Preparing for war: Canada's combat equipment programs.

In recent years Canadian foreign policy has moved to adopt features of common or "human" security. Policy documents note that challenges of a broader security agenda demand responses which go "beyond military options and focus on promoting international cooperation, building stability and on preventing conflict." (1) Canadian defence policy, as outlined in the 1994 White Paper on Defence, has yet to incorporate these changes, however, focusing instead on "the maintenance of multi-purpose, combat-capable forces." (2) With major procurement programs emphasizing equipment capable of high intensity combat, Canada's defence establishment remains bound to Cold War categories. Eager to be able to respond to the clarion call, the Department of National Defence continues to prepare first and foremost for war.

Canadian and international peace and security interests in the new millennium will be better served by a shift in government security spending, with less money spent on military priorities generally and more spent on building the conditions for peace, including Official Development Assistance (ODA) and other contributions to international peace-building. (3) A similar shift is required within the military itself, with efforts to maintain the capability to mount full-scale combat operations beyond Canada's borders replaced by an international focus on peacekeeping, humanitarian intervention, and limited protection/enforcement operations in low-intensity combat environments. Such capabilities would be roughly compatible with the capabilities required for domestic patrol, surveillance, search and rescue, and aid to the civil authority roles. In order to meet these objectives, Canada would have to end efforts to maintain an across-the-board three-service combat-capable armed force and adjust procurement accordingly.

Combat procurement

The end of the Cold War in 1989 has imposed some changes on the Department of National Defence, not the least being a decline in real terms of its budget since a zenith of $12.3 billion in 1990-1991. Following total expenditures of $10.6 billion for the fiscal year ended March 31, 1998, the DND budget is projected to reach $9.7 billion this fiscal year before it begins to rise again in fiscal year 1999-2000 and beyond (see Table I). In each budget year, the bulk of department expenditures cover the costs of departmental operations, including the operation and maintenance of equipment, with about half the budget spent on personnel. One-fifth to one-quarter of the total budget is used for procurement of new military equipment, $2.0 billion in 1997-98, $1.6 billion this year, and an expected $1.8 billion in 1999-2000. (4)

The 1994 Defence White Paper emphasis on combat-capability is found throughout DND's current and planned procurement programs. Although the primary function of individual equipment projects may vary widely, from non-combat support roles to low-intensity conflict operations to high intensity combat, a "multipurpose combat" requirement adds to the complexity and expense of most, if not all, procurement decisions. In its efforts to cover all bases, the Department of National Defence wastes hundreds of millions of dollars every year.

[Part 1 of 2]

Table I: Department of National Defence Expenditures FY 1997-2000

                             Forecast Spending  Planned Spending
                                FY 1997-98         FY 1998-99

1. Capital Expenditures (1)   $2,009,200,000     $1,643,885,000

2. Operating Expenditures     $8,186,500,000     $7,878,500,000
Personnel                     $5,014,300,000     $4,726,700,000
Goods & Services              $3,172,200,000     $3,151,800,000

3. Other                       $384,700,000       $188,315,000

Total DND Expenditures        $10,580,400,000    $9,710,700,000

[Part 2 of 2]

Table I: Department of National Defence Expenditures FY 1997-2000

                             Planned Spending
                               FY 1999-2000

1. Capital Expenditures (1)   $1,777,600,000

2. Operating Expenditures     $8,093,900,000
Personnel                     $4,884,100,000
Goods & Services              $3,209,800,000

3. Other                       $181,600,000

Total DND Expenditures       $10,053,100,000

(1) As of FY 1995-96, R&D and ammunition expenditures, at about $300
million per year, were transferred from the capital to the operations
budget. Recent financing innovations (such as those used to purchase
Upholder submarines), and out-sourcing of former DND programs (such as
flight training), understate department spending on capital equipment.

To begin with, almost a decade after the fall of the Berlin Wall Canada is still paying for combat equipment ordered during the Cold War. The high level of capital spending (averaging close to $3 billion per year between 1989-90 and 1995-96 in 1998 constant dollars - see Figure 1) for most of the decade failed to cover the costs of these Cold War weapons systems. Indeed, during this budget year ending March 31, 1999, the Defence Department will spend more than $150 million on just three programs ordered in the mid-1980s and designed to fulfill outdated Cold War roles. Beyond this year, the three programs - the Low Level Air Defence System to protect former Canadian forces in Europe, the Patrol Frigate program of 12 frigates to hunt Soviet submarines, and the Tribal Class Destroyer Update (TRUMP) to refit Canadian destroyers for naval combat - will require future spending of over $240 million to complete multiyear programs which together totalled $11.5 billion.

The current capital equipment budget also contains a number of more recent programs primarily designed to meet high-intensity combat needs. These include projects in all force areas - naval systems like the Naval Combat Operator Trainers (simulators for frigate and destroyer weapons training), land force systems like the Short Range Anti-Armour Weapon (anti-tank missiles), and air force systems like the CF-18 Advanced Air-to-Surface Missile Project (precision-guided missiles and "smart" bombs). All are projects with little purpose outside of intense combat conditions and likely would be cancelled under a procurement regime which met more pertinent goals for the Canadian military. In total DND will spend at least $115 million during fiscal year 1998-99 and at least $327 million in future years on such projects. (5)

Additional current equipment programs, while acknowledging a range of roles in the post-Cold War defence environment, maintain combat requirements, adding greatly to their cost. Examples include the Tactical Command, Control and Communications System (also called the Iris System), a $1.93 billion program to supply advanced battlefield communications for the Canadian army. Specifications emphasize the combat environment under which the communication system must operate, placing high costs on the project. Similarly, the Lynx Replacement Project is an $870 million program to replace tracked reconnaissance vehicles with wheeled armoured vehicles equipped with sophisticated communications equipment for battlefield intelligence and communication duties. In both cases the equipment may be useful to peacekeeping missions, but it is highly probable that systems designed for peacekeeping and other non-combat missions could have been supplied at a much-reduced cost.

Selected future combat-related capital equipment projects

The expense of current combat-related equipment is only a fraction of that of future procurement programs, however. The Department of National Defence has identified a host of projects to update or replace existing combat equipment requiring expenditures of billions of dollars. The implementation of these projects ranges from a near-term schedule for upgraded Leopard tanks, deliveries of which will begin next year, to the longerterm "Tactical fighter capability" project to replace the CF-18 fighter aircraft sometime after 2010. Beyond warfighting objectives, the common features of the programs are their expense (many are major crown projects worth at least $100 million and likely much more) and the pressure they will bring to increase defence spending to accommodate their final costs. With an emphasis on acquiring the very latest in technologies, programs to procure combat equipment are expensive.

The following are examples of future DND equipment programs which emphasize war-fighting roles and requirements. Under policies that more accurately reflected post Cold War security needs, many of these projects would be cancelled. The remainder would require major redirection and revision. In all cases, the changes would result in significant budget savings.

* Upholder-class diesel-electric submarines

In April 1998 the Department of National Defence announced plans to purchase four surplus Upholderclass conventionally-powered submarines from the United Kingdom to replace the three Oberon-class submarines of the Canadian Navy. In addition to the acquisition of the submarines - the deliveries of which will begin in 2000 - the project involves modifying the vessels for Canadian use, crew training, the purchase of simulators and spare parts, and construction of suitable shore facilities. To allow Arctic missions DND is considering the refit addition of an Air Independent Propulsion (AIP) system that probably would mean cutting apart the submarines to insert a new propulsion "plug." As Project Ploughshares has argued (see Monitor, March 1998), the program is far more costly than portrayed by the department, and more importantly, unnecessary for Canadian or international maritime security.

* Command and Control/ Air Defence Replacement (CADRE)

The four Iroquois-class destroyers now completing a $1.4 billion update and modernization project (TRUMP) are expected to reach the end of their operational lives around 2005. Because it is unlikely the vessels will be refitted again, DND is examining means of replacing the naval combat functions of the Iroquois destroyers. The CADRE project would provide future Canadian naval fleets with defence against air attack (anti-air warfare) and a battle coordination capability (command and control). The Department prefers this be done with new warships, but concedes an alternative in the refitting of existing patrol frigates. In collaboration with other NATO nations the Canadian Navy has begun development of an anti-air warfare capability (AAW) through the use of new radar, long range infra-red tracking systems, and the Evolved Sea Sparrow Missile. Components of the AAW system will be installed on European warships as early as 1999.

`The CADRE program, like the TRUMP program it is meant to replace, is premised on the retention of a maritime force capable of high-intensity naval warfare. This is projected to include the use of, and defence from, a host of advanced naval guns, missiles and torpedoes. The budget has not been determined, but CADRE likely will be a major crown project (valued at $100 million or more). If the Iroquois destroyers are replaced with new warships, the costs would run into the billions. If instead Canadian navy vessels were re-designed to fulfill roles in keeping with post-Cold War security tasks, such as coastal patrol or support to multinational UN operations, then the TRUMP destroyers could be retired and more modest communications and defensive equipment added to Canadian patrol frigates at a much reduced cost.

* Leopard Thermal Sight Project (LTS)

The Department of National Defence will upgrade its 114 Leopard C1 main battle tanks by adding to each a refurbished turret equipped with a new, computerized fire control system and a thermal imaging system. The Department has begun the purchase of 123 surplus Leopard 1A5 tanks from the German Army and in 1997 a German firm was appointed prime contractor for the project. The contractor will remove the turrets from the German tanks and make specified modifications. The refurbished turrets will then be shipped to Canada where a Canadian subcontractor will switch them with the Canadian tank turrets and add Canadian gun barrels. The upgraded tanks are due for delivery to the Canadian Army between 1999 and 2001.

The forecast cost of the project is $138.8 million, of which $5.2 million will be spent in the current fiscal year. Most project spending ($81.8 million) will occur in future years.

The LTS was one of six major crown projects examined in some detail by the 1998 Report of the Auditor General of Canada. The Report questioned the rationale for the project, stating "in our opinion, the studies undertaken did not provide substantiation for the decision to upgrade the Leopard C1 night vision system." (6) DND responded by noting that one major simulation cited by the Auditor General (where improved Leopard tanks "failed to withstand an attack or mount a successful assault") was conducted at the " `high end' of mid-intensity conflict" and "did not reflect the way they intend to employ Land Force combat units." Even so, the department's response merely underlines the fact that Leopard tanks, upgraded or otherwise, are extraneous to any future tasks of the Canadian army. The tanks, demonstrated as useless for the mid- to high-intensity land warfare for which they were designed, are no more useful for non-combat operations. The LTS project should be terminated and all Leopard tanks retired from the Canadian military inventory.

* Canadian Armoured Combat Vehicle Project

In early development stages, the Armoured Combat Vehicle Project is currently mandated to replace the army's 200 Cougar armoured vehicles. Industry officials expect the program to replace the Leopard tank as well since new Chief of Defence Staff Maurice Baril has expressed strong interest in an armoured vehicle equipped with a 105-mm gun as a tank replacement. (7) The project "has not yet received final approval," (8) but production of vehicles could begin by 2002. It will likely cost $600,000,000 for the Cougar replacement alone.

As the project name implies, the Canadian Armoured Combat Vehicle will be designed for battle. The project description requires a weapon system capable of defeating a variety of targets, including armoured vehicles. This translates into firepower equivalent to the Cougar's existing 76 mm cannon at least and, for the Leopard replacement, a 105mm gun to give the armoured combat vehicle the firepower of the replaced tank. The Armoured Combat Vehicle is not designed for Canadian peacekeeping missions. Indeed, new armoured vehicles more suitable for these roles recently have been ordered by the Department of National Defence under the Armoured Personnel Carrier (APC) Replacement project. (The APC project is the largest item of DND capital spending for fiscal year 1998-1999. The department may purchase up to 651 APCs at a total potential cost of $2.04 billion over the next decade.)

* CF-18 fighter aircraft Systems Life Extension (SLE)

In order for the CF-18 aircraft "to remain a viable and survivable fighter," the Canadian Air Force argues that it must be updated and equipped with aircraft systems which, among other things, take advantage of more advanced computer technology. (The estimated life expectancy of the CF-18 fleet, originally delivered between 1982 and 1988, has been extended to 2010, with expectations of use beyond that. (9) ) The SLE project includes improvements to, or replacements for, aircraft navigation, radar, communications, and display systems in approximately 100 of the 122 remaining CF-18s. Other upgrades are required to operate weapons ordered or planned for the CF-18. These include the Advanced Air-to-Air Weapons described below, as well as air-to-surface "smart bombs" and missiles purchased as part of the almost completed $103.7 million Advanced Air-to-Surface Missile Project. Depending on whether project phases are run concurrently or sequentially, the SLE will take five to ten years to complete at an estimated cost of $1.175 billion. (10)

The SLE project will provide the CF-18 with the systems needed to participate in the projected "peace enforcement" and war-fighting roles of the future. If alternatively a reduced number of CF-18s were retained for residual surveillance and support roles consistent with non-combat missions, a new systems life extension project, while likely still requiring the upgrade of CF-18 equipment, would be far less costly.

* CF-18 Advanced Air-to-Air Weapons (Short-Range)

In response to the advancing sophistication of air combat weapons, DND seeks a new short-range missile for its CF-18 fighters to do battle with enemy aircraft. This program will replace most existing short-range air-to-air weapons with a smaller number of newer generation missiles. Although full project implementation appears to be dependent on the CF-18 Systems Life Extension program, it has begun under an international missile program to produce the "IRIS-T" missile for "close-in air engagement" (under 15 km).

Canada is teamed with Germany, Greece, Italy, Norway and Sweden in the IRIS-T program to develop a cheaper alternative to existing British and US air-to-air missiles. (11) Germany is sponsoring 50 per cent of the (US) $304.5 million in development costs, with partner countries paying the remainder. Although production costs have not been reported, the Canadian advanced air-to-air weapons (short-range) program is a major crown project surpassing $100 million in value. The IRIS-T project began in October 1996 and deliveries to IRIS-T partner air forces are expected in 2002.

The Advanced Air-to-Air weapons project is premised on future CF-18 combat missions and a projected requirement for sophisticated short range missiles to shoot down enemy aircraft. The removal of CF-18 aircraft from its fighter and ground-attack duties would remove the rationale for the missile.

* Omnibus (Joint) Space Project

To address "the challenges to national security resulting from the international expansion of space activity," the Omnibus Space Project is designed to contribute to "a comprehensive space capability" for the Department of National Defence. The project consists of six elements which are, in order of priority: environmental observation, intelligence collection, surveillance of space, data analysis and fusion, warning systems, and defence systems. According to departmental notes, the objectives set for the first five elements, which are linked largely to the collection of information, potentially could be met through the use of existing commercial, other government departmental, or allied governmental equipment or data. In contrast, the preferred solution for Defence Systems is "territorial defence by some arrangement within NORAD and ... off-shore defence through a wider cooperative venture," through NATO for example. An alternative proposed solution is "developing a Canadian system of defences against space-related threats."

Estimates of the cost of the Omnibus Space Project run from $500-600 million, but a 1995 government statement that the project is the "largest and one of the most complex DND Joint projects ever" (12) suggests the price ultimately could be far higher. Although cost projections by element are not available, it is apparent from project descriptions that defence systems will be one of the most, or the most, expensive part of the overall program.

To the extent that it addresses future surveillance and communication requirements, the Joint Space Project may prove prudent and even cost-effective, particularly if it makes use of existing technologies and systems. The project element that will provide "adequate defensive measures against space-related threats" raises other issues, however. Not only would it probably be the most costly part of the project, but this is the component most likely to contribute to Canadian participation in a joint US-Canadian Ballistic Missile Defence (BMD) system. In spite of the clear violation of the 1972 Anti-Ballistic Missile Treaty and the potential to undermine further nuclear arms reductions, the Pentagon is exploring the deployment of a BMD system for North America and it wants Canada along for the ride. (13) For this reason alone, the defence systems component of the Joint Space Project should be dropped and the remainder of the program revised to emphasize the peaceful use of space.

* Other future major combat-related capital projects

- The Maritime Helicopter Program will replace the Navy's Sea King helicopters with 32 multi-purpose helicopters equipped with submarine detection and attack systems. The program, anticipated soon, will cost an estimated $2.3 billion.

- The Frigate Equipment Life Extension is a mid-life refit package to upgrade the combat systems on Canada's 12 Patrol Frigates. Although costs are not available, it will be a major crown project. (14)

- The Very Short Range Air Defence System, also a major crown project, is designed to replace the Canadian Army's existing Javelin missile with a new portable missile. (15)

- The Medium Indirect Fire System is a major crown project to upgrade the Army M109A4 self-propelled howitzer.

- The Tactical Fighter Capability project is intended to replace the CF-18 with a new fighter aircraft beyond 2010. Canadian defence officials have shown preliminary interest in the US Joint Strike Fighter program. Should the CF-18 replacement program proceed, it will cost billions.

- The Unmanned Airborne Surveillance And Target Acquisition System, valued at about $50 million, would be used in combat to guide artillery to targets.

Conclusion

Steeped in a combat tradition entrenched by four decades of Cold War, the Department of National Defence is ill-prepared to address the common security needs of Canadians in an interdependent world. Despite an average annual budget of $10 billion - by far the largest expenditure of Ottawa's discretionary funds - DND faces recent criticism of underspending on military personnel (in testimony to a parliamentary committee) and inadequate or misdirected spending on equipment purchases (in the latest report of the Auditor-General). Meanwhile, Canadian spending on preventive, non-military security programs has declined, both relative to past budgets, and relative to defence spending. Programs such as official development assistance, which help to relieve the environmental and economic conditions that trigger conflict, are woefully underfunded, especially in light of their long term benefits and their potential to deflect future military costs. Instead, with an emphasis on combatpreparedness, military expenditures are hostage to defence planning and equipment procurement that emphasize outdated, remote, or inappropriate roles. Canada continues to spend far more preparing for war than preventing war.

The security challenges of the post-Cold War era demand responses that are attuned to social, economic, political, and environmental realities, realities that cannot be adequately addressed by outdated military doctrine, and modern, but inappropriate, equipment. The Department of National Defence must be brought into the 21st century, and the procurement of military equipment must reflect new security roles.

(1) Canada in the World: Government Statement, Department of Foreign Affairs and International Trade, 1995, p. 25.

(2) 1994 Defence White Paper, Department of National Defence, p. 12.

(3) "Building Peace: New Challenges for Canada's Foreign and Defence Policies," Ploughshares Working Paper 93-4, May 1994.

(4) Recent DND figures for capital equipment spending have declined from earlier years in part because of bookkeeping changes. Since the fiscal year ended March 31, 1996, research and development costs and ammunition expenditures, totalling about $300 million per year, have been transferred from the capital to the operations budget. Innovations in financing DND equipment also help to understate the capital budget. The $750 million cost of purchasing four British Upholder submarines will be covered largely by a barter arrangement whereby the British government will defer eight years of payments to Canada for the use of military training facilities. (The future costs of the submarines, totalling as much as $4.7 billion over 30 years, likely will be split between the operating budget and the capital budget.) In another example, DND will avoid paying for a program to acquire new trainer jet aircraft out of its capital budget because it will be paying a private consortium for the training and the use of aircraft. The consortium will buy the aircraft with the income from a 20-year DND training contract valued at $2.85 billion.

(5) Estimates based on the Department of National Defence Report on Plans and Priorities, 25 March 1998 (Part 3: Capital Projects). Available from website http://www.vcds.dnd.ca/vcds/dgsp/rpp/sec4_e.asp.

(6) 1998 Report of the Auditor General of Canada, para. 4.50 as found at website http://www.oag-bvg.gc.ca/domino/reports.nsf/html/98menu_e.html.

(7) Defense News, October 13-19, 1997, p. 14.

(8) Ibid.

(9) "Renewing the CF-18," Canadian Defence Quarterly, Winter 1997, p. 28.

(10) Ibid.

(11) International Defense Review, 10/1996, p. 13.

(12) DND briefing for Project Ploughshares, 26 November 1997.

(13) "Return of the SDI," Ploughshares Monitor, December 1997, pp. 3-6.

(14) Canadian Defence Industries Association website http://www.cdia.ca/, no date.

(15) Canadian Defence Industries Association website.