Supplying the Canadian Armed Forces—National Defence

Opening Statement to the Standing Committee on Public Accounts

Supplying the Canadian Armed Forces—National Defence

(Report 3—2020 Spring Reports of the Auditor General of Canada)

19 November 2020

Karen Hogan, Chartered Professional AccountantCPA, Chartered AccountantCA
Auditor General of Canada

Madam Chair, thank you for this opportunity to discuss our audit report on supplying the Canadian Armed Forces. Joining me is Nicholas Swales, who was the principal responsible for the audit.

The Canadian Armed Forces consist of 68,000 regular force members and 30,000 reserve force members who may be called on at any time to participate in military operations at home and abroad. To do so, the Canadian Armed Forces must be well equipped and trained, and they must be supported by a supply chain that provides members with the materiel they need, when they need it.

Our audit examined whether National Defence delivered materiel items requested by Canadian Armed Forces members in a timely manner while avoiding needless transportation costs.

We found that military units received materiel such as spare parts, uniforms, and rations late 50% of the time. High-priority items required to satisfy critical operational requirements were late even more often, at 60% of the time. These delays affected National Defence’s capacity to perform its duties and manage its resources efficiently.

We found that delays were often caused by poor stock management. Minimum stock levels were often not set, and when they were set, stocks were below that level half the time. The warehouses expected to supply military units often did not have the materiel requested in stock. One third of the time, supplies had to be found elsewhere and rerouted through the supply chain. These situations created bottlenecks and increased delivery times.

National Defence did not adequately forecast its needs for materiel to be able to position it close to where it would be needed. Nor did National Defence have performance indicators to measure whether materiel was stocked in the right warehouses.

We also found problems in prioritizing requests for military supplies. National Defence could not demonstrate that 65% of its high‑priority requests were actually high priority. Unjustified priority requests put an excessive burden on the supply chain and incur extra costs.

Moreover, we found that National Defence lacked the costing information necessary to make well-informed choices about transporting materiel within Canada. The costs of commercial shipments were available, but the costs of using military transport were not.

We made 3 recommendations. National Defence has agreed with all of them and has shared its action plan with us. The plan includes actions and timelines for our recommendations.

Madam Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have. Thank you.