Relationship Contracting Expert: Questionnaire on CF-18 Hornet replacement dubious at best by Jon Hansen

In relation to the so called KPMG framework, there is nothing that one couldn’t find readily available in a managerial or financial accounting academic text book. As a tax payer, I hope I didn’t pay much for it and frankly I am not surprised by TBS falling for it because it supports current TBS framework for approval of complex capital projects, which by the way, I have been trying to change with some success. In any case the issue is the same, they are trying to bring price predictability into the selection of a long term relationship which we know does not work. Although, they recognize the need to be innovative ( which is good) they are focused on the wrong stuff and using the wrong tools. LCC (which, as we explain in our seminar and our online training program, is an ongoing cost analysis option) cannot be used to predict the cost, based on primarily an initial set of inputs and assumptions. I don’t even think it would be legitimate to select vendors on these basis. So net-net, I don’t think the outcome in this procurement would be any different than previous procurements of the same kind.

Andy Akrouche, President of The Centre for Relational Outsourcing & Strategic Management

In my February 18th, 2013 post Government’s proposed changes to procurement show that they are in the right room but haven’t turned the lights on . . . yet!, Andy Akrouche provided what was both an interesting and thoughtful assessment regarding the government’s contemplation of; a) rolling out individual “secretariats” for each successive military procurement, as was done in the fall of 2011 for the Royal Canadian Navy’s new fleet of warships or b) consolidate an estimated 10,000 bureaucrats from three federal departments – Defence, Public Works, and Industry Canada – into a “single huge new agency, under the aegis of a single minister.”

However, and based on an article by Dave Majumdar in the Flightglobal website (Canada releases industry questionnaire on CF-18 Hornet replacement), regardless of what option the government chooses – individual secretariats or single agency – success with complex capital projects will remain an elusive quest.

F35 replacements

As outlined in his above assessment regarding the utilization of a questionnaire to “support a rigorous examination of available fighter aircraft options,” Akrouche sees little difference in the viability of the current process and the one that was originally used to select the ill-fated F-35′s as a replacement for Canada’s aging CF-18 Hornets.

So here is the $9 billion dollar – well make that $17 billion, or should it be $40 to $60 billion – question; why does the government keep making the same mistake by following the lead of consultancy firms such as KPMG?

What are your thoughts?


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