Thoughts on the Defence Investment Agency (DIA)

DIA is a good first step, but there's a lot of work ahead

Canada’s Defence Investment Agency (DIA) was announced this morning.

The government’s outline of the DIA is available here, and Noah G. has a good primer over at True North Strategic Review.

Here are my initial thoughts on the DIA, expanding on what I posted to social media.

1) One goal of DIA is to reduce process. This is laudable and important. Treasury Board reviews may be sped up or simplified for the DIA, notably by raising the thresholds for the Board to get involved around complexity and risk. If the DIA is permitted to do its work with fewer trips to the Board, that’ll be good news indeed.

We’ll want to see additional details to get a better idea of what this will involve. I’m a bit concerned that DIA will be hamstrung by existing regulations and procedures. Let’s hope that the government tables legislation to bring about a major change to Canada’s defence procurement system as the DIA evolves, rather than tinkering with the status quo.

2) One aspect that stood out to me is that contracting experts will be brought into options analysis and requirements setting. This will be uncomfortable for the CAF in particular, since there’s currently an emphasis on preserving the purity of the technical requirements, i.e. the military requirements shouldn’t be unduly influenced by external considerations. The Material Group at DND typically tries to stay out of the requirements setting process for this reason.

I’m not exactly sure what the government has in mind here or how it’ll work, but this strikes me as an important point of potential tension. If the aim is to make the military’s requirements align with the government’s industrial policy, that may breed conflict between the DIA and the CAF.

In a similar vein, the relationship between DND/CAF’s requirements setting, definition, and implementation roles and the DIA is fuzzy. This may do more harm than good if it isn’t sorted soon. Arguably, the biggest risk around the DIA is not only that it will duplicate existing efforts, but that the DIA and DND/CAF will have overlapping mandates and end up fighting over who decides what.

3) It looks like the DIA may take on agile procurement approaches and other contracting authorities. That would be good. However, as a number of colleagues have pointed out, the DIA will only be dealing with contracts over $100 million. Agile procurement approaches are best suited to smaller projects, at least until we get used to them.

Indeed, the $100 million threshold is proving to be a source of frustration. The SMEs I know were hoping that DIA would spearhead efforts to invest in emerging technologies and Canadian start-ups. The $100 million threshold indicates that DIA won’t be leading these efforts at first.

I suspect that DIA will eventually expand to include procurements under $100 million. But my guess is that the defence industrial strategy (DIS) will be how the government intends to better engage with SMEs and emerging technologies.

4) Bureaucratically, defence procurement will remain divided between various departments and central agencies. The DIA will be a special operating agency under the Secretary of State for defence procurement, separate from DND/CAF and ISED. This may evolve, but right now DIA looks like a reform of PSPC, rather than the defence procurement system as a whole. Based on the information that’s available, it seems that they’re putting PSPC’s Defence and Marine Branch under a new CEO and the Secretary of State. This may just be the initial step, since the government has indicated that the full rollout of the DIA will take up to a year to complete.

The establishment of new teams for military operations, industry engagement, project management, and contracting within the DIA is hopefully a sign that these existing DND/CAF, ISED, and PSPC functions will all be brought together under the Agency in the future. In fact, that better be the case, otherwise I’m not sure what these new teams will be doing, who will be staffing them, and what they’ll be adding to the mix. And as noted above, we don’t want these teams grappling with departments who are responsible for these very aspects of defence procurement.

5) Finally, a new CEO who looks handpicked by the Prime Minister is a good sign, but the rest of the bureaucracy remains unchanged and mired in a risk-averse culture. The CEO will need to spend a lot of energy on culture change. In fact, that should be the new CEO’s main priority. The Prime Minister and Secretary of State also need to give the CEO their full backing here.

As the old saying goes, culture eats strategy for breakfast. Culture finds new organizations especially delicious. The establishment of DIA has to be accompanied by a fundamental shift in how Ottawa thinks about military acquisition; otherwise, we’ll end up spending a lot of time moving lines and boxes around, only to be disappointed when nothing new comes of it.

In sum, DIA is a good first step, but there are many more that’ll need to be taken to ensure that the Agency fulfills its promise and mandate.