The mad scramble to secure protective medical equipment and ventilators in the midst of a global pandemic has given some of the people who work in the usually tedious world of government procurement an unwelcome excuse to say, “I told you so.”
For years, there have been quiet but persistent demands coming out of the defence and acquisition sectors for successive federal governments to develop a list of “strategic industries” that do not have to rely on foreign supply chains — as insurance against the kind of procurement panic in play right now.
Those calls were largely ignored. Now, defence experts are saying the COVID-19 crisis is a costly wake-up call.
Canada needs — and has needed for almost two decades — a 21st century national security industrial plan that focuses on critical equipment and materials that should be produced at home, not abroad.
“We’ve been totally negligent on that and it is something I have articulated over and over again,” said Alan Williams, the former head of the procurement branch at the Department of National Defence.
“It’s absolutely critical and if this doesn’t wake us to that reality, I don’t know what would.”
Williams devoted a substantial portion of one of his books, Reinventing Canadian Defence Procurement: A View from the Inside, to the absence of a national security vision of Canadian industry.
“It frankly pisses me off because there’s no reason for us not to have done that,” he said.
“That should be the kind of thing ministers, the leaders of the country desperately want to do. And why we seem to have avoided that kind of strategic thinking … It just boggles my mind. It’s inexcusable.”
‘Key’ industries geared toward trade, not tragedies
There was a faint glimmer of hope in the initial debate over the National Shipbuilding Strategy a decade ago, when the former Conservative government made a conscious decision to build future warships, Canadian Coast Guard and fisheries vessels in Canada, instead of outsourcing the work to other countries.
At least in the context of defence procurement, Canada does have what are known as “key industrial capabilities”, including shipbuilding, the production of certain types of ammunition and the construction of a range of aerospace and maritime electronic systems.
Much of the work of those “key” domestic industries is, however, geared toward making high-end components for global supply chains. Critics have often said the policy focuses on high-tech innovation and business priorities, rather than hard-headed national security interests.
Other countries, Williams said, have carved out a space for national security interests in industrial policy by not allowing other countries to build certain pieces of equipment. The Japanese, for example, have retained the capability to assemble their own warplanes.
A shift in thinking
The COVID-19 crisis, which has uncovered a potentially deadly shortage of ventilators and protective equipment for medical professionals, will push the federal government into a radical re-evaluation of what we need to be able to build at home to protect the country.
In some respects, that work has already started.
Earlier this week, reflecting on the Trump administration’s moves to restrict exports of protective equipment, Ontario Premier Doug Ford expressed dismay over how the fate of so many Canadians had been taken out of the hands of the federal and provincial governments.
“I am just so, so disappointed right now,” he said. “We have a great relationship with the U.S. and all of a sudden they pull these shenanigans. But as I said yesterday, we will never rely on any other country going forward.”
Over the past two weeks, the federal government has announced plans to pour more than $2 billion into sourcing and acquiring protective medical equipment — masks, gowns, face shields, hand sanitizer — at home. On Tuesday, Ottawa unveiled a plan to get three Canadian companies to build 30,000 ventilators.
Health equipment may have been outside the normal definition of national security needs until just a few weeks ago — but the shifting geopolitical landscape offered another warning sign that was ignored, said procurement expert Dave Perry.
Leaning on China
“This is pointing out the flip side of our globalized world and globalized supply chains,” said Perry, an analyst and vice president at the Canadian Global Affairs Institute. “The cold, hard truth is that we’re going to be relying on China for critical supplies.”
When the coronavirus outbreak ramped up, federal officials should have been aware of the potential peril involved in relying on Chinese factories for so many critical items.
But in the absence of homegrown capability, Canada is at the mercy of panicked nations in the midst of panicked buying.
“The entire world is trying to put through orders from the same sets of factories we’re trying to source from,” Perry said.
“It might be accurate to criticize the Chinese for their response, but in the current context the government has to be cognizant of the impact on our potential ability to source stuff we really, really need right now from China — when there’s not a lot of other options available in the short term and when the rest of the world is making the same phone calls.”
One of the critical arguments against a homegrown national security industrial strategy has been the cost. It’s an argument familiar from the shipbuilding context: taxpayers pay a premium when we task Canadian industry with delivering solutions, instead of turning to cheaper foreign manufacturers.
Elinor Sloan, a defence policy expert at Carleton University, said she believes the crisis will focus the public’s attention on securing the critical industries and supplies the country needs in a global crisis.
“The trade-off, as we know, is that it can be more costly to build or produce at home,” she said. “This crisis may engender a perspective among the public that the extra cost is worth it.”
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