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2000 October Report of the Auditor General of Canada
October 2000 Report—Chapter 16
Exhibit 16.3—Electronic Support and Training Systems Project
The Electronic Support and Training Systems project was intended to develop, procure and install equipment necessary for the Canadian Forces to conduct electronic warfare training for the Navy, Army and Air Force. The total estimated cost of the project was $203 million. The project began in 1988.
As our audit noted, internal project documentation suggested that the project faced technical risks with a high probability of occurrence. However, National Defence had reported to the Treasury Board that the risk of exceeding cost and falling behind schedule was a low probability and the risk of failing to meet project expectations was a low to medium probability.
At the time of our audit, elements of the project had cost overruns totalling $22 million. Officials told us that they would deal with these overruns by adopting a non-conventional in-service support approach. We also reported that the project was 22 months behind schedule.
However, in late February 1998, before our audit report was finalized, a Senior Review Board decided to substantially reduce the scope of the project. According to officials, the installation of high-powered jamming equipment into a small commercial business jet produced unforeseen technical challenges. Efforts to solve these problems depleted the budget, and further work required to resolve system processor and integration problems created an excessively high technical risk that would not be reduced even with additional funding. A decision was therefore made not to install electronic countermeasures, electronic support systems and the system processor in the Challenger jets. This meant that the development and purchase costs of this equipment and engineering costs of the attempted installation were written off. In addition, the partially completed aircraft no longer met the requirements of the Canadian Forces.
Other components of the project, including fitting the Challenger jets with communications-jamming and chaff-dispensing equipment, were successfully completed. In addition, 19 radar-jamming, chaff-dispensing and threat simulation pods and modifications to 10 CE-133 T-bird aircraft were also completed.
In August 1999, the Department announced that the partially completed Challenger aircraft would be declared surplus in April 2000 and that the T-birds would be withdrawn from service by the end of fiscal year 2001-02. This action was taken because of the Department's overall shortage of funds and inability to support its force structure. Much of the investment has therefore been written off, leaving the Canadian Forces without the planned electronic warfare capability provided internally. The Department may recoup some of its losses through the sale of the equipment or its use by a contractor.
The Department's broader force structure decision to retire all its T-bird aircraft and Challenger jets used for electronic warfare training and medical evacuation, and to write off its investment in favour of private sector outsourcing was made, in part, because:
- inadequate risk management resulted in the Department's inability to complete the project as planned; and
- inadequate budgetary management led to the acquisition of equipment that proved to be unaffordable to operate as soon as it was completed.