Aleksi Korpela Defence Spending Procurement

DND’s Independent Spending Authority to Increase to $5 million

The DND will receive a boost to its spending authority on goods and services, announced DND spokesperson Ashley Lemire. The spending cap will be gradually increased through a phased implementation process to begin early 2016. The $5-million spending authority will be fully implemented in coming years. This provides the DND the ability to process the majority of its own purchases, instead of doing so through Public Works and Government Services Canada (PWGSC).

The decision was the outcome of years of lobbying by DND officials to raise spending restrictions. According to a 2013 DND report, involvement by both the DND and PWGSC created inefficiency in the procurement process, mainly due to the inability of the PWGSC to process the high volume of transactions.

Currently, the DND has the authority to buy goods worth up to $25,000 and services up to $2 million without processing transactions through Public Works and Government Services Canada. The $25,000 limit was the outcome of an earlier increase from $5,000 in October 2011. The $5 million spending authority will allow the DND to process an estimated 91% of its transactions independently.

While these increases will streamline the procurement process of most contracts, there remains a discrepancy between funding allocated for new hardware and the actual cost of acquiring them. According to David Perry, a defence analyst at Canadian Global Affairs Institute, this shortfall is in the tens of billions of dollars. Perry argues that the government must invest an additional $2 billion in procurement spending each year or risk downsizing the military and reducing capabilities.

Although increasing the spending authority of the DND reduces the obstacles for the majority of purchases, the broader problem of inadequate funds remains unresolved.

Photo courtesy of Corporal Nathan Moulton (Land Task Force Imagery).