted for by the large increase of expenditures related to Capital Equipment, which was primarily assigned to ADM(Mat).
Table 16 - Trend in Unspent Funds
Unspent Funding in Defence
Over the course of the analysis period, DND/CF has experienced a marked rise in unspent funds that in turn resulted in significant amounts of funding that was permanently lost to the department. Analysis was undertaken to understand the nature of the unspent funding and incorporate this analysis as part of the Financial Status Quo picture.
Historically, DND/CF had no difficulty expending available funding to advance program objectives until quite recently. From fiscal year 04/05 to 08/09, only twice did the department have a residual lapse (ie money permanently lost to the Department, as opposed to money carried forward, or reprofiled in later years, see note below)21 . In FY 04/05, $61 million was lost to the department and in FY 07/08 the amount was a then unprecedented $307 million. The FY 07/08 amount was largely due to significant funds for operations received unexpectedly in the Supplementary Estimates too late in the year to be used effectively. The Auditor General of Canada in a review of the Department’s unspent funding that year noted that growth in funds available from previous years, uncertain funding not confirmed until mid-year, conservative planning, and lack of accurate and timely information for decision makers contributed to the unspent funds in FY 07/08. While it remains to be seen how FY 10/11 will compare with previous years once the accounts are ruled-off, in-year estimates suggest the under-spending trend will continue. See also Annex F Appendix 5 for a detailed breakdown of unspent funding from FY 04/05 to FY 09/10.
Table 17 - Spending Trend
At right, the figure depicts the disposition of the unspent funding. The large amount of funding that has been reprofiled commencing in FY 07/08 is mainly due to the introduction of accrual budgeting and the availability of incremental ‘investment funding’ for capital projects (both equipment and infrastructure). For a variety of reasons, the department has not been able to execute the capital program as planned and has slipped significant Vote 5 funding (see Trend Chart). While the major portion of this was reprofiled into future years, in FY 09/10, the department had a residual lapse (lost to the department) in Vote 5 of $120 million. Slippage in the capital program has been attributed to: industry failing to deliver as contracted (for example, the Maritime Helicopter Project); lack of project management capacity in the department to progress a greatly expanded program; extended contracting timeframes after project approvals; as well as an overly protracted internal review and approval process.
Table 18 - Disposition of Unspent Funding
21 Reprofiled funding is allocated special purpose funding that can be rescheduled to future years assuming that the purpose for the funding remains. There is no limit on the amount of reprofiling that can take place. Carry-forward is unspent A-Base funding that can be rescheduled to the next year. Carry-forward was capped at $200 million until FY 0/09; for FY 09/10 and onwards, it is set at a maximum of 2.5% of the total Vote 1 and Vote 5 Main Estimates.
The trend chart also shows the increasing amount of Vote 1 funding that is going unspent. Little of Vote 1 funding is eligible for reprofiling and therefore must either be carried forward or will be lost to the department. The reasons for the under expenditure in Vote 1 programs appears to be multi-facetted, with the notable exception of National Procurement which was contract capacity limited. The is assessed as primarily related to risk management (stringent constraints on over-programming, and relatively large reserves without disbursement plans), an environment/culture of savings and spending restraints vice an emphasis on program execution, and cumbersome and inflexible process.
The level of unspent funding has increased steadily from a low of $151 million in FY 05/06 to over $1B in FY 09/10. A portion of this, predominately the Vote 5 capital procurement program and Vote 1 National Procurement, can be attributed in a significant way to force structure capacity problems. Evidence of this is the 67% nominal growth (50% real growth) in ADM(Mat) funding from FY 03/04 to FY 09/10, whereas ADM(Mat) had only a 4% growth in personnel over the same period. Future force restructuring will need to avoid adversely affecting program execution in the materiel area. On the other hand, addressing systemic process issues would appear to have more promise of success in addressing under spending in most of the Vote 1 programs.
A number of deductions have been made possible by conducting a detailed analysis of the personnel and financial Status Quo. Along with additional analysis, many of these deductions inform later recommendations in the report. In general, however, there should be no doubt that the data shows clearly that between 2003/2004 and 2009/2010:
- DND/CF grew substantially and quickly in terms of people and funding;
- The Regular Force grew as expected and slightly ahead of the Canada First Defence Strategy schedule, yet operational units as a whole have not benefited from this increase. The largest growth in the Regular Force was in headquarters;
- Employment of full-time Reservists increased to levels not seen in over 50 years; and
- The number of civilians in the department now exceeds the Canada First Defence Strategy planning levels.
Navy, Army and Air Force. The data clearly shows that the three environments, Navy, Army and Air Force, experienced greatly differing levels of growth over the review period. The Army grew significantly in terms of both personnel and fiscal resources, as would be expected of the core force fighting a land war in Asia. The Air Force appears to have ‘held its own’ with some personnel and fiscal growth, albeit less than the DND/CF average on both counts. However, the Navy barely grew overall in personnel terms. In fact, the underlying data show that Regular Force Navy personnel actually decreased by 11%, or 1,119 people, and the Navy was near zero fiscal growth, in real terms, over the six year period. These findings imply a range of structural and process recommendations which are discussed further in Sections 5.1 and 5.2.
Personnel Costs Growth Risk. The increase in personnel costs comprises two elements – the increase in the number of personnel and the increase in the costs per individual (salaries and benefits). The dramatic increase in total cost of Reservists (70% nominal growth between 03/04 and 09/10) was largely related to the increase in the number of personnel over that time period, and to a lesser extent the introduction of enhanced benefits (pension and medical). Civilian growth comprised both an overall increase in the total number of civilians and a shift toward a much higher proportion of indeterminate personnel with their related long-term benefit liabilities for the department. If unconstrained, rising personnel costs could imperil the CFDS Readiness pillar, as successively smaller proportions of the Defence Services program will be available for readiness and operations. This implies an urgent need for enhanced high-level monitoring, as described in Section 5.5.
Full-Time Reserve Growth. Employment of full-time reservists was at an all-time high at the end of the review period. Although that total number has started to decline, it is clear that DND/CF is continuing to employ Reservists at a rate that is significantly higher than historical averages and higher than the current establishment provides for. Specific recommendations regarding this finding are made in Section 5.6.
Personnel Cost Attribution. There is little consistency in how departmental costs are attributed to the Personnel pillar. The entire CF Medical system is in place solely to provide medical care for CF members, thus hospitals and clinics could be considered as part of the personnel pillar. As well and for the same logic, military housing could also be considered a personnel pillar cost. Multiple methods for calculating and tabulating expenditures relating to the personnel pillar were encountered. There is concern that these different interpretations of reporting the personnel pillar costs will not provide consistent, reliable information for decision-making in the coming years. Again, the implications of these findings relate mainly to Departmental performance measurement capacity discussed in Section 5.5.
Contractor Costs and Tracking. While it is impossible to know exactly how many individuals are employed as a function of Professional Services contracts (given DND contracts for a service, not necessarily individual people), research indicates that at least 5000 people would fall in that category (many of whom are in the NCR). The total amount of funding spent on all Contracted Services at the end of the analysis period was 13% of the Defence Services Programme and the amount of that funding spent specifically on Contractors is in the order of several hundreds of millions of dollars. Understanding Contracted Services is critical to the Department successfully managing its overall budget in general and its Personnel pillar in particular. It cannot be determined, with accuracy, how much of the funds spent on Professional Services relate to personnel costs as the system lacks a simple means of tracking and rolling-up the numbers of contractor personnel and the expenditures attributed to them. The implications of this are discussed further in Section 5.6.
ADM(Materiel) Capacity Risk. The data for ADM(Materiel) when examined alongside the results of the ‘Unspent Funding’ analysis strongly suggests that ADM(Materiel) is experiencing production and capacity challenges. Although the amount of resources expended on Capital Equipment has increased dramatically over the last several years, the number of personnel (Regular, Reserve and Civilian) has not. Some personnel/capacity gaps have no doubt been closed via contracted services, but there is a limit to the efficacy of using contracted personnel for processing DND/CF procurement requirements. A review is required to confirm what resources ADM(Materiel) requires to successfully execute the aggressive procurement program that lies in the offing, which must be integrated into the recommendations proposed in Section 5.3.
Overhead. DND/CF has grown the overall numbers of personnel in its Headquarters at a rate far greater than the Regular Force has grown overall. The number of military and civilian personnel performing overhead functions above tactical-level headquarters has increased disproportionately, even when allowances were made for new operational demand and for manning the new organizational constructs established in 2005. Drawdown of overhead is an omnipresent theme across many of the transformation team recommendations, and is discussed in specific detail in Chapter 5.
Process and Structure. The DND/CF has many layers of complex bureaucratic processes that are counter-productive to efficiency and effectiveness. For example, the Department is unable to effectively expend hundreds of millions of dollars annually in one domain, yet required to reduce or cancel critical training and maintenance activities in another part due to lack of resources. Similarly, it was a unique challenge to develop a coherent picture of DND/CF’s most vital resource because of the large number of systems employed to manage and track DND/CF personnel. There are several different Human Resource and pay systems for Regular, Reserve and Civilian personnel. Conversely, establishment positions and functions are neither centrally tracked nor managed. There are no common Departmental processes or systems that track, govern or rationalize personnel against their respective establishment positions, and until now, the department did not measure or analyze how many personnel, whether Regular, Reserve or Civilian, work in related work functions such as Administration, Finance, Public Affairs, or IT Services. Process reform is dealt with in Section 5.7, and governance is the specific topic of Section 5.5.
Though the peril of flat tax targets has been discussed, appropriate quantitative goals spur and guide action, and allow course corrections to be made. Given the sustained prominence of the CFDS, it is only logical that it would be the basis for an initial set of internally-generated transformation targets. While some elements of CFDS have been costed and could notionally be used to develop exact transformation reinvestment and savings requirements, it is felt that the initial set of transformation targets should reflect the focus of the CFDS on preserving vital operational capability, while reinforcing and maintaining an appropriate balance between the pillars of personnel, equipment, infrastructure, and readiness.
At present, the data suggests that DND/CF personnel allocations have become unbalanced, as personnel growth has disproportionately favoured military and civilian headquarters rather than front-line forces. Full-time reserve employment has increased significantly, and growth in civilian personnel levels has surpassed CFDS assumptions. In a zero-sum funding environment, where increased spending in any one area comes at the expense of spending in other areas (regardless of whether the defence budget increases) unbalanced personnel spending will inevitably impede the DND/CF from achieving its CFDS mandate. Accordingly, it is recommended that reasonable yet significant targets for personnel reduction should be the starting point for implementation of the current round of transformation, and should be imposed on areas of overhead growth according to sound analysis, rather than simply through the flat tax approach:
- Rebalance Personnel Levels: In order to meet the demands of the future, reduce headquarters and staff structures to allow reinvestment of at least 3500 Regular Force personnel into new and emerging capabilities; reduce full-time Reserve Force personnel to a baseline of approximately 4500 positions, and restore Civilian personnel to those levels outlined in CFDS.
- Target Overhead and Areas of Exceptional Growth when Rebalancing Personnel Levels: In lieu of applying a flat tax across organizations, reductions should focus on overhead and non-front line units, targeted specifically at those areas where growth has been much higher than the average for DND/CF.
From the outset, it became clear that neither a primarily structural approach to change (such as occurred during the 2004/05 transformation round), nor an approach oriented on process reform (as occurred during the MCCRT in 1997), would necessarily achieve transformational goals. Instead, a more holistic view of what transformation could and should entail was needed.
The theory and practice of organizational architecture sees public and private enterprises as a manifestation of their various environments. These environments can be physical and literal (such as the geographic, financial, and human resource environments), as well as conceptual (including process, structural and even cultural environments); they influence and in some cases determine the behaviours and outcomes of the organization. In recognition of this, it was decided to pursue an initial design approach that reflected prevailing organizational architecture theory by attempting to address the complexity that characterizes the DND/CF.
Rather than starting with traditional environmental groupings such as the Army, Navy or Air Force, or existing functional groupings such as the Chief of Military Personnel, it was felt that building a generic activity-based model of the CF would be a more suitable point of departure from which to consider alternative groupings of like function.
To arrive at a common understanding of what the CF does, a basic conceptual model of the overall activity set of the Department was created. This consisted of activity building blocks; organizational actions involving the intentional expenditure of resources to produce an output, achieve a goal, or satisfy a purpose. By subdividing what the DND/CF does into generic, non-partisan structural elements, the team could then rearrange them into different structural forms to allow comparative analysis of different organizational options. This in turn simplified the construction of new processes, and allowed current areas of duplication and overlap to be more easily identified.
When constructing the initial model, a number of distinct classes of activities emerged. The majority included activities required for the basic machinery of Defence to function, which were currently being performed by single organizations, or by multiple organizations for good and valid reasons. Other uncontested activities included those not required for the basic machinery of Defence to function, but which are mandated or legislated, such as supporting the Cadet organization. Other of activities also exhibited characteristics that singled them out for additional scrutiny. Some were being performed by multiple organizations without clear or defensible justification for the duplication, or made sense in the current operational and governance context, but perhaps not in the future. These were viewed as areas for reduction. Finally, the team observed some activities which had been performed more diligently and to better effect in the past and merited future reinvestment; strategic performance measurement was an obvious example.
As the generic activity set took shape, it became clear that this effort that would yield long-term benefits. By using a commonly-accepted activity model to harmonize the PAA with internal structures and processes, Treasury Board reporting could be aligned with how the DND/CF actually does business. Accordingly, a working group was convened consisting of the PAA authority, Defence Research and Development Canada process modelling personnel, and senior civilian representation from inside the transformation team, with the intent of continuing the activity description and process modelling effort. This ongoing work is described in greater detail at Annex O Appendix 7, but is recommended to be formalized and brought under the aegis of follow-on plans that may emerge from the current transformative round:
- Harmonize Future PAA Structure with the Departmental Activity Model: Enhance DND/CF governance and TB reporting by creating a Departmental activity model that accurately depicts internal activities, processes, and structures, within the context of the PAA.
The Evolution of the ‘5F’ Concept
Development of the generic activity set was ceased once the team arrived at about 110 high-level activity elements,22 since obvious groupings of like function could be discerned and were sufficient to permit the development of several basic organizational architectures for comparison. Elements of activity-based high-level process models existed in the recent past, and influenced current organizational structures. For example, in 2009, 1 Canadian Air Division reorganized to separate operational employment of air assets from activities related to training and support, and the Navy has recently proposed a similar model. The creation of the operational commands in 2005 reflected this same basic idea by removing Force Employment activities from those focused on Force Generation; similarly, an argument can be made that the creation of CANOSCOM represented the early growth of a nascent Force Support element (albeit narrowly focused on support to deployed operations). As a matter of interest we received some excellent ideas from CANOSCOM (and many others) on why they needed to be controlling or commanding more force support elements with more pan DND/CF authority, and after a lot of thought we moved the idea of up a level to apply the same sort of logic to the entirety of the organization (Annex J).
Nevertheless, in the past there had been no collective attempt to group activities by function, rather than by existing organizations. In proposing what became to be known as the 5F Model23, we sought to re-situate discussion of what the DND/CF should be doing, how it should be doing it, and how it should be structured, away from traditional organizational notions of process and output, and into a more capability-oriented frame of reference.
In its most fundamental form, the 5F Model describes the full span of military activities necessary for the CF to achieve operational effects, in terms of five functional groupings – Force
22 The currently approved Program Activity Architecture (PAA) has about 400 discrete activities, though some have a distinct “process” quality given that they group multiple activities that might be described individually.
23 “5F” stems from Force Development, Force Generation, Force Employment, Force Support and Force Management.
Management (Force Management), Force Development (Force Development), Force Generation (Force Generation), Force Support (Force Support), and Force Employment (Force Employment). These concepts were defined as follows:
- Force Management (Force Management) – Activities and processes related to planning, directing, monitoring and coordinating Force Development, Force Generation, Force Support and Force Employment activities across the span of the CF. These include leading and directing the institution, developing, tasking and delegating policy, and providing and executing administrative, governance, and general management services, including corporate internal services, financial controls and oversight, mandated programs, and those Human Resource management functions focused on indirect support to field forces (see Force Support for direct support description). The Vice Chief of the Defence Staff organization is currently the focal point for most CF activity in this functional area, but this particular grouping has a strong civilian component compared to the others.
- Force Development (Force Development) – Activities and processes related to identifying and gaining approval for new or amended military capabilities, to planning and managing the acquisition, production, and/or staffing of those capabilities, and to bringing those capabilities to a sufficient level of operational maturity to allow them to be integrated into the normal Force Support, Force Employment, and Force Generation domains. Driven by changes in policy, actual or projected changes in the security environment, and lessons learned from operations, Force Development comprises capability-based planning, strategic intake planning, strategic capability management, and capability production. Chief of Force Development is the nominal central focal point for Force Development, but exercise of this function is heavily influenced by the Environmental Chiefs, and other organizations.
- Force Generation (Force Generation) – Activities and processes related to recruiting new military personnel, assembling, equipping, training, certifying and generally preparing military field and garrison forces, and activities required to maintain military forces in a defined state of readiness for Force Employment. This functional area is currently the central focus of the existing Environmental Chiefs and their subordinate organizations, but many organizations are intimately involved in force generation and duplication of similar activity exists.
- Force Support (Force Support) – Activities and processes related to the broad support and/or overall sustainment of military field forces, both deployed and in-garrison, including maintenance and repair of equipment, the movement and control of operational materiel, and administrative and logistic support of personnel and infrastructure that directly and primarily enables field force operations (in contrast to Force Management functions focused on indirect support). Force Support is a cross-cutting enabler and critical foundational activity that permeates and underpins Force Employment and Force Generation. This functional area is the focus of many existing organizations, but currently has no central oversight beyond those niche capabilities provided by CANOSCOM.
- Force Employment (Force Employment) – Activities and processes related to the command, control, and overall employment of military field forces in operational roles. This functional area is currently the central focus (but not the exclusive purview) of existing CanadaCOM and CEFCOM structures.
Figure 1 - DND/CF Generic 5F Model Figure
Clearly, the above definitions by themselves cannot describe every possible or required activity necessary for the DND/CF to achieve the full range of operational effects. Similarly, it is difficult to draw exact boundaries between the different functions, especially when considering units that have multiple roles, or when dealing with activities that can have multiple outcomes (such as a mission that combines training (Force Generation) and operational (Force Employment) tasks – naval and air deployments in particular). Nevertheless, the 5F Model has a number of compelling qualities. It groups and describes complex military activities in a manner that is simple enough to be easily understood both within and outside of the military; it supports the construction of a clear and logical series of process flows connecting the various functional areas; and it reinforces the idea that achieving military outcomes, whatever their nature, requires balance between resource sustainability and operational flexibility.
From the perspective of an activity-oriented transformation, instead of one defined by a focus on structures or processes, the 5F Model is reasonably neutral. Within the functional areas, it doesn’t make any overt distinction between military and civilian personnel. It doesn’t favour operational over support functions, nor is it Environment-centric. Nor does it impose any particular structure or limitation on integrating other Departmental functions outside of those purely oriented on the operational remit of the CF. This last quality is particularly important, since it allows the construction of a companion set of Departmental functional groupings (largely oriented around civilian competencies) that underpin and support the 5Fs, thereby creating a high-level, pan-DND/CF functional model, against which structural options could be compared and considered.
With a high-level conceptual model completed, the next step was to propose a trio of organizational structures for the November-December 2010 Seminar discussion.
The initial focus was on grouping related activities to maximize effectiveness and efficiency. These concepts proved quite durable once it became clear that traditional military environmental organizational groupings tended to focus on maximizing effectiveness, while traditional corporate organizational groupings tended to focus on maximizing efficiency. While neither quality was felt to be inherently better or worse, the tendency to associate effectiveness with operational or military outcomes, and efficiency with administrative or process excellence marked the two concepts as suitable starting points upon which to focus the development of various organizational constructs.
This approach, found support in the examination of the status quo condition. Surveying the organizational reality that confronts the DND/CF, it became evident that neither the traditional CF nor DND organizational groupings are pure – that is, neither the Department nor the Forces is optimally organized (by accepted organizational design standards) to maximize either effectiveness or efficiency. Instead, what we have now is a potentially confusing matrix where control and accountability are diffuse, and where organizations, processes and activities are insufficiently aligned to the point that some activities are contested (carried out in a mutually antagonistic fashion) or orphaned (carried out in isolation from other mutually supporting processes).
The current Force Development process is an example where process weakness has degraded what should be a productive dynamic tension of competing ideas into a contest for capital prioritization in a zero-sum environment. Examples of orphaned activities and even organizations can be seen among certain joint and emerging capabilities that do not fit well within current constructs (such as ISR, Space and Cyber. Within largely civilian organizations, there are similar contested examples arising from the almost impossible task of reconciling centralized policy-making and institutional management functions with service delivery roles that span hundreds of locations run by a number of mainly military organizations, and impact on literally tens of thousands of people. When implementing policy set by ADM (IM) and ADM (IE), for example, there is no one single point of command authority to oversee service delivery; a dilemma that is addressed later, with the ideas of centralized Force Support and the operationalization of corporate service delivery.
To move beyond the status quo, three contrasting organizational models were proposed. The first, a centralized model, sought to group activities in such a way as to maximize efficiency by arranging civil and military competencies according to the idea of like function. This model, depicted in the diagram below, attempted to reinforce strong civilian – military lateral accountabilities at the strategic level by aligning the respective groups’ core businesses in a manner that would allow clear expression of the chain of command, in parallel with lines of accountability. The model proposed to centralize the oversight and conduct of major force management, development, sustainment, generation and employment activities, even at the expense of traditional environmental divisions, including the strong service model.
Figure 2 – Centralized Model: Groupings by ‘Like’ Function
The model implies a number of advantages and disadvantages. The move to adopt highly centralized groupings of like activities would allow for extremely efficient command and control and process alignment. By deconstructing and remaking the traditional environmental and Departmental structures along purely functional lines, enormous opportunities would emerge for eliminating duplication of effort and overlapping processes. Going to parallel civilian/military structures would clarify lines of accountability and would eliminate ambiguities in strategic chains of command. As well, the structure enforces a strong joint focus, rather than relying on procedure or custom as is the current case. Finally, in corporate terms, the centralized structure would align well with existing program activity management and mandated reporting mechanisms.
From a negative standpoint, actual implementation of such a model would cause chaos at the level of the front line units, as each specific function would be run from Ottawa and no one authority would be able to pull it all together at the local level. As well, a complete deconstruction of the strong service model would compromise effectiveness, and would risk loss of critical flexibility and resource levelling at the local supporting base, specifically in terms of taking care of the needs of the deployable assets – the teeth. This extremely lean structure would limit strategic resilience and even organizational agility, given the extent to which a relatively small number of key leaders would be assigned extremely broad functional and policy mandates in their respective areas of responsibility. Finally, the purely centralized model precludes the implementation of a logical split between policy and service delivery, which runs counter to both corporate and public sector lessons, all of which have been learnt the hard way.
The second model, depicted below, proposes the opposite approach. With the intent of maximizing operational effectiveness, Defence activities would be radically decentralized according to the strong service model, preserving strong lateral accountabilities by distributing joint and common functions to create mutual interdependence. Within the sphere of corporate functions, wherever feasible, policy formulation and service delivery would be separated. The focus of ADMs at Level 1 would be reoriented on policy formulation and coordination, with additional emphasis on strategic performance measurement. In this model, the current committee structure would be subject to process and Authority/Responsibility/Accountability reforms. L1 Environmental Commanders would be supplemented by Level 2 senior civilian corporate service delivery specialists, who implement Level 1 ADM policies in line with the effectiveness needs of their respective environments.
Figure 3 – Decentralized Model: Grouped to Achieve Mutual Interdependence
The Decentralized model reinvigorates the strong service concept and distributes internally federated functions such as force development, combat support, training, and control of routine domestic operations along environmental lines. Deployable support functions would become a subset of Force Employment, which would retain distinct domestic and international command and control remits. Overall, the option seeks to create a mutually-interdependent structure to drive joint behaviour, and to improve lateral accountability among the Navy, Army and Air Force by situating specific capabilities and unique operational remits in each of the three environments.
Federating activities across traditional three-service model yields obvious operational effectiveness advantages; it preserves the existing structures, but sites a number of capabilities that had formerly existed within the Vice Chief of the Defence Staff organization within operational communities. In terms of achieving better corporate effectiveness, the clear separation of policy and service delivery at the strategic level offers significant process reengineering options. When combined with the injection of senior civilian corporate service specialists, this could in turn lead to a dramatic and positive reinvigoration of the Defence Team concept, with much closer and more operationally focussed civilian involvement in the Environments. This model also proposes a novel method of achieving joint focus – rather than the conventional expedient of assigning a joint force champion, clear lateral accountabilities and obvious lines of interdependence between Service Chiefs create an environment that discourages stove piping, and encourages a pan-CF focus on providing joint and common capabilities.
Finally, the model leverages the inherent resilience and demonstrated operational flexibility of the tri-service model, while sequestering the conduct of Defence Management and Force Development from CF service delivery in the domains of Force Employment, Generation, and Support.
There are, however, drawbacks to a decentralized approach. For example, the retention of a traditional service structure means that existing duplication of activities would be unlikely to be resolved; similarly, the temptation to avoid meaningful process reform and to carry on business as usual except in the newly added capability areas would limit potential savings in personnel, or gains in efficiency or effectiveness. Nor should the significantly disruptive quality of implementing a complete policy / service delivery split be underestimated – though it is an accepted model in some other public sector organizations, it would represent a dramatic change in the status quo for existing civilian and military accountability and authority arrangements. Nor would the complexities involved in creating and documenting inter-service lateral processes and accountability relationships be trivial, as the often outdated state of many existing service-level agreements attest.
The third model sought to balance the extremes of the previous two concepts, employing a hybrid approach that would centralize the oversight and conduct of like functions for efficiency wherever possible, but accept groupings of dissimilar activities where effectiveness considerations predominated. This concept saw the introduction of a medium service model across the traditional environments, with accentuated focus on joint effects in the domains of Force Development and Force Generation. The model also described an approach that would preserve elements of the policy-service delivery split concept, with potential centralized options along personnel, infrastructure and equipment lines, as well as centralized Force Support and Force Employment structures.
Figure 4- Hybrid Model, balancing efficiency and effectiveness.
To build on a balance of both centralized and federated approaches, the policy and service delivery split was proposed below the ADM level for Fin/Admin, Civilian Human Resource management, and Information Technology and Management, with service delivery of these functions occurring within a Force Support organization under combined military and senior civilian (EX3/4) control. The expanded Force Support function would exercise full vertical and horizontal control of all bases, supply depots, and non-deployable formed support units, in a supported/supporting construct, possibly akin to the current Army Area Support Group concept but taken up level. A joint staff would be retained, and this model could see conjoined civilian and military continental staff representation under a first-among equals Force Manager, as exists in United States STRATCOM and other allied organizations. The three environmental commanders are retained, but are supplemented by a sole Joint Force Generation commander at Level 1 to oversee generation of joint capabilities, along with an additional Level 1 Force Development entity. The Army and Navy would retain regional Force Generation models, while the Air Force could centralize around like fleets or capabilities for maximum Force Generation efficiency.
In general, the hybrid approach is the most interesting of the three because it appears to offer the best opportunity to balance management efficiency while preserving operational effectiveness. Favourable qualities of the current civil / military relationship at the strategic level are retained, while thinning out the upper management structure and offering alternatives for organizing and centralizing support to front line units would provide significant opportunities for personnel savings and reinvestment. A less disruptive construct, it would also preserve the matrix management view of the Department and permit a more incremental process reform path, thereby decreasing organizational resistance to change. Finally, the evolutionary quality of the hybrid model creates a more recognizable transformation path that preserves and builds upon widely-applauded elements of the 2005 Transformation, particularly in the realm of operational support.
Positive attributes notwithstanding, the hybrid model as shown is less than ideal. Even with solid reform to the existing Accountability, Responsibility, and Authority regime, the model perpetuates less than clear command and control lines for the CDS to exercise his responsibilities, as is true of the DMs accountabilities. As with elements of the decentralized model, its superficial resemblance to the current organizational structure may encourage incomplete process reform. Finally, given the blended or compromise nature of the model, it appears likely that potential gains in efficiency or effectiveness would be less than with the centralized and decentralized models.
With the three models in hand the transformation team conducted a comparative analysis exercise using the Transformation Advisory Network – as this consultation with transformation stakeholders unfolded, and as later confirmed by the results of the seminar, it became evident that none of the proposed models was seen to fully address the desired outcomes. During early winter 2011, the growing weight of analysis and senior staff feedback converged on the functional issues underpinning the 5F Model.
To address this difficulty, the transformation team drew upon the 5F Model to reformulate and rescope its work around three basic tasks: developing organizational options, developing supporting concepts, and developing action items that could be initiated within the allotted time, but whose resolution would require longer term focus.
Using the evolved 5F functional model as a basis, and drawing upon the Terms of Reference and senior staff feedback for explicit and implied tasks, seven thrusts to see the CFTT effort through to its conclusion were proposed and accepted. These thrusts, although identified numerically, were not intended to be implemented in sequence. Instead, they simply represented an interconnected series of ideas that form part of the larger mosaic representing a possible solution set.
Thrusts one, two and three focused on developing organizational structure and process options in the domains of Force Employment, Force Generation, and Force Development. The intent was to adjust and streamline the predominantly military functions across these groupings, extending upon the organizational structures and philosophies underpinning the key changes implemented in the 2005/6 timeframe. Although direct cost savings from any potential adjustments in these areas would likely be minimal, it was felt that additional effort in this area would improve the functioning of key processes and generate modest military personnel savings that could be applied to higher priority (non-HQ) functions.
Thrusts four and five were to involve concept development around Force Support and Force Management, the latter of which was broadened to Defence Management to more accurately reflect the highly integrated nature of civilian and military functions in this area. The ideas underlying these Thrusts required further detailed elaboration and examination, but they clearly embody significant potential to realize process improvements and cost savings, particularly through the realignment of major support / service-delivery activities, or streamlining NDHQ.
Thrusts six and seven were focused on action items related to Administrative Review and Process Reform – interrelated yet distinct areas of inquiry oriented on achieving concrete gains in productivity and direct resource savings. These initiatives also required additional validation, but even though their ultimate resolution will extend well beyond the impending close of this round of Transformation, they represent a rich potential source of savings in the near to medium term.
Together, the seven Thrusts describes and organizes the critical body of work that the transformation team believes is most likely to yield qualitative and quantitative improvements in Defence productivity. Certain elements of the 7 Thrusts can be enacted independently of changes in broad policy; others require high-level ratification and external engagement. An incremental approach to enacting the key elements of the 7 Thrusts over the next three to five years is potentially achievable; as such, they represent a potential plan for implementation that can be activated as circumstances and DND/CF desires dictate.
The seven Thrusts and their lineage from the original Terms of Reference can be diagrammed as follows:
Figure 5 - Terms of Reference Amalgamation into 7 Thrusts
The purpose of this section is to present the cross-cutting transformational themes and key recommendations. Working through the seven Thrusts in sequence, each chapter describes the ideas that resulted in the development of Thrust-specific requirements, and discusses the diverse and often competing perspectives regarding supporting processes and structures. Each section also contains specific recommendations, details and supporting analysis for which are contained in Annexes G through L. The Chapter concludes by presenting a blended organizational model – a single, high-level view of a potential DND/CF structure that builds upon the activity modelling around the 5Fs, and which amalgamates many of the recommendations and observations gleaned from the various consultations.
Of note, across the seven Thrusts there are a number of key points of similarity between transformation team findings, and those of the UK MoD Defence Reform Steering Group, chaired by Lord Levene. These include the emphasis on making the head office smaller and more strategic; creating a Joint Force Command that includes pan-DND/CF support elements; and the idea of a single Joint Force Employer, adjusted for the Canadian context. Other parallels ; create a single defence service delivery authority (the Commander and the senior civilian executive within Joint Force Support Command); empower the service chiefs with more control and available expertise to manage within the accountability framework by assigning a senior civil servant to each service and; group defence business services (in the Canadian context, certain of the civilian Assistant Deputy Ministers) into coherent structures and streamlined structures where we think it makes sense to do so.
The purpose of the Force Employment and Command and Control (C2) Thrust was to propose options for a consolidated Force Employment organization that would enable concurrent and well-coordinated delivery of operational effects, enhance Force Generation and Force Development process integration, and preserve clearly identifiable and distinct Command and Control chains for expeditionary and domestic operations.24
Specific requirements included the need to right-size the existing Force Employment and command and control structures without unduly compromising the CF’s current operational command capability, while increasing the integration between Force Employment, Force Generation and Force Development processes and structures. Secondary considerations included the desire to maximize the effectiveness and efficiency advantages of a centralized operational command and control model while preserving the brand identity of such entities as Canada Command, CEFCOM, and CANOSCOM. Finally, any options were required to propose tangible savings on the order of 25% of existing headquarters overhead personnel.
Beginning with the current establishments of CanadaCOM, CEFCOM, CANOSCOM, and Force Employment elements of the Strategic Joint Staff (SJS), analysis was done to parse out headquarters and overhead elements. This arrived at a figure of about 750 personnel engaged in a range of standard J-staff type operational oversight activities, some of which clearly overlapped within the operational commands and SJS, and some of which had distinct qualities related to the nature and mandate of their respective organizations. Though structurally dissimilar, there were no gross functional inconsistencies noted, with the possible exception of the existence of an Arms Control Verification (ACV) capability within the SJS.
Overall, in the context of organizations whose broad initial purpose upon creation had been (through command and control role specialization) to collectively reinforce the primacy of operations within the CF and to demonstrate enhanced levels of joint integration,25 it was evident that the current construct met most criteria of effectiveness and excelled in some (such as provision of support capabilities to operations) – a perspective shared by previous reviews.26
That said, there was evidence that against a wider set of both effectiveness and efficiency metrics, considerable progress could still be made. For example, in 2007, commentators noted the relatively rich composition of the operational commands;27 a departure from the former Deputy Chief of Defence Staff group, that was a much leaner command, control and Force Employment construct.28 Though there are some differences in operational tempo and the nature of current international and domestic engagements, given the propensity of organizations to expand their workload proportionate to the personnel and resources allocated to them,29 it was felt that the advantages gained through role specialization came at the expense of increased overhead and functional duplication. At the same time, there are indications that while progress has been made in harmonizing and sharing intelligence and watch capabilities, discontinuities still exist in key areas; the command and control environment occurring around Operation HESTIA being an example.30
25 Department of National Defence, Chief of Defence Staff, “CDS Planning Guidance – CF Transformation,” 18 October 2005.
26 R.R. Crabbe, L.G Mason and F.R Sutherland, A Report on the Validation of the Transformed
Canadian Forces Command Structure, Report Prepared for the Chief of Defence Staff (Ottawa: 31 January
2007), p. iv.
27 Ibid., pp. 7-8??
28 Adjusted for vacancies, the Force Employment portion of the DCDS group numbered about 200; See “DCDS positions transferred to CAN-CEF Commands,” Excel Spreadsheet, dated 6 June 2011.
29 See Don Neill, “The Business of the Botanist”: Growth and Change in DND, 2000-2010. CORA Letter Report 2010-243, (3565-1 (SH Strat A)), dated 15 November, 2010.
30 Operation Hestia was the CF participation in humanitarian operations conducted in response to the January 2010 earthquake in Port-au-Prince, Haiti. See “Operation Hestia.” http://www.cefcom.forces.gc.ca/pa-ap/ops/hestia/index-eng.asp. Accessed June 2011.
In this regard, the team felt that a smaller number of personnel working within an efficient organizational model could leverage the many lessons learned since 2005 to build a more effective Force Employment environment. Added to the efficiencies implied by a single 3-star Level 1 Chief of Joint Force Employment / Commander of Canada Command, the creation of a consolidated operations staff (along with supporting intelligence fusion / battle-watch / situation centre capability) could offer enhanced organizational flexibility and agility, enabling more seamless and integrated oversight of all operations without the barriers created by a domestic / international division. While this would come at the cost of some of the discreet brand identity for all three commands, it was felt that the advantages inherent to reducing overhead would more than compensate, particularly if the Canada Command brand could be retained and reinforced, in line with CFDS.
“The monetary savings from reductions in senior personnel will be relatively modest... The primary purpose behind this shift is to create fewer, flatter, more agile, and thus more effective organizations.”
- Robert M. Gates, Secretary of Defense, The Pentagon, 06 January 2011
Moving to a single Level 1 Joint Force Employment construct and brand would mandate rapid adoption of clearer chains of tasking and command. This would require the functions of the SJS to be revisited, to ensure a more measured and constrained focus on strategic planning, tasking, and readiness. It would also create the conditions whereby the current Joint Task Force roles and structures could be re-examined for new geographic and functional options. In general, the team believed the current 6-region model needed review in light of changing national priorities, focus and budgets, and the proposed replacement of the Army Area Structure with a two Division (Regular and Reserve) Force Generation structure (see section 5.2). Accordingly, consideration should be given to redefining Task Force boundaries and Command responsibilities, with one of the more interesting options has as to the command relationship of Joint Task Force North; should this be assigned to the Navy as MARNOR (as the issue is mainly one of air and maritime surveillance and approaches, and would result in an increase focus of the Navy on the North), or continue the established links with the single Force Employer, also known as Canada Command?
“A model for running military operations centred on the Permanent
Joint Headquarters (PJHQ) remains the optimum one. In principle, and to simplify roles, the Department should look to make PJHQ responsible for all military operations. The Department should consider whether those operations not currently run by PJHQ should transfer to it. “
Lord Levene of Portsoken KBE
At the same time, moving to a single Joint Force Employment entity would present a valuable opportunity to further integrate CF C4ISR capabilities into a single, all-encompassing organization. This would leverage the positive progress already made by CDI to create a national intelligence capability that encompasses both Force Employment and Force Generation functions for already established units and capabilities, such as the CFIOG and CFNOC. It would also allow the development and maturation of emerging capabilities such as Cyber to take place with strong Force Employment-oriented oversight, thereby reinforcing the operational organizational culture so critical to the healthy evolution of these highly specialized capabilities. Finally, the creation the single Joint Force Employment organization creates a single, one stop repository for oversight of diverse functions such as OUTCAN administrative oversight and liaison, foreign military training initiatives such as the Military Training and Cooperation Program (MTCP), and ongoing operational remits such as Arms Control Verification.
In summary, the transformation team recommends the following Thrust 1 initiatives be considered for implementation:
- Consolidate operational staffs and operations centres: Consolidate operational planning and oversight functions into a single staff, while amalgamating and centralizing the management and operation of all CF ops centres, beginning with those located in the NCR.
- Redistribute RJTF functions: Examine the current geographic and functional disposition of the existing RJTFs to determine whether the 6-region model is still optimal. Consider redefining boundaries as follows:
- Joint Task Force Pacific (BC) MARPAC
- Task Force Western (AB, SK, MB) 1 Canadian Air Division
- Task Force Central (ON) 1 Canadian Division
- Task Force Quebec 2 Canadian Division
- Task Force Atlantic MARLANT
- Task Force North MARNOR under the Navy or the Joint Force Employer
- Group external engagement capabilities under Chief Joint Force Employment: Consolidate oversight of miscellaneous capabilities focused on external engagement, including OUTCAN administration, MCTP, and Arms Control Verification, under the Chief of Joint Force Employment.
- Consolidate Force Employment into a single Command and Control construct: To maximize efficiency, amalgamate operational planning and oversight functions currently carried out collectively by CanadaCOM, CEFCOM and CANOSCOM, and selected elements of the SJS into a single 3-star Chief of Joint Force Employment, who as Chief of Joint Operations would also be the Commander of Canada Command.
- Consolidate C4ISR functions: Group key C4ISR functions, including CDI, CFNOC, CFIOG and the emerging Cyber domain into a single organizational entity under Chief Force Employment, recognizing that the need to maintain a strong Force Employment focus within these specialized capability areas outweighs any potential efficiency gains realized by sequestering Force Generation from Force Employment.
The Force Generation Thrust needed to reconcile a variety of fairly disparate goals. These included the desire to create an integrated Force Generation structure to oversee joint capabilities currently dispersed throughout the CF, and to better integrate Force Generation processes with strategic planning, readiness, and Force Development activities. Much of the early work focused on determining how best to create a fourth force generator (possibly by recreating the former Deputy Chief of Defence Staff organization) to alleviate operational force generation responsibilities from organizations outside of the Navy, Army and Air Force. At present, important elements of joint force enablers and common assets are scattered across a number of non-service or civilian-led organizations, each of whom has had to create force generation mechanisms and staffs. Obvious examples include Defence Intelligence and Military Policing (currently within VCDS), Health Services (CMP) Information Operations and CFIOG (ADM (IM)), as well as capabilities such as the previously-mentioned MTCP (ADM (Pol)).
While the traditional Force Generators are logically aligned the efficiency and effectiveness of many of the critical common Force Generation mechanisms (such as personnel intake, trade management, Force Generation performance measurement, and monitoring of deployed capability) varies widely. This results in perennial problems related to mounting, sustaining, and regenerating these often-scarce capabilities for operations. As well, span of control within the parent organizations was identified as a recurring challenge, particularly for joint and common enablers within the VCDS organization.
At the outset, it was believed that consolidating joint and common enablers under a single three-star authority would create a first among equals force generator. This entity would balance the operational requirements for joint and common capability in the pure Force Employment realm (as exercised by the operational commands) and among the environments, with the ability to operate a more efficient and effective Force Generation process by creating economies of scale.
With wider consultation and input from the working groups, however, a more nuanced view of how best to meet the challenge of integrating Force Generation began to emerge. In the first place, the organizational realities associated with establishing a brand-new structure of this sort made it less attractive than it originally seemed. For example, creating new headquarters that did much the same thing as the Navy, Army and Air Force at a time when overhead should be shrinking was deemed problematic. While it was recognized that some savings could be gained through centralizing administrative and training activities, the creation of a another purpose-built Force Generation organization would primarily deliver gains in effectiveness, at a cost of a considerable draw on resources. As well, given the criticisms of the status quo span of control, it was felt that consolidating such highly varied capabilities could actually perpetuate the problem, rather than solve it. Even under a single, dedicated commander, it seemed likely that having too broad a series of capabilities would dilute the focus on operations and merely substitute one problem for another when it came to effective oversight of the smaller and more niche joint and common capabilities. Finally, when considering the likely effect of a centralized force generator empowered with authority and responsibility for CF readiness and tasking, the belief was that it would be extremely difficult for any entity with a stake in force generation to appear unbiased or impartially arbitrate on tasking issues. For these reasons, the team concluded that other alternatives should be pursued.
This is not to suggest that consolidation and integration are not worthy goals; only that the expedient approach of creating a single, super-Force Generation entity might not be the best way to proceed. For example, building upon the concept of the decentralized organizational model, an alternative to a new three-star command would be to have the common trades and capabilities distributed across the three large established force generators in a manner that encourages collaboration and mutual interdependence. Similarly, it was noted that within certain joint and common capability areas, the functions of force generation and force employment actually should not be separated, given the operational synchronicities that had been developed or evolved. As already mentioned, the functional alignment of the CFIOG, CDI and the CFNOC, along with Cyber, makes these organizations obvious candidates for consolidation. In the same vein, CANSOFCOM already exhibits positive qualities of cross-functional consolidation, having evolved an internal operating approach successfully combining elements of all of the 5F model components, with a primary focus on effectiveness.
To address these complex and interwoven challenges, a multi-faceted approach was needed. Some capability areas, such as C4ISR, were reasonably straightforward, as described in Section 5.1. Others, such as Health Services, Military Policing, and Personnel and Family Support, clearly had broad pan-CF remits for which no obvious logical location existed; at least within the current Environmental force generators. This had the effect of deepening the discussion around Force Support, the results of which are described in detail in Section 5.3. Finally, a review of the existing large Force Generators led to a re-conceptualization of how they might be subtly reconfigured to emphasize the predominance of Force Generation, while harmonizing their respective structures in areas such as Force Development and emerging capabilities, schools and training, and Reserves and Cadets.
In summary, the transformation team recommends the following Thrust 2 initiatives be considered for implementation:
- Rationalize the Navy Force Generation Structure: Rebalance and reinforce Force Generation primacy within the Navy, to bring efficiencies to the three key processes of Training, Readiness, and Technical Operational Support. Create a pan-naval Training and Readiness organization and further integrate and align internal structures and processes to efficiently generate the key operational skill sets and platforms.
- Rationalize the Army Force Generation Structure: Replace existing Area Structure and Commands with two Army Force Generation Commands (1 Division – Regular; 2 Division - Reserve) that could also be deployable for limited surge durations (1 Div international for nine months, 2 Div Domestic for three months) on operational missions . 1 Division would have responsibility for Force Generation to standing high readiness tasks (DART, NEO, etc) and provides the nucleus of a deployable Headquarters, supported by the necessary communications and service support enablers, and all of the Regular Brigades and deployable support elements. 2 Division would command tactical Army Reserve forces focussed on domestic response, connectivity to local communities and augmentation to regular force units and formations for international operations. Create a consolidated Training and Land Force Readiness organization to maximize commonality of training, and to formalize readiness monitoring.
- Rationalize the Air Force Force Generation Structure. Implement a common, single-Wing command concept, consolidating main Air Force capability by fleet/capability, while retaining a combined air operations Command and Control capability sufficient to support ongoing operations, the NORAD mandate, and ongoing Force Generation / Force Employment. Fleets and their parent capability groupings would transition to a single Wing commander construct, with common structure and proportional manning levels, independent of the geographical location and/or number of supporting bases. 2 CAD would be enabled as a consolidated Training and Air Force Readiness organization to maximize commonality of training, and to formalize readiness monitoring.
- CANSOFCOM remains a direct report to the CDS. While this is not a change from the status quo, it is explicitly recommended here for clarity.
- Decentralize Reserves and Cadet Oversight. Decentralize cadet oversight to the three primary environments, and consolidate this with the Reserve management function – both of which are responsive to policy developed within Chief of Military Personnel.
- Force Generation Process and Sustainment Reform: Use structural reform to reinforce the primacy of Force Generation roles within the Environments, shifting responsibility for all garrison, base and infrastructure support functions to a Force Support Authority as described in Section 5.4, and clarifying key operational Command and Control relationships at the margins between Force Generation and Force Employment functions.
Section 5.3: Thrust 3 - Delivering Future Capabilities through a Revitalized Force Development Structure
Though the purpose of Thrust 3 was to create a centralized Force Development structure that was better integrated with associated strategic planning and programming (while retaining significant environmental command inputs), the major issues were not structural in nature, but relate more to process design, mandates and authorities, and discipline.
At present, Force Development is largely a requirements-driven activity and generally remains platform and equipment-centric. Whether the goal is to replace or recapitalize existing equipment, or to introduce new capabilities, concepts and doctrine still appear to take a back seat to the development of requirements, and to the processes associated with translating them into formal proposals for acquisition. This is probably partially due to the devolution of Force Development responsibilities to the Navy, Army and Air Force in the late 1990s, which had the effect of weakening both joint focus and DND/CF integration. Nevertheless, this also had a positive impact, in that it formalized the role of the Environments in identifying and communicating requirements upwards.31 This legitimate requirement emerged as an issue during the initial series of consultation, and was reinforced when early models proposing complete centralization of Force Development were vigorously contested by senior staff. Consequently, upon revisiting the concept of centralization, and in particular when considering whether the current requirements-focussed, Environment-dominated Force Development processwas being unjustifiably maligned, it became clear that a more nuanced view of structural Force Development reform was required.
To counterbalance the natural tendency of the Environments to focus almost exclusively on requirements within their specific operational domain, the Joint Capabilities Requirements Board (JCRB) and later the Defence Capabilities Board (DCB) were created. From 2005 onwards, the latter body was intended to be a forum where concept development and doctrine could be brought to the table to assist in prioritizing and planning capital acquisitions, to exercise a challenge function against Environmental perspectives on relative need, and where true joint requirements could be championed, such that they could compete properly for funding. The nominal authority for these functions is intended to be the VCDS, with execution and oversight provided by Chief of Force Development, but there is ambiguity over exactly what degree of authority CFD actually has.
31 A reality that has also led Canada COM and CEFCOM to create limited internal Force Development capability to allow these organizations to exercise necessary requirements generation roles.
“...in-theatre, junior leaders are given extraordinary opportunities to be innovative, take risks, and be responsible and recognized for the consequences. The opposite is too often true in the rear-echelon headquarters... in which so many of our mid-level officers are warehoused. Men and women in the prime of their professional lives, who may have been responsible for the lives of scores or hundreds of troops, or millions of dollars...may find themselves in a cube all day reformatting Power Point slides... or assigned an every expanding array of clerical duties. The consequences of this terrify me.”
- Robert M. Gates, Secretary of Defense, West Point Address, 25 February 2011
Put bluntly, notwithstanding the migration away from threat-based planning and the introduction of capability-based planning in the early 2000’s, the means by which the CF anticipates, plans, prioritizes, and oversees the development of new capabilities has seen little reform, while reactive, requirements-driven planning and acquisition, largely mediated by Environmental concerns, has remained preeminent. Consequently, joint focus remains sporadic rather than institutionalized, and process integration between Force Development and other DND/CF resource allocation mechanisms appears to be getting worse rather than better.32 Most critically, what should be a very transparent series of interlocking planning, prioritization, and reporting mechanisms is nearly impenetrable, even to those individuals charged with managing and working within the Force Development system. Despite the recommendations of the CDS Action Team (CAT) Report to establish a central force development authority within an integrated CF Force Development system, Chief of Force Development lacks a hammer to enforce the identification, development and acquisition of military capabilities with any degree of coherence.33
While the transformation team concentrated on assessing the general functioning of Force Development processes internal to DND/CF, it must be acknowledged that significant external challenges also exist. It is a frequent refrain in published procurement criticism (as well as in previous Transformation reports) that DND is only one of many players in the complex and interlocking series of activities, processes, and accountabilities surrounding defence materiel procurement.34 With PWGSC and Industry Canada playing significant approval roles, and with fiscal and policy oversight exercised variously by the Secretariat of Treasury Board, the Privy Council Office and the Department of Finance, a degree of functional duplication, overlap, and induced process drag is a certainty. This in turn magnifies the difficulty of materially improving procurement outcomes solely by enacting internal reforms, however progressive and innovative.
To attempt to address these challenges structurally without significant activity and process reform would be futile. Accordingly, the transformation team recommends that a number of interrelated changes be seriously contemplated.
32 See Annex F, Appendix 5 “Departmental Spending Profile FY 2004/5 to 2010/11”.
33 See CDS Action Team 2 Report, Enabling Transformation: Concepts for Integrated Force Development, Integrated Force Generation and Coalition Advocacy, 28 June 2005.
34 See Alan S. Williams, Reinventing Canadian Defence Procurement: A View from the Inside (Kingston: Queens-McGill University Press, 2006).
First, the legitimate requirements generation role that currently exists within the Environments should be recognized, documented, and widely implemented - not only within the existing Force Generators, but also within the Force Employment (described in Section 5.1) and Force Support organizations (as described in Section 5.4), as well as in Chief of Force Development itself. But military requirements, particularly those of a joint and common nature, cannot be the exclusive purview of the traditional heads of the Army, Navy, and Air Force. At the same time, while recognizing that individual Environments have very different requirements, and potentially need different procurement strategies, there is a need to implement a common system for force generating and managing military procurement specialists, if necessary through the introduction of a follow-on career path, and preferably through innovative partnering and skills development with other Government Departments and Canadian Industry.35
Structurally, the Chief of Force Development function should be re-oriented to encompass three discreet lines of operation: joint requirements and prioritization, capital planning and control, and concept development and experimentation. The joint requirements body must be the process owner of the prioritization rule-set, and would be charged with making capital acquisition priority recommendations to the VCDS, in his or her capacity as the Chair of the DCB. The capital planning and control organization would oversee and control the strategic capital investment and the Force Capability Plan, and would conduct in-year performance monitoring of the capital expenditure and the overall acquisition process. This group would also perform a unique, time-sensitive role as overseer and operator of a pan-CF miscellaneous and short-fuse capital investment opportunities panel, engaged with both PWGSC and industry, and empowered to identify smart in-year investment opportunities and accelerate expenditures where possible.
Finally, CF concept development and experimentation organizations (outside of those currently within DRDC) would be centralized under Chief of Force Development, which would command and operate selected Environmental Warfare Centres. This would be done to maximize jointness, to focus experimentation and concept development efforts on practical, medium-term capability development, to reduce stove-piping, duplication, and questionable effort devoted to long-term, futures-oriented environmental analysis, to better support the introduction of new capabilities, and to realize such efficiency gains as are possible.
Though process reform of Force Development may seem daunting, many of the key processes exist already, or existed previously. With some modest reconstitution of these, there is the possibility of achieving real gains in both efficiency and effectiveness with a relatively modest investment of time and effort, particularly in the context of a VCDS-led Force Management organization (as detailed in Section 5.5) empowered with clear lines of accountability, responsibility, and authority to exercise a directive Force Management function.
Other factors also make Force Development reform an attractive target for early action. For example, the impending shift to the new Headquarters encourages structural and procedural rationalization of the sort described above. As well, in the face of a more stringent fiscal climate and the recent Government decision to appoint an Associate Minister oriented on procurement reform, it seems likely that the degree of Departmental and external agency engagement with issues of material interest to the Force Development process will increase. Finally, as Governmental efforts to increase the efficiency of defence procurement take hold, there will likely be opportunities to revisit and potentially refresh critical DND/CF procurement relationships with stakeholders in other Departments, to the mutual benefit of all participants.
35 This recommendation parallels the general intent expressed in the December 2009 CADSI Military Procurement Report, jointly commissioned by the Ministers of Industry Canada, the Department of National Defence, and Public Works and Government Services.
In summary, the transformation team recommends the following Thrust 3 initiatives;
- Create an Innovative Capital Investment Opportunities Group: Within the capital planning and performance monitoring organization of Chief of Force Development, create and empower a discreet capability oriented on identifying, prioritizing and green-lighting smart, short-fuse in-year investment opportunities to accelerate acquisition and capital expenditures, thereby minimizing the level of unspent funds while maximizing the wise use of resources.
- Entrench Requirements Generation and Emerging Capabilities: Create environment – specific requirements and emerging capabilities cells under the primary force generating Level 1s, Chief of Joint Force Support, Chief of Joint Force Employment, and Chief of Force Development to entrench integral force development competencies and processes within the environments, while providing a single-point interface for requirements, prioritization and internal concept development to the centralized Force Development Authority.
- Reorient Chief of Force Development: Through a combination of structural and process reform, focus Chief of Force Development efforts on three main remits – articulation of joint requirements and prioritization of pan-CF capability investments, capital investment planning and acquisition performance management, and concept experimentation / Command & Control of selected Warfare Centres.
- Empower the VCDS to Set and Enforce Force Development Priorities: Review existing and previous processes to create a truly integrated and highly transparent end-to-end Force Development process, with clear and unambiguous lines of authority, accountability and responsibility that encourage and support productive lateral Level 1 engagement, mediated and controlled by the VCDS, while minimizing Level 0 involvement in capital acquisition decision-making to exceptional circumstances.
- Formally Engage External Stakeholders: Accelerate and empower Force Development within the larger Government of Canada family by spearheading the creation of a tripartite defence procurement advisory committee, at the Associate MND level, to formally examine and recommend changes to key defence procurement processes outside of DND’s remit.
Thrust 4 was intended to explore and develop concepts surrounding the Force Support function.
Without adequate support mechanisms that are properly coordinated and synchronized the chances of mission failure are vastly increased. Of all high-level CF activities, Force Support is the most omnipresent cross-cutting enabler of operations. In the context of the non-deployable support assets it also represents the CF’s most decentralized and borderline incoherent set of organizations and processes when viewed from the top and looking down. Though support and sustainment activities vary among the Environments due to differing operating concepts, equipment and infrastructure, there are many more areas of commonality than there are differences. Many of the most fundamental non-deployable garrison sustainment activities, including administrative and logistic support to personnel, maintenance of infrastructure and non-operational equipment, financial oversight and management of mandated programs share common processes, notionally require similar numbers of personnel and skill sets to perform (adjusted for local conditions), and should yield roughly similar outcomes in terms of service delivery.
This is not the case, however. In the context of the current model, responsibility for base operations, supply depots and non-deployable formed support units resides within a number of L1s, including the traditional Environments as well as in CANOSCOM, Chief Military Personnel (CMP), Assistant Deputy Minister (ADM) (Material), ADM(Information Management), ADM(Infrastructure and Environment) and others. Within their respective lines some subordinate organizations have developed discreet structures and processes for supporting and sustaining their operations. At the operational level, Commanders often have authority to reallocate infrastructure and base support resources, and will do so in order to maximize Force Generation activities in other areas. This complicates governance, policy development and monitoring at the strategic level, when intended standards of service delivery and infrastructure recapitalization are undermined by the well-meaning redirection of local funding, without necessarily having the full context of the medium and longer-term effects of the reallocation. In the end, unintended consequences of this weak governance approach trickle down to the tactical level, creating service inequities and exacerbating have and have not situations that invariably emerge among the various Bases and Wings, and more importantly amongst the front line units, regular and reserve, they support.
In considering these challenges, it soon became evident that a degree of functional centralization in the realm of Force Support could yield significant productivity and efficiency gains. Accordingly, it was proposed that a single L1 Force Support authority could be structured so as to provide a wide range of garrison support services, to oversee recruiting and education, and to consolidate and integrate the control, oversight, and employment of certain key joint and common support capabilities. Additionally, it was felt that in many key areas this could be carried out in such a manner as to encourage the development of an advantageous policy / service delivery split; a concept discussed in greater detail at Annex J.36 Within the broad package of structural reform options presented to participants at the various seminars the concept of a single Force Support authority with L1 status figured prominently in both the centralized and hybrid models, and has generated discussion and increased interest throughout the process.
From the outset, it was recognized that a degree of centralization of Force Support has already occurred at the operational level with the formation of CANOSCOM; by most measures, this is a successful example of how functional integration and modest centralization can succeed, particularly given an aggressive operational focus.37 But outside of this niche support capability, the Force Employment and Force Generation activities of the CF are supported and sustained by an unwieldy mix of military and corporate support entities whose activities, processes and structures are largely the result of reactive evolution rather than conscious design. As a result, it is possible to see a myriad of supporting organizations from across the CF whose responsibilities overlap or duplicate each other, where multiple levels of redundancy are the norm, and whose root operating concepts have seen little meaningful staffing or process review to determine whether the base operation, service, and core infrastructure oversight functions they discharge might be managed and delivered more efficiently.38
The concept for a single L1 Force Support authority would see the creation of an L1 Chief of Joint Force Support organization, with functional command authority in four general areas of capability: garrison support, non-deployable logistic support to operations, oversight of selected joint and common capability enablers (including Health Services, Military Policing, and Personnel and Family Support) and recruiting, training and education. As with other L1 entities, the Chief of Joint Force Support would receive direct corporate service delivery from an EX-led organization - in this case, given the immense functional range of the organization, an EX-4 would appear to be justified. The Chief of Joint Force Support would be a powerful strategic entity responsible for delivering support effects to meet the requirements of the Force Employer and the Force Generators as well service delivery for most of the ADMs, and would oversee internal force generation of support functions, just as an Environmental Chief. In this sense, the Force Support concept bridges and encompasses elements of both Force Employment and Force Generation, while clarifying chains of command and lines of accountability.
In terms of garrison services, the Environments and other L1s would be out of the base support business. The Chief of Joint Force Support would, through a regional support area command chain, operate all bases, supply depots, and non-deployable formed support services. In his or her strategic capacity, the Chief of Joint Force Support would work laterally to manage the competing resource demands of the ECs in accordance with a pan-CF view of mission priorities and requirements, and would look to implement common structures and processes, as well as service standards, wherever possible. The creation of a Garrison Support Division would result in a single point of process discipline for support functions related to running the Defence estate. It would also provide obvious opportunities for leveraging economies of scale, including the capability to reach into the various Bases and Wings for additional support as and when required.
36 See Shaye K. Friesen, The Creation of a Single Level One Force Support Authority: A Concept Paper, DRDC CORA Letter Report (LR) LR 2011-57 (Ottawa: DRDC CORA, 11 May 2011).
37 R.R. Crabbe, L.G Mason and F.R Sutherland, p. 50.
38 Obviously, certain related issues are being addressed by the Strategic Review, as well as by ongoing administrative review activity and change efforts internal to support organization; that said, there is no centrally-driven, consolidated approach.
With respect to operational support, consultations during the second round of GOFO discussions in April 2011 confirmed the need to link this capability to any centralized force support concept. The incorporation of existing deployable and direct support capabilities within the Chief of Joint Force Support mandate has a number of advantages. With Force Support functions centralized within a single chain of command, the Chief of Joint Force Support would be able to allocate and shift priority of manning as required, thereby demonstrating enhanced effectiveness and agility in response to changing operational and garrison support needs. That said, simply transplanting the existing CANOSCOM structure into the Chief of Joint Force Support would not be an ideal path. Certainly, much of the existing direct support capability would be required, but careful consideration would need to be given to incorporating additional support functionality (such as Public Affairs, Legal, Policy etc.) as well as highly specialized niche operational capabilities such as chemical, biological, radiological and nuclear (CBRN), to more comprehensively fulfil the need for operationally-focused rapid reaction capacity across the full spectrum of support capability.
Situating CANOSCOM and related deployable support capability within the Chief of Joint Force Support organization, rather than within Chief of Joint Force Employment, may be seen in some quarters as diluting the operational focus of the existing organization. This is a valid criticism, but tends to overlook the fact that such focus tends to issue more from the clarity of an organizations’ stated purpose and accompanying structure than it does from the exact details of its upper chain of command. By making a clear delineation within Chief of Joint Force Support between policy and service delivery functions, and in particular by reinforcing the primacy of operations through the creation of a dedicated Operational Support Division, the team felt that a suitable balance could be achieved between the need for a focused, national-level operational support entity, and the requirement to centralize support functions to allow for efficient and effective internal force generation.39
The creation of a single L1 Force Support authority would also offer the opportunity to consolidate and align all of the recruiting, basic training, and advanced education from CMP under a single umbrella, along with specialized support trade training capability and support schools. In the domain of recruiting and education, separating policy from service delivery in a logical fashion remains the primary justification for such a proposal. As discussed later in Section 5.5, it is felt that control of personnel policy, including personnel requirements, establishment control, and career management policy, is one of the critical focal points of overall governance power for the Force Management function, which should not be diluted by the day to day operation of the service delivery elements currently located within CMP. Instead, these capabilities could be more productively centralized within the VCDS, thereby creating a very powerful and obvious impetus for regular lateral engagement between that organization, Force Generators, the Force Employer, and the Force Manager.
Locating the specialized support trade training capability and associated schools, as well as the non-Environmentally affiliated support capabilities such as Health Services, Military Policing, and Personnel & Family Support, creates obvious efficiencies of scope. As previously discussed in Section 5.2, there is no logical reason not to site force generation activity in these particular areas within Chief of Joint Force Support, and several compelling advantages why it should be done. For example, to avoid the potential trap of reducing to the lowest common denominator (in which joint and common capability enablers would be grouped to achieve critical mass and simplify their administration), consolidating oversight and control of these capabilities within Chief of Joint Force Support provides not only a common command and control construct within which they can be governed, but also reinforces the existence of a single, operationally-driven organizational remit, interpreted and mediated by a powerful champion at the strategic level. Specialized capabilities would no longer scramble to serve a multiplicity of masters, nor would they need to involve themselves in trying (often unsuccessfully) to reconcile competing external requirements with the necessity to keep their own force generation machinery functioning efficiently. Rather, they would benefit from the traditional advantages of operational and ECS-affiliated capabilities, including strategic attention to their factors of production and overall health, and clear remits in terms of expected capability generation. Finally, this construct would mandate a sustained internal focus on service delivery, in the form of Operational and Garrison Support Division clients who oversee the generation and provision of task-tailored operational support to the Force Employer and Force Generator, respectively.
Of all the options and concepts considered by the team, the creation of the Chief of Joint Force Support has the highest potential to realize cost savings through the following initiatives:
- the integration of policy, planning and management staffs within the command structure and concomitant reduction or wholesale elimination of redundant positions;
- greater coordination of policy, procedures, standards and process resulting in the elimination of service overlaps and duplication; and,
- the regional optimization of Base and Wing support services, including supply chain management, material distribution, administration, transportation, infrastructure maintenance, and personnel services.
It also has the very laudable quality of extending upon the extremely potent operational focus that characterizes the success of the CANOSCOM model, which in turn reflects the positive and enduring impact of the 2005 Transformation on the CF organizational culture.
That said, it must be acknowledged that creating a consolidated Force Support entity will not be easy. Bringing together the many DND and CF personnel and unifying them through structures and processes is akin to building a new environmental organization. Though individual elements of the Force Support concept have previously appeared on a smaller scale within certain CF organizations, there has arguably not been a consolidation of such magnitude since the CF reorganizations of 1965-1968. The difference now is that we have the sterling example of what CANOSCOM has provided at the operational level, and the potential to replicate this success at the strategic level is high.
Accordingly, it is recommended that the following Thrust 4 initiatives should be considered for implementation:
- As part of the Chief of Joint Force Support organization, Create a Garrison Support Division: Maximize the efficient provision of base and garrison support services by centralizing service delivery for all base, wing, depot, and DND/CF infrastructure support services, under a regional support service delivery model.
- As part of the Chief of Joint Force Support organization, Consolidate Recruiting & Education Service Delivery: Consolidate all recruiting, non-Environmental basic training, and advanced education from CMP under a single organization, along with specialized support trade training capability and support schools, to maximize economies of scale.
- As part of the Chief of Joint Force Support organization, Group Ancillary Force Support Capabilities: Group specialized support capabilities including Health, Military Police, and Personnel and Family Support constructs (including JPSUs) in a manner that allows them to efficiently and effectively carry out necessary Force Generation functions, while providing support to the Force Employer and Force Generators, mediated by the Chief of Joint Force Support.
- Rationalize CANOSCOM as a key element the Operational Support Division within the Chief of Joint Force Support organization: Parse existing OSCOM structures to concentrate on providing front-line, deployable support capabilities to the Chief of Joint Force Employment, and to provide a point of consolidation for other deployable support capabilities that may currently be generated elsewhere, as well as niche and specialized rapid reaction capabilities not currently encompassed within the Environments.
- Create a Level 1 Chief of Joint Force Support: Consolidate all common and joint and infrastructure support functions under a single L1 entity, recognizing the crucial importance of logistic and support efficiency and effectiveness in delivering combat effects, while providing a focal point for the generation, oversight, and disposition of logistic and common support personnel, as well as acting as the single authority for achieving DND/CF-wide support efficiencies.
Section 5.5: Thrust 5 – Strengthening Force Management Today to Better Integrate Civil-Military Defence Governance in the Future
The intent of Thrust 5 was to explore and develop concepts supporting enhanced Defence Management, without necessarily focussing on explicit structural options. That said, the Terms of Reference contained a number of prescriptive requirements related to the function and structure of the VCDS group that were clearly intended to address perceived shortfalls in the current organizational concept. In addition to the more general intent of enhancing integration and reducing resources committed to non-deployable HQs, there was specific direction to review the scope of CF responsibilities of the VCDS, and to design a CF strategic management structure that would enable an adapted governance model with the VCDS empowered as the Chief of Staff of NDHQ.
During the course of its analysis, the transformation team’s perspectives on the status, composition, and future potential of the VCDS construct evolved significantly. The initial challenge seemed largely mechanical; that of reducing and rationalizing the scope and scale of VCDS activity to allow renewed emphasis on governance and Departmental interface functions, thereby creating the conditions where VCDS group attention could be focussed on Chief of Staff (COS) like responsibilities. Instead, the role and composition of the VCDS organization engendered serious debate within and outside of the Team regarding organizational, process and cultural impediments to an efficient and effective internal civil-military relationship. Numerous competing constructs were discussed, analyzed, and discarded, and a wide variety of historical and academic sources were reviewed, with valuable insights gleaned from multiple high-level interactions. This included feedback from the various seminars and working groups.40
Though consensus was not achieved, common ground did emerge. This centered on a broad collective belief in the absolute criticality of a decisive and leaner Force Management capability. Explicitly empowered to exercise oversight of key CF force development and strategic planning functions, it was felt that this organization should set and enforce the application of personnel and establishment policy, and should serve as the primary governance conduit and military policy interface between DND and the CF. Though the VCDS’s span of control was also considered, the preponderant view was that the real problem was not so much one of quantity, but of variety – the idea being that if a range of functions being performed within the organization were more closely aligned than is presently the case, issues related to the span of control would diminish. Accordingly, it is recommended that only the minimal force generation and service-delivery functions that are required to support or exercise a force management role should be retained within the VCDS, as detailed in Section 5.8.
40 See Shaye K. Friesen, “Quick Look” Report – General Officer/Flag Officer/Executive Transformation Seminar Survey, DRDC CORA Letter Report (LR) LR 2011-01 (Ottawa: DRDC CORA, 13 January 2011); Shaye K. Friesen, High Level Analysis of the Strengths, Weaknesses, Opportunities and Threats (SWOT) of CF Transformation, DRDC CORA Letter Report (LR) LR 2011-20 (Ottawa: DRDC CORA, 1 March 2011).
As a result of the above feedback, and with a concerted review of historical case studies, prior analyses and subsequent recommendations, the guiding intent for transformation team concept development in the context of Thrust 5 evolved to center on the following requirements:
- the need to reinforce the Force Manager as the CDS’ deputy and the true ‘first among equals’ within the CF Level 1 structure;
- the need to cement the Force Manager as the CF’s undisputed administrative governance, strategic policy, and resource management lead;
- the need to properly situate the Force Manager’s office at the locus of the shared civil–military accountability relationship between the CDS and the DM; and,
- the need to more tangibly connect Force Management with CF operational outcomes through the strategic planning, tasking, and readiness monitoring functions.
At one extreme of the potential COS spectrum, this implies that the VCDS is expected to interpret and represent the interests of both the DM and the CDS through control of both the content and form of the strategic agenda. In practical terms, however, this particular interpretation was felt to be problematic.
Fundamentally, within the current command and line of authority constructs governing L1 access to the CDS and DM respectively, there does not appear to be the possibility (either now or in the future) that the VCDS would be empowered to exercise an equivalent first among equals function on the Departmental side as in the past or in the same manner as is possible among the CF Level 1s. The standard Public Service model establishes clear and unequivocal reporting relationships for ADMs, which already constitute a de facto staff for the DM, while the National Defence Act (NDA) itself contains explicit provision for Associate DM supporting structures.
At the other end of the spectrum, the COS role may also be viewed in more transactional terms: as the primary resource manager of the Department and as the non-aligned owner of the strategic decision-making process. Nevertheless, this is an equally limiting perspective, with attendant practical obstacles to implementation. For example, notwithstanding the CDS’ legislatively-enshrined responsibility for “...control, and administration of the CF...”41 the fact that the DM is the accounting officer responsible for overseeing and administering DND/CF spending in line with the FAA means that this particularly important element of CF governance is a shared activity. As well, with the recent creation of a Departmental Chief Financial Officer, the future utility and practicality of employing the VCDS in pan-DND financial oversight roles is questionable.
With respect to broad oversight and control of corporate services within the CF, it is difficult to envisage a circumstance where the VCDS organization would or should develop competencies in resource management and governance domains that are preponderantly within the civilian purview. This seems likely to perpetuate functional duplication. Rather, in the long-term interests of creating a meaningful policy and service delivery split (similar to the remaining L1s), the transformation team concluded that establishing a senior civilian executive presence within the VCDS group (as well as in other Level One organizations) would enable not only the provision of VCDS-specific corporate services, but also would allow pan-CF monitoring of similar entities across the remaining CF L1 organizations.
The VCDS would be best-positioned to play a predominant Force Manager role by creating within the organization the ability to execute and oversee critical pan-CF functions (joint and otherwise) that are not otherwise addressed within the existing Level 1 hierarchy and which demand attention and oversight at the strategic level. These roughly correspond to four lines of interrelated function: CF-specific governance and resource management oversight, force development and control of the capital plan, strategic planning, tasking, and readiness monitoring, and strategic Human Resource management of the CF establishment. Along these four lines the VCDS organization must be prepared to direct and oversee the reform of the committee structures, to support the retrenchment of vital strategic performance measurement and monitoring capabilities, and to provide the primary CF / DND strategic policy and governance interface, in the form of a reconfigured SJS.
To implement these concepts, a number of significant changes would have to be contemplated, and several existing organizations would require recapitalization and a redistribution of their functional responsibilities. Key elements of the proposal include:
- recapitalization of core VCDS governance processes, oriented on building, maintaining, and enforcing a well-documented and logical governance regime, including CF financial management, reporting, strategic performance measurement, and corporate service policy oversight;
- empowering Chief of Force Development to mediate and determine joint requirements, manage the strategic capital investment plan, and oversee concept development, in line with the recommendations articulated in Section 5.3;
- oversee and direct the Strategic Joint Staff on high-level strategic planning, tasking, and readiness monitoring functions, and making it the primary conduit for military advice to the CDS; and,
- establishing critical Human Resource policy and governance capabilities for both Regular and Reserve elements, including military personnel requirements, establishment control, and career policy.
The general organizational outline of what the future Force Manager could look like is included at Section 5.8, along with more comprehensive descriptions of the above functional areas.
To a greater extent than the other 5F-oriented Thrusts, Force Management as a function (and by extension the VCDS as an organization) is unique in terms of its potential impact upon the strategic and governance culture of the CF and DND.
To further empower the current VCDS organization with the range of functions and authorities necessary to fulfil the critical Force Management mandate, the following Thrust 5 initiatives are proposed:
- Recapitalize the VCDS as the Force Manager: Reorient the VCDS group on broad Force Management functions of pivotal concern to the CF, including high-level CF governance and performance measurement, strategic planning, taskings and readiness, force development and prioritization of the capital program, and oversight and control of key aspects of military personnel management – thereby reinforcing and empowering the VCDS as Deputy CDS, and reinforcing the ‘first among equals’ status of the office in terms of setting and controlling the tempo and scope of CF activity and resource expenditures.
- Designate the VCDS as the Readiness Authority: Connect Force Management with CF operational outcomes by designating the VCDS as the CF operational readiness authority, aligned with supporting Business Planning processes, and using the Strategic Joint Staff to provide strategic Force Employment / Force Generation arbitration advice.
- Consolidate Military Personnel Management & Policy: Centralize strategic CF Military Human Resource management and policy within the VCDS group, including control of operational CF pers requirements, CFTPO oversight, CF establishment control, career policy and management, and strategic military personnel forecasting and modelling, thereby increasing coordination of intake, outflow, progression, rank ratios and other key elements of the personnel pillar. All human resource service delivery functions would rest with the appropriate Chief of Joint Force Support Director General.
- Establish a Civilian Corporate Service Delivery Model: Establish a cadre of EX 3/4 civilian corporate service delivery specialists within the military Level 1 organizations, reporting directly to individual Level 1s and overseeing all aspects of civilian service delivery, management, and policy implementation. This group would form a crucial interlocutory link between the CDS’ chain of command and the DM’s lines of accountability and mandate.
- Evolve the Strategic Joint Staff: As part of the VCDS Group, reorient current Strategic Joint Staff structure to concentrate on high-level strategic planning, tasking, and readiness monitoring functions, and position it to serve as the primary strategic conduit between the CF and DND, maximizing its value in staff advisory roles to the CDS / VCDS.
- Reinvest in Strategic Performance Measurement: Create a standing, centralized performance measurement group within VCDS as the approved source for strategic decision-quality information and insight, empowered with agile business intelligence tools and analysis capacity sufficient to act as the primary CF ‘data-clearinghouse,’ and required to provide regular performance audit reports to senior staff.
- Governance Process Reform: As a matter of priority, accelerate reform of the committee structures, formalize and publish a revised organization and accountability manual (including statements of authority, responsibility and accountability adjusted for any changes implemented as a result of either the 2005 or 2011 transformation rounds), and purge the existing assortment of governance documents of all time- and organization-expired material.
The goal of Thrust 6 (Administrative Review) was to propose potential efficiencies across DND/CF and to identify at least $1B of potential budget reallocations. Though constrained by the requirement to avoid overlapping with Strategic Review and with work undertaken by other transformation team Thrusts (in particular, with transformation team Thrust 7 – Process Review), and by previous initiatives including but not limited to the HQ Rationalization, Internal Services, and MACAE reports, a number of ideas not identified by previous efficiency efforts were considered.
The team generated a list of 19 potential reallocation initiatives, enclosed at Annex L. The total potential reallocations for the whole list range from a minimum of $750 M to a maximum of $3.1B, with a mid-point of $1.9B. Each item was initially assessed with a rough order of magnitude estimate of potential savings and an overall degree of difficulty of implementation, based on professional judgement and available data. Key items with the largest potential were researched in greater depth and all were then assessed, after a second pass, with indicative ranges of reallocation amounts. The reallocation estimates were intended to be net totals, incorporating potential costs of implementation. Executive direction was provided for review, prioritization, and target-setting purposes.
The highest value reallocation initiatives found were in the areas of Enterprise Resource Planning (ERP), professional services, consultants and contracting, IM/IT, full-time reserve personnel, and base support. Together, these items represent the bulk of potential reallocation amounts – total estimates for potential savings range from $690M to a probably unachievable $2.8B, with a realistic target in the order of $1B within several years.
Enterprise Resource Planning
The current IM strategy, based around existing Enterprise Resource Planning (ERP) and Business Information (BI) systems, is complex and expensive. The total cost of ownership(TCO) for ERP systems in DND/CF is now in excess of $400M annually, while the current investment plan proposes to spend more than $6B over the next 10 years. Until recently, however, there was no viable alternative that could meet senior leadership’s IM requirements.
In 2002, a group of researchers from the Massachusetts Institute of Technology (MIT) leveraged a new approach to data access called facets that allows for the integration of data holdings (regardless of type) without the need to build data warehouses. Facetted data is a disruptive technology that alters the existing IM investment paradigm. It crosses the boundaries between most information system stovepipes and allows for extremely rapid delivery of information capabilities at a fraction of the capital cost of current methods. Rapid integration of data from many different sources allows IM capability to be delivered in weeks instead of years and for a fraction of the cost of a traditional approach. Under the broad moniker of ‘Agile Business Intelligence,’ facetted data technology is now being widely adopted across industry and government.
Implementation of a facetted IM capability would enable a fundamental simplification of the ERP architecture in DND/CF, and would place DND at the forefront of applied, practical implementation of Agile BI techniques. Enterprise data for HR, materiel, realty assets, finance, and contracts would enhance Force Management, with access possible through a variety of implicated organizations, including (at a minimum) the SJS and the standing Strategic Performance Measurement organization discussed in Section 5.5. Agile BI capabilities would influence and impact upon a wide range of critical strategic functions, including managed readiness, operations planning, HR management, succession planning, supply chain management, capability based planning, business planning and cyber defence.
The current IM investment plan is likely to cost of several billions of dollars, with a significant Total Cost of Ownership. It is proposed that DND/CF implement an alternative, proven technology, which it is believe can eliminate the IM requirements backlog in 36 months, for a fraction of the currently planned expenditure and a greatly reduced TCO. Accordingly, it is the recommendation of the transformation team that Agile BI data architecture solutions be aggressively pursued.
Contracted services are a major DND/CF expenditure, consuming both Vote 1 – Operations & Maintenance and Vote 5 – Capital funds across the four CFDS pillars. They cover a wide range of services, from repair and maintenance of equipment and buildings, to spares and consumables, to direct personnel expenditures on engineering consultants, medical professionals and management consultants. The transformation team examined 113 general ledger (GL) accounts related to contracted services for this review, and found that contracted services expenditures increased substantially over the past three years - from $2.13B in FY 07/08, to $2.61B in FY 08/09 and $2.77B in FY 09/10 (as indicated in Table 19 below). This represents an increase of 30% over the period. Although ADM (Mat) has the largest expenditures in this area, spending $879M in FY 09/10, almost all Level 1s consume contracted services of some form. For example, the three ECs expended $684M between them, while the Deployed Operations Accounts (Domestic and International) spent $189M.
Contracted Services Trends - FY 07/08 to FY 09/10
Table 19 - Contracted Service Spending Trends
Understanding what makes up these expenditures is a major undertaking, complicated by the current service groupings, which do not consistently distinguish between direct salary expenditures and funds spent on equipment, infrastructure or other physical assets. Similarly, differences in contractual vehicles and administrative practice can create ambiguity when it comes to assigning expenditures to the service groupings. Accordingly, the transformation team had to be cautious about making broad assumptions or attributions. For example, contractors are generally defined as individuals who use DND working space, have a DWAN account and a DND telephone account. For analysis purposes, they were considered part of the overall Personnel pillar in CFDS. As of 31 March 2010, 5,447 contractors met this definition (many, but not necessarily all of whom would have been paid under these GLs). Other services, even those which clearly have a significant personnel financial component (such as contracted maintenance of aircraft, or preparation of architectural drawings) might be more appropriately attributed to the CFDS Readiness or Infrastructure pillars given that the functions being performed are directed at achieving mission outcomes, rather than directly supporting the Personnel pillar.
Though it would be desirable to understand the exact impact of funding reductions in contracted services expenditure areas in advance of assigning savings targets, it was evident to the transformation team that some GL expenditures are more discretionary than others. For instance, indicative targeted reductions ranging from 0% to 30%, were seen as an appropriate starting point for each Service Grouping of GLs, although Management Consultants were recommended for a dramatic 80% reduction. If implemented, this would result in an overall reduction of 16% in one year and would yield approximately $445M for reallocations to other parts of the Defence budget. Over three years it is not unreasonable to plan on a 30 % overall reduction, though a second and third order consequence study must be done with the various stakeholders.
More analysis work is needed before broad funding reductions in this area could be contemplated. This work is currently underway through direction promulgated by the VCDS in July 2010 as part of the FY 2010-2011 DND/CF Business Planning - VCDS Programme Direction to Level 1s. As detailed at Annex C to that directive, Level 1’s were to conduct a 100% review of contracted services with the results forwarded to C Prog no later than end March 2011. Required information includes contract duration, number of contracted personnel, rationale for the contract, as well as potential operational impacts if the contract were to be deleted. These returns will enable the strategic staff to better quantify the potential impact of the funding reductions proposed above consequently, it is the recommendation of the transformation team that this undertaking be carefully monitored and, if necessary, reinvigorated to ensure actionable information is produced, and a targeted reduction plan proposed and implemented.
Information Management / Information Technology Service Delivery
DND/CF maintains and manages its own internal networks, including both unclassified and classified intranets, large data centres and a very large number of servers. In order to deliver these services, DND employs large numbers of personnel and contracts many service providers, currently spending approximately $735M annually (not including large IM/IT capital projects). Achieving savings with this initiative would require an ambitious re-think of how IM/IT is delivered to the DND/CF, and the recently completed IM/IT Campaign Plan42 is a great point of departure. Specific examples of how savings might be achieved include outsourcing data centres, outsourcing desktop services, consolidating redundant management systems, and delivering non-secure DWAN capability via the internet. Though seemingly radical, the United States Navy and Marine Corps have pursued this sort of IM/IT reform, and have completely out-sourced their desktop services while achieving significant savings.43 The goal would be to minimize as much as possible all expenditures on IM/IT, while maximizing the opportunities presented by disruptive technologies.
The quantitative benefits of such an approach are clear - outsourcing large portions of IM/IT to a third-party service provider can reduce the complexity of IT management, and would shift Departmental effort to contract management versus personnel and organizational management. Qualitatively, outsourcing can increase the range and responsiveness of the services by leveraging new technologies and industry-best practices. It also reflects current GOC intent to rationalize and reduce back-end IM/IT service provision.
Though the degree of internal pushback from the many thousands of people involved in these functions (see Annex F for the cross sectional analysis of military and civilian personnel dedicated to the IM/IT function) is likely to be intense, and there are a number of service standard and security concerns, the current IM/IT service delivery model is clearly both costly and under significant stress. Accepting that the future security environment will see the continued growth of cyber as a discreet operational domain rather than as a supporting capability, and with competition for human resources in the area increasing, hard questions must be answered regarding where the DND/CF should focus scarce resources and talent. It is the perspective of the transformation team that a rebalancing is required, and that rather than propping up an increasingly expensive back-office service-delivery model focused largely on delivering day-to-day administrative functionality, aggressive efforts to achieve savings in thisarea should be pursued, to enable reinvestment in specialized military IM/IT capability to meet emerging threats. ADM(IM) should be renamed to the Chief Information Officer with absolute and complete authority for all IM/IT policy, priorities and corporate level accountabilities. This authority should also include approval for all IT/IM expenditures, of any size, so as to halt the ever-increasing resources being allocated to this function by the many organizations currently empowered to spend money on IT. Likewise, the former ADM IM should be divested of all service delivery activities, and these should be grouped under the Joint Force Support Command.
42DND/CF IM/IT Campaign Plan, 18 May 2011, http://img.mil.ca/kd-dc/cp-pc/index-eng.asp
43For recent developments, see http://defensesystems.com/articles/2011/06/10/naval-it-day-ngen-and-canes-update.aspx for a discussion of NGEN – the USN”s Next Generation Enterprise Network, an outsourced, land-based IM/IT architecture.
Directed Reserve Personnel Rationalization
The VCDS launched the Primary Reserve Employment Capacity Study (PRECS) in October 2010, with a mandate to report its findings by 30 June 2011. The main deliverable of the PRECS was to propose a sustainable baseline for full-time Reserve employment across DND and the CF. This recommendation was to be based upon a review of current employment levels, and informed by the anticipated requirements for full-time employment in the future environment, as dictated by expected fiscal and operational pressures.
While the final report of the PRECS has yet to be approved, the proposed baseline is expected to be in the vicinity of 4,500 full-time Reservists, which represents a reduction of approximately 4,500 positions from September 2010. If approved, the new baseline is to be implemented by 31 March 2014, generating an annual savings of approximately $400M. Of note, the study estimates did not take into account other potential structural and manning adjustments implied by the division of Reserve Force policy and service delivery between the Force Manager and Force Generators, as discussed in Sections 5.5 and 5.1.
Other recommendations arising from PRECS include the need to promulgate accurate and comprehensive Reserve Force Defence Administrative Orders and Directives (DAODs), the need for a strategic guidance document for the Reserve Force, and requirement to revise notional funding levels for Reserve activities, including the protection of funds for part-time Reserve force generation and training.
Canadian Forces Bases, Wings and Area Support Units (ASUs) provide a wide range of support services to those units that assigned to them. Overall, as detailed in Annex L, approximately 24,000 personnel support the nearly 150,000 DND and CF members from 35 locations across Canada. Base support, therefore, is a very significant undertaking, employing approximately one-sixth of DND/CF personnel.
As discussed in Section 5.4, the transformation team believes that centralizing the provision of Base support services under the aegis of a Level 1 Force Support entity could result in significant long-terms savings, greater process alignment, and a more evenly distributed service standard across the Environments. To begin to quantify the extent of the challenge, DFSR staff sought to assess pan-CF service levels at Bases, Wings, and as provided by ASUs.
To determine how many personnel were providing support services, manning numbers for each Base/Wing/ASU were extracted from the HRMS database as of end-December 2010. Since each Base/Wing/ASU has only one Departmental ID associated with it, supported units with separate Departmental IDs were not included in the support numbers. Personnel were then attributed to one of 12 support functions typically provided by a base, using section-level identifiers. In addition, six support functions (legal, health, dispute resolution, joint personnel support, residential housing and military police) which have personnel located at the base but held against other Departmental IDs were added to the Base/Wing/ASU numbers to provide an overall indication of support service personnel numbers. Contracted personnel, whether providing a service (e.g. janitorial staff) or as individuals (e.g., medical doctors and dentists), were not included in the overall support numbers.
The attributions described above were carried out by DFSR analysts and have yet to be validated by Level 1 or Base/Wing/ASU personnel. In some cases, such as firefighters, attributing personnel to specific support functions is very straightforward; in other areas, however, it was difficult to make a clear distinction between related support functions at the Base/Wing/ASU section level – for example, finance versus administration. As there is no uniform base support service structure across the country, or even within the three environmental commands, the current attributions need to be treated with a degree of scepticism, and require confirmation. Nevertheless, preliminary observations showed wide variation in the ratios of support personnel to base population in a variety of areas – an imperfect metric, it must be admitted, but one which is at least potentially indicative of relative service levels, as well as functional efficiency.
In addition to the supporting-to-supported ratios discussed in the study, an assessment was made comparing the per capita expenditure of realty replacement funding across a variety of locations. This also yielded inconsistent results, with potentially significant variances noted between the Air Force, Army, and Navy, as well as between geographic locations running on a primarily ASD model. Again, particularly given the relative immaturity of the metrics used and the obvious statistical problems presented by an analysis approach of this nature, more detailed study is required.
Overall, even with the incomplete data that exists, there would seem to be potential opportunities in the following areas: military to civilian conversions, levelling of support services across Bases, Wings, and ASUs, and applying best practices more widely, such as using alternate service delivery versus in-house support. In particular, it is felt that both effectiveness and efficiency gains could be realized by standardizing the delivery of Base/Wing/ASU support services.
As discussed in detail at Annex L, even a partial implementation of the some of the proposed reductions in administrative overhead would be likely to realize $1B in savings over time. While full implementation of all of the proposals would be complicated, particularly if initiated simultaneously, these tasks would constitute a very compelling forcing function that would drive the Force Support concept ahead, and would spur large-scale process reform. Accordingly, it is recommended that the following Thrust 6 initiatives be considered:
- Invest in Agile Business Intelligence Capability: Enable enhanced strategic decision-making and performance measurement by introducing and institutionalizing the use of Agile Business Intelligence technology architecture, while seeking opportunities to reduce or eliminate DND/CF reliance on traditional, overhead-intense, contractor-mediated enterprise resource planning systems.
- Establish Reduction Targets for Contracted Professional Services: Continue and if necessary reinvigorate ongoing work to quantify the nature and scope of contracted services (as per table 19), with the intent of implementing a directed spending reduction in the order of at least 30% cumulatively (10% per year for three years), with deep reductions in certain specialized areas such as management consulting. Institutionalize this capability to ensure enhanced monitoring in the future, including automatic periodic review of contracted service / Alternate Service Delivery business cases.
- Reform IM/IT Service Delivery: Realign ADM (IM) to emphasize the CIO as the sole source of IM/IT policy, priorities, and corporate accountabilities, with the initial task of quantifying options to outsource the delivery of non-operational IM/IT services, to enable significant reinvestment in operational IT capacity (including but not limited to Cyber defence capability) or in the capital program.
- Standardize Base Services: In line with recommendation 25 and the formation of a Garrison Support Division, establish organizational structure and service delivery standards for all common overhead elements of bases, wings, and Area Support Units, adjusted as required for legitimate local variations such as size, geographic disposition and lodger unit operational functions.
- Reserve Reinvestment: Reduce the Primary Reserve Full Time manning baseline to about 4500, and consolidate Reserve Policy and establishment monitoring within the Force Management organization, in line with recommendation 32
Thrust 7 was oriented on identifying the most expensive (in terms of opportunity cost to the Department versus return on investment) and least productive processes. This Thrust emerged in reaction to the broad perception within the transformation team that in many overhead activities, the tendency to risk-averse administrative behaviour increasingly trumps the mantra of ‘good enough,’ even when it results in excessive associated costs, increased complexity, and reduced operational effectiveness. It is this same observation that drove the Prime Minister’s Advisory Committee on the Public Service to note, “...we are concerned that the costs of operating this complex (oversight) regime may be disproportionate to the benefits... with operating a system that is becoming more concerned with how things are done than with what is done for Canadians.”44
In this vein, given the cross-cutting nature of the many options for positive process reform, it was the decision of the transformation team to identify a macro set of potential process targets and to make a single recommendation regarding how best the review could be completed, rather than exhaustively document individual recommendations for each proposal. Accordingly, the following processes are felt to be a good starting point for consideration:
|Process Name||Problem Description||General Reform Approach|
|PER System||The current PER system is extremely inefficient, annually consuming up to 5% of the net available productive time of command and admin staff, and adversely impacting operational productivity on many units for prolonged periods.||Validate PER system purpose & required outcomes, propose alternative approaches with equivalent outcomes, but consuming less time and command effort.|
|Posting / Career Management System||Postings are extremely costly in terms of both time and money, but often appear to be used haphazardly or by custom, rather than as part of a coherent force generation plan.||As part of recommendations 16-18, examine the posting process as a key force generation element of career management, and propose solutions to decrease posting rates by at least 25% without adverse effect on operations.|
|Claims Processing||Even for straightforward travel, claims processing is onerous and technical, requiring user time to prepare, and specialist clerk services to administer and oversee.||Examine where savings can be achieved through process reform to claims processing, at no net cost to CF members, while remaining compliant with TB guidelines.|
|Second Language / Official Languages Act (OLA) Implementation||The CF currently uses a costly ‘just in case’ second language strategy which sees personnel assessed and advanced based on second language competency, regardless of use or employment location.||Examine the current CF implementation of the OLA to determine whether a more efficient ‘just in time’ 2nd language strategy can be employed and aligned with current career management practice, and with the actual functional requirements of employment.|
|Translation Services||DND currently adheres to a rigorous translation standard for documents, briefings, and web pages, necessitating considerable expenditure on translation services.||Assess the current DND strategy to determine if a less stringent OLA application can be envisaged, which takes advantage of online automated translation capabilities now available.|
|Program Activity Architecture (PAA) Reporting||DND current reports annual program spending according to established Treasury Board principles, but uses a PAA that reflects neither the organizational architecture of the CF, nor the established methods of tracking program expenditures.||Continue with the development of a generic DND/CF activity model, along the lines of the 5F approach. Once the model is sufficiently mature, and assuming key organizational changes are made in parallel, adjust the PAA to reflect.|
|VCDS Manning Priority System||Manning priorities are used for career management and establishment control, but in many cases reflect inaccurate assessments of the actual operational priority of units, and/or are applied in too literal a fashion when prioritizing weight of effort.||Consideration should be given to prioritizing manning within units by line and function, to allow easier delineation of truly critical operational and support capabilities within establishments.|
|Security Controls||DND currently uses a myriad of security protocols for building passes, identity control etc. This inefficient approach wastes time and money as DND personnel move through the system.||Determine where efficiencies can be gained by going to a single, centralized DND-common set of identity and building access processes, and if possible, mechanical systems. This would align with recommendation 27.|
|Pay Processes||The Department maintains four different pay systems for Regular, Reserve, Public Service and NPF Employees.||Determine whether efficiencies can be gained by going to a single system for all CF and Civilian personnel, possibly administered external to the Department.|
|Readiness Monitoring & Op Resource Mgmt||Individual environments and even op communities continue to pursue a variety of readiness monitoring and operational reporting capabilities, according to their specific needs.||Determine whether efficiencies can be gained by going to a single readiness and operational performance measurement system, based on Agile Business Intelligence technology, as per recommendation 39.|
|Strategic Performance Measurement||There is currently no consolidated source of credible strategic performance information, nor is this capability properly enable at the strategic level.||As per recommendation 37, establish a standing strategic performance measurement capability, and investigate how best to disseminate and act upon information generated by the system. This relates back to the discussion on Force Management and the role of the VCDS in a transformed CF.|
|CFTPO Implementation||The usefulness of CFTPO in identifying and assigning troops to task is counterbalanced by its inability to identify and communicate organizational manning realities, and by the tendency to use it as a direct tasking method, bypassing chains of command.||Determine what structural and / or process shortfalls impede the application of the CFTPO, and propose solutions that increase its efficiency as a system of record for deployments and tasking. Centralize oversight and management of the system within a single organizational entity, as per recommendation 30.|
|Strategic Governance Documentation||It is currently impossible for a casual observer to discern how DND is governed, which accountabilities reside where, how critical high-level decisions are taken, or even how the DSP is allocated.||Review the current committee structures used for strategy formulation, discussion, and broad governance implementation in DND to find and eliminate areas of overlap, duplication, and dysfunction; rewrite DND ARAs, as per recommendation 38.|
Historically, one of the less-appreciated actions of the Management Command and Control Re-engineering Team (MCCRT) was to stand up a Red Tape Action Team (RTAT), whose mission was to increase the delegation of administrative and decision-making authority and reduce the amount of administrative regulation by at least 50%. The intent was for the team to simplify and consolidate all DND/CF administrative policy into DAODs. Regrettably, by early 2010 only 342 Canadian Forces Administrative Orders (CFAOs) had been either cancelled or incorporated into DAODs; at present, over 400 CFAOs, Civilian Personnel Administrative Orders (CPAOs) and directives still exist, awaiting review and consolidation. The RTAT evolved into the Corporate Policy Review Group (CPRG) chaired by the Directorate of Strategic Corporate Services (DSCS), but their work remains unfinished; accordingly, lack of updated, rationalized, harmonized and promulgated DAODs perpetuates pan-Departmental inefficiencies and impairs Departmental effectiveness.
While the initial RTAT and subsequent policy review effort was a worthy step in the right direction, it did not go far enough. The current process environment makes identifying and consolidating existing direction a futile exercise; what would be of use, however, would be the reinterpretation and re-establishment of a standing RTAT function, within the Force Management organization. As recommended below, this organization would be expressly oriented on identifying and auditing DND/CF processes to determine whether their respective products or outcomes justify the cost in personnel and financial resources, and would (in consultation with the strategic performance and readiness oversight cells) allow the Force Manager to exercise broad oversight of the operational and administrative performance of the CF.
- Establish a Standing Process Audit function: Create a standing organization empowered to review and audit pan-CF and DND administrative processes, empowered with agile business intelligence tools and analysis capacity sufficient to identify options where productivity gains can be realized through process reform (red tape reduction) and able to exercise a policy function with respect to the documentation and control of administrative practices.
The attached CF structural model was developed to encompass and depict the potential application of as many of the transformation recommendations as possible. It reflects feedback collated from the Transformation Advisory Network syndicate exercise on 12 April 2011, specifically in response to broad syndicate support for advance on the Thrust 4 (Force Support) and Thrust 5 (Force Management) fronts. As a variant on the 5F model, it displays a certain bias towards centralization, but also encompasses elements of the hybrid and decentralized models, in the form of broad foundational concepts such as splitting policy and service delivery where it makes sense, and federating certain joint activities across Environmental organizations where an obvious alignment exists (for example, placing responsibility for oversight of Space capability within the Air Force).
Variants of this model have been debated and discussed at considerable length, the guiding intent was to arrive at a logical diagram of how the concepts contained within this report might find purchase in a more familiar command / line of accountability architecture. As such, it has only been subjected to limited quantitative modelling and analysis of projected rank distribution. Nor can it be regarded as a comprehensive overarching structure intended to encompass all organizations and functions currently being performed. Many existing organizations at L2 and below were excluded, but this should not be interpreted to mean that they have necessarily been earmarked for absorption or elimination, only that their individual characteristics were not illustrative of the concepts being considered.
Guide to Interpretation
Although it is strongly recommended that the model be reviewed only after reading and considering the preceding report, it is recognized that organization charts exert an almost irresistible pull for those conditioned by successive rounds of traditional transformation attempts. Accordingly, the following directions are intended to assist those individuals to achieve a rudimentary understanding of the big ideas contained within the 5F model. Please be aware, however, that using a functionally-oriented line diagram to attempt to derive and understand the intended outcomes and subtle detail of a fairly complex and interlocking series of ideas is likely to result in erroneous conclusions.
Specific characteristics of the model include a numbering convention aligned directly with recommendations made in the report, as laid out in detail at Annex B as well as later in this Chapter. Of note, while each number in the diagram corresponds to an associated recommendation, some recommendations cannot be depicted in structural terms; this accounts for why there may appear to be numbers missing.
The diagram also depicts high-level estimates of potential available for reallocation or reinvestment opportunities. As described in greater detail at Annex M, Appendix 2, the transformation team attempted to quantify the potential reinvestment in personnel that could issue from implementation of the blended organizational model. While this may appear to imply dramatic changes in the manning levels of certain L1 organizations, these must be placed in the context of the creation or reform of other organizations, to which the bulk of these personnel could be assigned (for example, Base / Wing support personnel currently within Environmental lines, who would moving to the proposed Force Support organization).
Finally, it must be pointed out that the model is not a conventional organizational chart, but mixes existing and formally constituted organizational entities along with proposed functional and in some cases geographic groupings. It is not meant to fully quantify the exact command and control disposition of these functions, and instead represents a starting point for further refinement.
- Align DND functional competencies: Adopt innovative institutional alignment options to allow the Department to advance in parallel with CF transformation, and to pursue options for reducing overall personnel costs, to include:
- Separate policy making and corporate management oversight functions from service delivery
- Combine Info Management, Environmental and Infrastructure functions into a single Level 1 entity to set service delivery standards and monitor performance within the proposed Joint Force Support Command
- Amalgamate all aspects of Acquisition and Materiel Management into one Level 1 organization to achieve synergies across the Department for the acquisition and life-cycle management of all materiel and equipment. Subsequent consideration should be given to establishing this integrated capability as special operating agency within government
- Merge the current Policy and Public Affairs organizations into one Level 1 organization, able to exercise corporate oversight and policy making of Departmental policy development and accompanying messaging
- Create a Level 1 Corporate Services entity that combines the current corporate services functions within ADM (FinCS) with the policy oversight of Civilian Human Resource Management. This organization would also provide the Departmental coordination function for the EX 3/4 corporate service delivery specialists that would be established in the military L1 organizations.
Over the recent past the DND/CF has delivered magnificent results in operations both at home and overseas. We enjoy tremendous support from Canadians, and our budgets have increased more so than in the past 50 years. We have great people and some superb equipment either delivered or on the way, but we are at a crossroads and we have a variety of choices to make, some easy and others much harder. We are transforming because our funding is constrained so as to help tackle the national deficit, and not all our resources are currently positioned to make best use of the taxpayers’ dollars to position ourselves for success in meeting the challenges of tomorrow. By almost any standard and like almost all of our friends and allies, we have too many headquarters, too much cumbersome process, too much overhead, too much tail. We are going to have to reallocate a significant number of people from within to meet the demands of the future, and we have to do all that we can to protect and invest in the equipment, training and infrastructure needs of the front line and deployable units. We are not alone in these challenges as all of our friends and allies have come to the same respective conclusions, and are tackling the issues in similar ways.
There are a wide variety of ideas contained in this fairly lengthy report, representing the many facets of the organization that is the DND/CF. The information that it includes is usually focused at the strategic level, and of necessity is much akin to skimming the wave tops of what are dozens of very complicated and interlinked issues, all of which have to be considered in total and not as discrete items that can be solved later.
Based on extensive efforts to research and present the unclassified facts about the numbers and types of people, who has received what funds, what are they used for and establishing trends, we know where we are. We also have a very good idea of where we have to go. The devil is in the thousands of details needed to move us from here to there, from today to tomorrow. The transformation team cannot answer all these questions, as the very size and complexity of the DND/CF means it is impossible for us to accurately predict the second and third order consequences across the entirety of the organization, which is why these recommendations need to be analysed in conjunction with the stakeholders.
This is an opportunity. We have been presented with the circumstances to do all that we can to make the organization of the DND/CF leaner, more agile, better focused on output instead of process, to invest in our future and an organization that will become a model of managerial excellence. This is the time for leaders to decide, to make the decisions that the DND/CF have not had to, or have managed to postpone because we could. The report identifies a diverse set of potential approaches that could result in significant savings in the near, medium and longer-term. In considering the relative difficulty of some of the recommendations presented, and their potential implementation challenges, senior decision- makers must avoid the temptation to resort to a flat-tax approach. One size does not fit all and the front-line forces, regular and reserves, those capabilities upon which Canadians depend, are not only the most valuable, they are the most vulnerable as they have traditionally been the easiest to reduce or to cut.
In the words of John F. Kennedy, "the time to fix the roof is when the sun is shining". The sun is truly shining on the DND/CF. As is always the case, this nice weather will not last forever and what is more is we have quite rightly been told to get on with it in no uncertain terms. Faced with challenging geopolitical, strategic and fiscal situations and the certainty that the CF will continue to be called on to act, whether domestically or internationally, we now have an opportunity to move forward. By reducing overhead and finding ways to improve efficiency and effectiveness, we can make the Canada First Defence Strategy - our plan for the future - much more achievable within the resources available, without cutting any of the regular or reserve operational capability that Canada and our allies have come to depend on when times are tough. This is a task worth doing.
“It ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them.”
- Niccolò Machiavelli, The Prince
The Attachments, Artifacts, and Annexes for the Report on Transformation 2011 are available through DND’s Public Inquiries section. Please contact us to request a copy of the documents, available by CD or in print. Please indicate if you are requesting a particular document, and the format in which you would like to receive it.
Assistant Deputy Minister (Public Affairs)
Department of National Defence
National Defence Headquarters
Major-General George R. Pearkes Building
101 Colonel By Drive
Ottawa, Ontario, Canada
Annex A – Guidance Documents
Appendix1 – News Release - MND - Chief of Transformation Appointment - 30 Apr 2010
Appendix2 – Chief of Transformation - Terms of Reference - Amendment 1 - 15 Sep 2010
Appendix3 – VCDS Initiating Directive - CF2020 Transformation - 26 Jul 2010
Appendix4 – Chief of Transformation - Terms of Reference - 9 Sep 2010
Annex B – Recommendations
Summary Table of Recommendations
Annex C – Chief of Transformation Internal Departmental Communications
Appendix1A – Professional Services Research Memo - 19 Jan 2011
Appendix1B – Professional Services Research Attachment
Appendix2A – Status Quo View of Personnel Memo - 21 Jan 11
Appendix2B – Understanding the Status Quo Data Attachment
Appendix2C – Hierarchical - Vertical Overviews Attachment
Appendix2D – Cross-Sectional Overviews Attachment
Appendix3A – Status Quo Financial Expenditures Memo - 13 Apr 11
Appendix3B – Status Quo Financial Expenditures Attachment
Appendix4A – Administrative Review Memo - 18 Apr 2011
Appendix4B –Admin Review Reallocation Initiatives
Appendix4C – Initiative 001 – ERP Briefing Note
Appendix4D – Initiative 002 – Contracted Services
Appendix4E – Contracted Services Trending
Appendix4F – Contracted Services Spreadsheet
Appendix4G – Initiative 003 – Reserve Pers
Appendix4H – Initiative 004 – IM/IT
Appendix4I – Initiative 005 – Base Support
Appendix4J – Base Support Spreadsheet
Appendix4K – Initiative 006 – Cost Moves
Appendix4L – Initiative 007 – R&D / Op Research
Appendix4M – Initiative 008 – Non-tactical Vehicles
Appendix4N – Initiative 009 – Travel
Appendix4O – Initiative 010 – Real Property Management / Overhead
Annex D - Historical Analysis & Future Security Assessment
Appendix1 – Intentionally Left Blank
Appendix2 – The Changing Global Security & Economic Environment
Appendix3 – Defence Transformation - Historical
Annex E – Allied Initiatives
Allied Transformation Initiatives
Annex F - Status Quo Personnel and Financial Data Sets
Appendix1 – Briefing – Understanding the Status Quo Data
Appendix2 – DND-CF Personnel Hierarchical Data Tables
Appendix3A –DND-CF Personnel Cross-Sectional Groupings
Appendix3B – DND-CF Personnel Cross-Sectional Data Tables
Appendix4A – DND Financial - Fund Allocations
Appendix4B – DND Financial Overview - Explanatory Notes
Appendix4C – DND Financial Overview with Percentages
Appendix4D – DND Financial Overview with Personnel Totals
Appendix5 – Departmental Spending Profile
Appendix6 – Civilian Personnel Update – Jan 2011
Annex G - Thrust 1 Force Employment
Appendix1 – Thrust 1 WG Opening Slide Deck - 8 Feb 2011
Appendix2 – Force Employment Thrust Option
Appendix3 – Detailed Depiction of Force Employment Thrust
Appendix4 – Manning Comparison
Annex H - Thrust 2 Force Generation
Appendix1 – Thrust 2 WG Opening Slide Deck - 8 Feb 2011
Appendix2 – Joint Force Generator
Annex I - Thrust 3 Force Development
Appendix1 – Thrust 3 WG Opening Slide Deck - 9 Feb 2011
Appendix2 – Force Development
Annex J - Thrust 4 Force Support
Force Support Concept
Annex K - Thrust 5 Defence Management
Appendix1 – Defence Management Concept
Appendix2 – Vice Chief of Defence Staff Annex - 19 May 2011
Annex L – Thrust 6 Administrative Review
Appendix1 – Admin Review Reallocation Initiatives Summary Table
Appendix2 –Admin Review Reallocation Initiatives Briefing Notes – 18 Apr 2011
Appendix3 – Preliminary Primary Reserve Employment Capabilities Survey Report (TBP)
Annex M – Blended Organizational Model
Appendix1 – Blended Organizational Model
Appendix2 – Explanatory Notes
Annex N – Transformation Advisory Network Seminars
Appendix1 – Timeline of Events
Appendix2A – Major Syndicate Themes and Issues
Appendix2B – Three Models Compared - 30 Nov 10
Appendix2C – Letter Report - Survey
Appendix2D – Syndicate Presentations - 30 Nov 10
Appendix3A – Transformation Advisory Network Working Group Summary - 12 Apr 2011
Appendix3B – Syndicate Exercise Orientation - 12 Apr 2011
Appendix4A – CoT brief to GOFO Seminar - 30 Nov 2010
Appendix4B – CoT brief to GOFO Seminar - 7 Jun 2011
Annex O – Supporting Documentation
Appendix1 – CANFORGEN 090-10 - Senior Appointments - Chief of Transformation
Appendix2 – CANFORGEN 119-10 - General and Flag Officer Seminar Amendments
Appendix3 – CORA Letter Report - Transformation SWOT Analysis
Appendix4 – CORA Letter Report - Centralization of Defence
Appendix5 – CORA Letter Report - Growth and Change in DND 2000-2010
Appendix6 – News Release - MND - Senior Appointments - 19 Jul 2010
Appendix7 – New Activity Set letter
Appendix8 – HQ Rationalization Report - 18 Jun 2010
Appendix9 – IPSOS Presentation to General and Flag Officers Seminar - 8 Jun 2011