Opening Statement to the Standing Committee on Public Accounts

National Defence—In-Service Equipment
(Chapter 10 - December 2001 Report of the Auditor General)

Mr. Chairman, thank you for the opportunity to meet with the Committee to discuss Chapter 10 of our Report tabled last December. I am accompanied today by Peter Kasurak, responsible for our audits of National Defence.

I would like to start by clarifying what we said in our Report about the Defence budget. We have been widely quoted as having advocated an increase in the Department's budget. This is incorrect. It is up to Parliament to determine how much should be spent on Canada's defence. Our Report calls attention to the fact that, at the time of our audit, departmental planners provided us with data that suggests that DND has a funding gap of $1.3 billion in fiscal year 2001-2002. We noted this because the failure to match Force structure with funds available has been one of the factors contributing to maintenance backlogs and declines in equipment availability.

I will now turn to the specifics of our Report. This chapter provides Parliament with its first set of comprehensive statistical data on a major component of readiness. Readiness is composed of four basic components: people, equipment, training, and enablers such as command-and-control and intelligence systems.

Today, I would like to discuss the following key points related to the chapter:

• first, what we found concerning the state of equipment readiness;
• second, what we learned about the Department's ability to manage equipment readiness; and
• finally, certain actions needed to improve information in order to resolve the management issues noted.

The state of the Canadian forces' equipment

The statistics that we were able to compile indicate that the Army has maintained equipment, and the Navy is holding its own, but the activity, availability and maintenance of Air Force equipment has declined significantly.

• From 1989 to 1998, the Army has been able to keep deployed equipment available for use almost 90 percent of the time. However, it is experiencing some problems in keeping up with preventive maintenance and in keeping vehicles available for training in Canada.
• The Navy has been able to maintain its activity, that is, the number of days its fleets are at sea each year. But it is also unable to keep up with scheduled maintenance and is facing a "bow wave" of deferred work on the Patrol Frigate.
• The Air Force picture is much more adverse: annual flying hours for the Sea King, Hercules, and Aurora have all steadily declined over the last five years. Their availability is declining, and mission aborts are increasing for all types of craft except the Griffon. Aircraft availability is low, except for the Griffon helicopter, which is new.

We also found that the supply system is rarely able to meet urgent demands, and there is a shortage of maintenance personnel. Overall, 13 percent of positions are vacant and 15 percent of those on the job have not completed the training required for their rank. Almost 40 percent of the training required to do specific jobs in individual units has not been taken.

Due to limitations of the data maintained by National Defence, we could not determine how operations and training have been affected overall. Nevertheless, there are strong indications that maintenance problems with the Hercules, Sea King, and Aurora aircraft have limited training and operations. Delays in obtaining spares, prioritization of transportation of spares, and "mission fatigue" of maintenance technicians appear frequently in unit reports.

The state of equipment management

In general, the information needed to manage equipment is often unavailable. The information that is available is often inadequate, incomplete, and inaccurate. I would like to cite just a few examples:

• First, none of the armed services has formal standards or targets for how ready its equipment should be.
• Second, we could find only 41 percent of the required post-exercise reports that document problems and lessons learned and facilitate corrective action. The rest were either not completed or had been lost.
• And finally, navy maintenance data are inaccurate due to posting of data up to two years after operations, use of estimates rather than actual measures, and loss of data due to bad diskettes, server crashes, and failure to back up data.

The lack of adequate management information is a problem that, unfortunately, is widespread throughout the federal government. Good information is the essential first step in good management. Without it, managing risk intelligently is not possible. We believe that improvement of information is essential to resolve management issues noted in our Report.

Money alone will not solve the problems identified by this audit. There must be the will to assess operations and training and to learn from them in a systematic manner.

The Department agreed with our findings and is already taking action through the roll-out of its Materiel Acquisition and Support Information System (MASIS) and its new Supply System. However, the new Supply System will not arrive until next summer, and MASIS is not expected to be in place until 2004.

Parliament might consider taking the following steps to ensure that equipment is better managed in the future:

• Encouraging the Department to set a timetable to develop basic targets and goals for equipment maintenance and to begin reporting against them.
• Asking the Department to state what specific interim steps it intends to take to ensure the reliability of management information while its legacy information systems remain in use.
• Asking the Department to set a deadline for the completion of its lessons-learned database and to regularly inform Parliament of the percent of required post-exercise and post-operations reports that have been completed.

Thank you, Mr. Chairman. We would be pleased to respond to questions.