Canada’s military faces steep costs for IT makeover

As Canada joins the global race to modernize its military, analysts say the country and its allies have been forced to examine the business case for defence-related IT systems.

How do governments afford them and which are relevant to their needs?

Although revolutionizing the military

has been discussed at “”various junctures in history,”” the concept achieved particular currency as the Cold War ended and began to appear in military and scholarly literature, explained Martin Shadwick, a defence analyst at York University in Toronto.

Yet it’s uncertain whether Canada is ready to give its military’s IT systems a makeover, he said.

“”Our philosophy is you’ve either got to be the best in these technologies or get out of them,”” said Eric Fresque, director of business development for Defence R&D Canada (DRDC)-Ottawa. “”To quote our assistant deputy minister, there’s no such thing as second-class research.””

To facilitate this research, DRDC annually invests about $250 million, plus $36 million from industry funneled into the department, “”to ensure that the Canadian forces are technologically prepared and relevant,”” explained Fresque.

Created after 9/11, the Chemical, Biological, Radiological and Nuclear Research and Technology Initiative allows technologies being developed in government labs, universities and industry to vie for funding to speed up their market-readiness, said Fresque. The CRTI permits DRDC to collaborate with other departments working on similar projects to both ensure these technologies become standard in the armed forces, and to cut costs.

Under its Technology Investment Strategy, DRDC is working on 22 areas to improve military technology over the next10 years, including autonomous intelligent systems, space systems and network-centric warfare.

All told, roughly half of DRDC’s $250-million financing of internal technology development in the armed forces is contracted out to Canadian industry, Fresque said.

The entire National Defence budget, under which DRDC’s funding falls, equalled $11.83-billion in 2002-03. Generally speaking, National Defence said it’s not standard practice to isolate R&D expenses, technology purchases and maintenance costs.

The $3.67 billion invested in operations and maintenance, for example, included R&D costs and other expenses. The bulk of the nearly $12-billion budget, or $4.67 billion, was spent on military and civilian personnel, $2.19 billion was invested in capital expenditures (including machinery and equipment) and $1.3 billion went towards statutories, grants and contributions.

Data from Statistics Canada, however, offers more clarity: The federal government in 2002-03 spent $289 million on R&D in National Defence, compared to $313 million a year earlier.

Still, few are impressed by the money National Defence typically spends. “”I don’t think there’d be a defence analyst in the country who would tell you that the capital share of the defence budget is adequate to modernize the armed forces,”” said Shadwick.

Shadwick said the biggest chunk of defence dollars is directed towards operating costs, including salaries, food, fuel, ammunition and other consumables. A decent amount keeps aging equipment reasonably serviceable and safe.

In the end, though, size may work against Canada’s efforts to invest in technology, Rob Huebert, assistant director, Centre for Military and Strategic Studies at the University of Calgary, argued. “”You can play at the edges, so to speak, but in terms of anything representing the big powers, it’s just too cost-inefficient”” for a small nation to maintain an independent and robust R&D capability.

Financing the technologies DRDC is developing is a tall order. “”You can go anywhere from, say, $100,000 all the way into the tens of millions for any of those systems,”” Huebert said.

The deep-pocketed U.S. — which analysts describe as having a military R&D budget of between US$50 billion and $150 billion — probably leads the world in pioneering tools and equipment for the military.

With a budget estimated to inch up to $14 billion in fiscal year 2004-05, National Defence is spending more. It will never have access to American-sized budgets, but it definitely needs a significant cash infusion — maybe in the order of 25 per cent more money, but ideally in the range of 30 per cent to 50 per cent more cash — after which time the department can work out which new technological capabilities it needs, said Patrick O’Donnell, president of the Canadian Defence Industries Association in Ottawa.

It’s doubtful that O’Donnell will get his wish. In October’s throne speech, Prime Minister Paul Martin admitted Canada must enhance security by investing more in its military, offering the qualifier: that Canada’s will never be the biggest military force, so it must be smart, strategic and focused.

Regardless of how much Canada decides to spend on defence, the stakes are high for technology vendors in a post-9/11 world. CAE, a developer of military training and simulation systems, believes the process by which the U.S. government purchases defence-related products and services has become “”better, faster, cheaper.””

In fact, said Stephane Albert, senior manager of modeling and simulation business development for Montreal-based CAE, the aim of the U.S. is to cut the cycle of acquiring products and services from 15 years to seven years. He also acknowledged that 9/11 opened up opportunities for defence companies to provide technologies to battle terrorism instead of the Cold War.

Public Works and Government Services Canada, meanwhile, said it’s continuing a timely procurement service to support National Defence, including its operations related to the campaign against terrorism.

Bidding for North American government defence contracts may be simpler these days. But Canada’s plans to bankroll new capabilities, according to some critics, may be less so.

Day two: Network-centric warfare

Day three: Autonomous intelligent systems

Day four: Directed-energy weapons

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