Keywords

If we think of procurement as a way to ensure the implementation of specific government goals, it is not far-fetched to see it as a fundamental element in the micro-calibrations of public policy that makes policy goals and objectives actionable (Cashore & Howlett, 2007) (see Table 2.1). That is, procurement is fundamental in brokering the meso- and micro-levels of policy-making, ensuring that the chosen policy tools are effectively employed towards reaching policy targets. If a decision-maker wishes to successfully implement what are often lofty and abstract policy goals, successful procurement processes are necessary for this to occur.

Table 2.1 The components of public policy
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But what are the parameters according to which procurement is successful, and when does it fail?

As the literature on procurement has shown, successful procurement processes need to match clear objectives and targets. These parameters must be set by the government, and on the back of this effort, specific tools and tool calibrations can be chosen and matched by the departments or agencies that will then be in charge of delivering the project (Almarri & Blackwell, 2014; Vaidya et al., 2006). Procurement fails when this clarity of intent and alignment are not present (Phillips et al., 2007). This is recognized in the procurement literature if departmental strategic goals and the procurement instruments do not align, then problems almost always arise (Glas et al., 2017; Patrucco et al., 2017; Plantinga et al., 2020).

The literature also suggests that issues emerging from such a misalignment of means and ends vary according to how complex and costly are the products being procured, and upon whether or not the planned purchases can be discretely reduced or terminated. As shown in Table 2.2, several procurement classes exist and those which develop over long time spans and often involve irreversible phases of development are a distinct category. In such cases severing decisions one from another may be extremely complicated, and, if path dependencies are involved, reversals may be much costlier if not impossible to make. These complex cases are thus inherently more difficult and conflict-prone than simpler one-off, low cost cases.

Table 2.2 Types of procurement
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As Jacobs (2008, 2011, 2016) noted for long-term policy-making in general, long-term procurement choices are more problematic because (1) they involve the distant future, which is highly uncertain and risky while concurrently (2) extending far beyond the electoral plans and the mandate of whichever government kickstarts the process and (3) incorporate sunk costs, contracts and other variables that make them very difficult, if not impossible, to modify and sometimes even to tackle incrementally (e.g. it is impossible to convert a nuclear reactor to use other types of fuel or to build and operate it in stages).

Major weapon systems and platforms, by nature, tend to be extremely complex and long-term Type 4 purchases, incorporating cutting edge technology that is both developmentally complex and very expensive, often only being developed as the platform is built and put into service, as has often been the case with new generations of fighter aircraft and new warships. It is also the case with such systems that, like a hydroelectric dam or nuclear reactor, they cannot be acquired piecemeal but must be purchased and constructed all in one effort (Migone et al., 2023). This complexity, high costs and the lack of severability of contracts once signed are characteristics of the kinds of procurement processes that generally trigger hard-fought political battles about costs, benefits and platform choices (Hoppe, 2010; Williams, 2012).

Unfortunately, most of the literature on procurement often tackles relatively simple and low-cost Type 1 and Type 3 cases, where decisions can be walked back, or where the expenditures are small enough or are organized on a one-time or short-term basis and can be adopted incrementally. Another popular subject of study is Type 2 cases such as buildings or airports in which large amounts are invested, but on a one-off basis, so that individual decisions can be treated and analysed as idiosyncratic processes. In all of these cases decisions are often reversible and, generally, smaller financial commitments are involved or purchases are de-composable into a sequence of steps (Erridge & Murray, 1998; Potoski, 2008; Flyvbjerg, 2007; Grimsey & Lewis, 2017; Hawkesworth & Burger, 2011). However, the literature has not focused very much on Type 4 for which few comparative studies are extant and these are often just assumed—mistakenly—to involve the same drivers and dynamics as shorter-term or lower cost types.

Occasionally, two different types of procurement may morph into another. The case studies we examine in this volume do show some attempts at dividing large Type 4 projects into sub-projects with funds allocated in an incremental fashion. This is done in the attempt to change a Type 4 procurement decision—which at a certain point incorporates concerns like sunk costs, unlike what happens for single-use, smaller cases—to become a simpler, more discrete Type 2 decision in an attempt to reduce the complexity, uncertainty, cost and conflict involved in Type 4 projects. We explore the theoretical dynamics of this model in the conclusion. Often, however, in the case of expensive, technologically complex, and time contingent projects, such as warships and fighter aircraft, this type of ‘project slicing’ is impossible, or very unlikely, since an air force or navy requires a fleet of aircraft or ships and not a single model. A similar situation exists with other civilian megaprojects, such as the construction of large hydroelectric projects in which generation, transmission and distribution systems must be built simultaneously and cannot be severed (Migone et al., 2023).

In fact, the model of indivisible, high cost, projects is generally the norm when dealing with major military platform and system purchases, including tanks, fighter aircraft and warships. Some weapons or technology, however, such as drones, firearms and logistical elements including ammunition and trucks, fall into the Type 3 category because of their relatively low cost per item. But the purchase and development of large, more complex platforms, such as warships, or extremely complex systems of systems such as Fifth-Generation fighter aircraft, on the other hand, squarely represent examples of Type 4 procurement. Serious issues and problems can emerge in these cases, which are not translatable to the other types (Aguado-Romero et al., 2013; Besselman et al., 2000; Kim et al., 2016; Louth & Boden, 2014; R. M. Page, 2007), given their unique nature and characteristics. This type of expensive, technically complex, defence procurement thus occupies a very specific and difficult niche within the Type 4 category.

As a matter of course, not only do these decisions involve very large long-term financial commitments and occur in high-stakes, politically charged and risk-filled environments, but, furthermore, the life cycles of the technology involved are often unclear or contested, especially when the platforms or systems in question are not fully developed themselves, and contracts are spread over many years, if not decades, and are technically very complex. Finally, both political support and the financial commitments in both the shorter or longer term are often scarce or variable (Jacobs, 2016).

Since these complexities are the hallmark of much defence procurement, we should expect that political and administrative personnel across the globe have devised strategies to tackle and manage these risks, and as the case studies examined in this book demonstrate, they have. But such processes can still fail, and we will show how they can be successfully and unsuccessfully navigated after detailing the two comparative Canadian and Australian aircraft and naval ship cases.

Given the complexities described above, including multi-layered interests and the need for integration with national and international joint forces, ensuring that governments, private companies and administrators achieve the required degree of cooperation for these projects to succeed often depends on detailed political-electoral cost/benefit analyses (Calcara, 2018, 2020).

In particular, each Type 4 procurement situation provides a government with different kinds of administrative and political risks and payoffs (see Table 2.3).

Table 2.3 Type 4 procurement economic costs and political benefits
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As Table 3.1 shows, originating governments seldom extract large political payoffs from Type 4 procurement processes while absorbing all the costs and therefore they often employ a variety of common strategies to try to transform them into one of the other types which enhance their ability to claim credit or avoid blame for large costs and project overruns or delays. One of the strategies that governments have employed in Type 4 situations is, perhaps counterintuitively, simply to ignore the issue and leave the expenditure decision to some future administration. This strategy usually involves ‘punting’ or ‘kicking the can down the road’ to the next government; in the field of climate change policy, for example, this is a common enough approach (Howlett, 2014).

In other cases, purchases of weapons platforms, for example, are typically not downsizable and may not be amenable to punting or to incremental processes. Thus in the case of many Type 4 cases originating governments face having to pay ‘up-front’ all of the costs, while simultaneously, given long development times inherent in weapons design, they are unlikely to reap more than a few benefits with most credit accruing to the incumbent government at the time of product delivery. Strategically, it is sometimes possible to reverse this equation by starting with prominent announcements of intended purchases, while at the same time postponing the actual acquisition. Thus, all political benefits are received up front while costs are at worst delayed and at best offloaded onto another government.

However, this strategy often cannot be extended indefinitely and, eventually, it must either result in abandoning a project or deciding on a specific course of action to follow. In some cases, this may mean trying to transform a large procurement project into a set of smaller-scale decisions that are at least partially reversible, although, as noted above, this may only be possible for Type 3 procurement cases (such as reforestation) but not when Type 4 purchases are in play. It is nevertheless sometimes possible, as we have noted, to ‘disassemble’ a large strategic procurement project into a series of interconnected incremental ones that are not only smaller in scale but also potentially reversible. While theoretically appealing, this approach is again not always feasible in the military platform case, especially if the contract for a specific weapons platform is not amenable to orders being downsized, cancelled or acquired incrementally.

Another possible Type 4 strategy entails reducing total expenses by securing revenues through some kind of industrial offset, which—for example, by involving national domestic industry in the supply chain for the weapons system in question—reduces overall costs and shifts the project towards a lower cost mode. Furthermore, governments can also sometimes simply reduce the size of their purchase, which transforms it into a Type 1 project. Finally, a sixth strategy is to purchase a platform ‘off the shelf’ which also typically lowers costs. We set out these pathways in Fig. 2.1.

Fig. 2.1
A 2 by 2 table. The row headers read low cost and high cost. The column headers read short term and long term. 4 cells have types 1 to 4. Type 4 leads to type 2, via incremental and continuous build with offsets, and type 4 leads to type 3 via off-the-shelf and kick-the-can, and to Type 1 through downsized purchases.

Pathways away from Type 4 procurement problems

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2.1 The Need for Alignment of Government Purchaser and User Aims in Successful Type 4 Military Procurement Processes

Which if any of these strategies is adopted by a government in a Type 4 military procurement decision depends largely, we contend, on the nature of the purchase and, further, on whether or not government policy goals are ‘aligned’ or congruent with their military services’ doctrine and vice versa (Glas et al., 2017; Migone et al., 2022; Plantinga et al., 2020).

The cases that we present here, and the different outcomes that they yield, underscore how important this is. Successful procurement/implementation requires that governments establish a clear set of objectives and targets, which then allows for specific tools and tool calibrations to be matched by the administration and for this congruence to be maintained over time and throughout periods when changes in government occur (Almarri & Blackwell, 2014; Vaidya et al., 2006).

Alignment between service doctrine and government defence policy is key since without it there is zero chance of an amicable/sellable Type 4 solution, thus increasing the odds of a ‘kick the can down the road’ or even a ‘downsized purchase option’ result. With alignment, though, a successful Type 4 outcome is possible.

The fleet procurement cases set out below, in particular, highlight that while navies may have a more or less clear vision of their intended or established doctrinal roles, and of what equipment or force structure will be necessary to fulfil these roles, if national defence policy does not align with these roles (and, again, vice versa), then the preferred naval force structure will be unlikely to emerge in a coherent or timely fashion. In the Australian case, unlike in Canada, alignment, and government sustainment of this alignment between administrations, allowed for successful platform procurement.

This is very clear in the naval case, for example, where, doctrinally, the RCN and the RAN possess different service priorities which either did or did not match government policy goals. Throughout the temporal arc we analyse in the 1990–2020 period, the RCN saw itself as dedicated to the implementation of Canadian collective defence, and its key role in this effort being to contribute to NATO’s Anti-Submarine Warfare (ASW) capability. However, the Navy’s relative importance within the scope of Canadian national security shrank after the end of the Cold War (Collins, 2021) as government policy shifted towards peacekeeping and an emphasis on Arctic national sovereignty issues; indeed, the RCN was usually given third priority against the Army and RCAF for service funding.

The RAN, on the other hand, perceived itself as the essential guarantor of Australia’s continental defence, and, as far as government defence policy was concerned, this was supported politically, with numerous Australian government administrations repeatedly confirming the RAN’s established doctrinal role, indeed, supporting these statements with high prioritization for new construction and funding. Not only was the RCN comparatively less well-funded, but Canadian governments also came to perceive the role of the RCN as essentially a coastal defence organization, with occasional minor expeditionary roles—resulting in a clear case of misalignment between government defence policy and a service branch’s doctrine, subsequently undermining plans to construct and purchase replacement Type 26 frigates (see Appendices A, B and C for short chronologies of Canadian and Australian defence policy and procurement efforts during this period).

For Canadian politicians, unlike in Australia, the end of the Cold War was supposed to represent the arrival of a new era signalling a ‘peace dividend’—consequently allowing national defence spending to fall to about 1% of GDP. This was not an isolated situation: defence spending among the NATO Allies between 1987 and 1993 fell by around a third (Markowski & Hall, 1998, p. 8). To make matters worse, from the blue-water RCN’s perspective, the Conservative Party, under Prime Minister Stephen Harper, in 2007 inaugurated a defence policy that very much stressed national (Arctic) sovereignty, so that the construction of the Arctic Offshore Patrol Vessel/Ships (AOPV/S) became a central procurement item and was inserted into the proposed warship procurement package before construction could start on the RCN’s Halifax-class frigate replacements.

Australian governments, conversely, had a diametrically opposed vision of what the end of the Cold War implied for their country’s defence posture: both Labor and Coalition governments appreciated this period as ushering in not peace but a whole set of new geostrategic uncertainties and risks linked to, among other things, the rise of China and the growth of the People’s Liberation Army Navy (PLAN). This feeling was shared by many others in the region and indeed Association of Southeast Asian Nations (ASEAN) defence spending grew by a third between 1989 and 1994 (Markowski & Hall, 1998, p. 8) as the Chinese challenge intensified. Much the same is evident in the case of the F-35 procurement: here the Canadian tendency to overpromise and underdeliver, to get embroiled in exquisitely political diatribes that would (more or less slowly) critically undermine the case for an efficient procurement will also be on full display. Grounded in an evident disconnect between strategic and political visions, this approach would ultimately not only undermine the preparedness level of the Canadian Air Force, but also contribute to a severe boom-and-boost model of military procurement that generates a critical tension in the system. Because Canadian politicians are very shy about large financial commitments for new military hardware, they prefer to ‘punt downfield’ any such expenditures; however, by delaying the replacement of old weapons systems, they progressively create a situation where there is no other solution to the obsolescence to these system than a large disbursement (and/or facing a critical gap in capacity), which—in turn—triggers the original aversion. In Australia, however, the much greater alignment yielded very different results, with a comparably speedier and much more effective procurement process.

These dynamics and doctrinal-policy divisions and agreements and their impact on large platform military procurement efforts and strategies are elaborated in the two procurement cases set out below.