03/05/2013 05:17 EST | Updated 05/05/2013 05:12 EDT

Contracting out at DND up by $500 million despite promises to cut

OTTAWA - Money spent by National Defence on outside consulting and professional services has increased dramatically, even as the Harper government was warned the practice needed to be curbed.

Spending on external contracting rose by $500 million between 2009 and 2011, the year retired lieutenant-general Andrew Leslie advised the department it could safely cut 30 per cent of those agreements.

The contracting figure stood at $2.7 billion when Leslie, former top army commander, tabled his watershed analysis of how to overhaul the military in 2011.

The latest set of government financial estimates shows the number was $3.2 billion in 2011-12 — and it may be climbing.

A report tabled last week by the parliamentary budget officer suggests the amount could jump higher in the current budget year because National Defence was forced to go back and seek extra spending authority for "professional and special services."

An additional $774 million was pumped into the department in 2012-13 for contracting. That is over and above an extra $776 million the federal government set aside to pay a class action lawsuit by disabled veterans.

Even if the Harper government reduces defence contracting by $460 million, as promised, it will still be far short of the goals set out in the Leslie report.

Defence Minister Peter MacKay suggested earlier this week that the end of the Afghan training mission in Kabul next year will ease the pressure on the department and reduce the need for outside services.

"We have soldiers, full-time soldiers, regular force soldiers, coming back from Afghanistan, assuming their positions throughout the country, throughout the department, and thus doing less contracting. So, there are savings to be found there," he told the Economic Club of Canada.

With trained soldiers fighting in Kandahar for five years, and later training Afghan forces, the Canadian army was forced to rely on private contractors to carry out some training functions and maintenance services.

The trend over the last decade has been to take many of the routine jobs and rear-echelon functions in the military, including repair and overhaul of equipment, and give it to the private sector.

The idea was to reserve soldiers for fighting and front-line duties.

In some cases, the decision to replace uniformed and civilian jobs at National Defence with the private sector has been made against the advice of senior military commanders, by federal bureaucrats who say it's the mandate of the Harper government to eliminate public service jobs.

New Democrat defence critic Jack Harris said the situation has become "utterly incoherent" and an embarrassment.

"They're all over the place when it comes to numbers," he said. "They don't seem to have a handle on this at all."

The wind down of the Afghan war means this should be an era of budget savings on contractors, Harris added.

But MacKay insisted in his remarks to the economic club that no stone was being left unturned in the hunt for savings.

"We are looking in very painstaking detail at every area of the department in which we can find efficiencies," he said.

Private consultants and contractors provide a myriad of services, from emptying garbage pails and mopping floors, all the way to fine-tuning and repairing some of the military's state-of-the-art aircraft.

Giant defence contractors also have lucrative professional services contracts, according to public accounts records.

The largest single amount paid out in 2011-12 was to U.S.-based Lockheed Martin, which took in $175.3 million for a single engineering contact.

The company best known in the political world as the builder of the F-35 stealth fighter had six other service and consulting deals with the Canadian government that year.

In total, the Defence Department paid $313.04 million to Lockheed Martin.