Preserving capacity, General Tom Lawson, Chief of the Defence Staff, Keys to Canadian SAR
Issue link: http://vanguardcanada.uberflip.com/i/103039
DEfENCE SPENDING D lapses to date, and those announced in Budget 2012, just four years into a 20 year capital program, amount to $7.4 billion in shifted capital funding. A five percent loss of purchasing power means that $370 million has already been removed from DND's procurement balance sheet. If the capital program continues to face delays at a similar rate, close to $2 billion worth of purchasing power could be lost due to defence inflation over the CFDS' 20 year planning period. This could render entire projects unaffordable, as this amount is roughly equivalent to the budgets for the army's CCV and TAPV projects. Worse still, it is not clear that seven percent accurately captures the inflationary pressures facing the department, particularly for the naval shipbuilding program that represents roughly half of the total capital program budget. The RAND Corporation, for instance, suggests that the effective inflation rate for ships ranges between 7.5 and 10 percent. This would mean that the actual loss of purchasing power in the naval shipbuilding program due to inflation is somewhere in the neighborhood of $1 million a day. Two solutions could mitigate this problem. First, budgets could be properly inflated. However, at least until deficit reduction measures are concluded, this is highly unlikely. Second, effective procurement reform that eliminates endemic delay would prevent the loss of purchasing power from arising in the first place. However, despite various department efforts, there is little indication that this will occur, as the time to contract for defence procurements is on the rise. With neither of these solutions likely, the best course of action is a reappraisal of the capital investment plan that takes a realistic assessment of DND's actual purchasing power into account. If this does not occur as part of the defence policy reset currently underway, DND will continue prosecuting an overly ambitious capital plan, imperiling its equipment acquisition in the process. OUR FOUNDATION IS OUR TECHNOLOGIES OUR MISSION IS EXPANDING YOUR CAPABILITIES To develop innovative solutions that provide the comfort, protection and performance you need, we work backwards. First, we consider the requirements of the end user. Then we assess every element of design and apply the latest technology to develop comfortable, low-burden equipment so wearers can focus on the task at hand. Europe: +44 (0) 1695 727171 scott.sales.uk@tycoint.com North America: +1 800.247.7257 sh-sale@tycoint.com © 2011 Scott Safety ®, ScottSafety.com®. All Rights Reserved. © Crown Copyright/MOD. Reproduced with the permission of the Controller of Her Majesty's Stationery Office www.vanguardcanada.com DECEMBER 2012/JANUARY 2013 21