The legislation apparently exists in the National Defence Act for DND to become a broker or distributor.
Proposal:
That DND constructively engage with the legislation and establish, if such a department does not already exist, its own sales department that would work in conjunction with Public Services Procurement Canada (procurer) and Global Affairs Canada (supplying international office space and contacts).
The US situation wrt FMS
On March 9, 2023, the Biden-Harris Administration submitted to Congress a proposed Fiscal Year (FY) 2024 Budget request of $842 billion for the Department of Defense (DoD), an increase of $26 billion over FY 2023 levels and $100 billion more than FY 2022.
Secretary of Defense Lloyd J. Austin III released a statement on the President's FY 2024 budget.
www.defense.gov
Procurement of weapons and systems cost $136 billion in 2022 and $107 billion was spent on research and development of weapons and equipment. The military also spent over $10 billion on the construction and management of military facilities and $1 billion on family housing.
The United States spends more on defense than any other member of the G7.
www.pgpf.org
On average, Allies and partners purchase approximately $45 billion annually in U.S. arms, equipment, and training via FMS, and from 2021 to 2022, implemented FMS purchases grew by 49 percent.
Foreign Military Sales (FMS) are a key U.S. arms transfer mechanism and an important tool of U.S. foreign policy. Overseen by the U.S. Department of State and implemented through the U.S. Department of Defense, FMS is one of many ways the United States promotes interoperability and strengthens...
www.state.gov
PS I would disregard the 49% growth in one year - cf COVID and Ukraine.
But.....
45/136 is roughly 1/3 of the US capital budget and the capital budget is 136/766 or 18% of the DOD budget. So about 6% of the DOD budget, or 33% of their capital budget is offset by Foreign Military Sales.
Canada's defence budget is about 26.5 BCAD.
Transition of the Associate Deputy Minister of National Defense – June 12, 2023
www.canada.ca
6% of 26.5 is 1.6 BCAD annually.
Canada's defence capital budget is 6.1 BCAD
1.6/6.1 is equivalent to a 26% increase in the capital budget.
How...
Have PSPC engage with Canadian industry and have them set up the Government of Canada as a distributor entitled to OEM pricing. Typically that can mean a discount from MSRP, or Manufacturer's Suggested Retail Price, of 10 to 40%.
Then start selling.
But don't go for the bespoke stuff. That is shop window stuff that often acts as a loss leader - kind of like Formula 1 racing teams.
What you want to sell is nuts, bolts and gaskets. And Rockwell Automation modules.
You build a reputation by being able to source and supply hard to come by kit in a timely fashion.
And by supplying advice on how to use it.
Don't try and sell the CSC. The AOPS and Seaspan's Multi Purpose Vessels, possibly even the Fisheries and Science vessels might have legs once fully debugged.
But generally speaking the real money is in selling gaskets and controls, providing maintenance and training, and of course, consummables.
My favourite personal example is Tetra Pak. I worked for a company that is older than Tetra Pak. Both of them came from Sweden and Tetra Pak started up down the road from my employer. My employer was in business for 60 years and internationally recognized as a national champion when Tetra Pak's owner presented them with a wooden mock up and a business plan in the 1940s. Of course my employer turned down the opportunity.
40 years later Tetra Pak bought my employer, kept what it wanted and put the rest of it back on the open market.
My employer's model was the sales of Swedish stainless steel to industry. They made their sales by supplying high quality machines, engineered to specific tasks and well supported with marketing and maintenance. I was part of the sales engineering group. We met with end users, sussed out their needs, looked through our catalogue for canned solutions that could be combined into systems with as little customizing as possible. Some customizing would always be required though.
We found that we were losing sales to Tetra Pak. We couldn't compete. Tetra Pak was giving away not just the engineering but also stainless steel hardware, the mechanicals, electricals and controls.
They were making their money from the consummables. In their case the consummables are the cardboard cartons that hold you kids' drinks, your juices, milks and soups. They have replaced Dole's old tin cans as ubiquitous containers. And every time one of those cartons drops off the filler Tetra Pak makes money.
They also make money by supplying onsite maintenance staff, that uses parts sourced and marked up by Tetra Pak, as well as training client staff that use the same parts stream.
One example of parts supply that I have used in the past?
Client in Kelowna requests part from Scarborough for inventory. Scarborough source part from Lund in Sweden. Lund sources part from other department in Sweden. Other department sources part from other department in Stockholm. Stockholm sources part from distributor in Germany. Germany sources part from distributor in Belgium. Belgium source part from original manufacturer in the US. The US contacts their subsidiary to manufacture and supply the part. The part followed the reverse trail to the client. Everybody charged shipping, handling and margin along the trail. 1200 CAD part became a 12000 CAD part.
The part that Scarborough requested from Lund was manufactured down the road in Brantford and could be purchased directly by the end user at 1200 CAD. ca 1985.
That is where the money is to be made.
.....
Now, I note that the CAF is not world renowned for either its maintenance or logistics. But what if the trades were profit centres that paid their own ways?
Would that not also benefit the CAF directly?
....
What else could Canada supply? Shells? Bullets? Small arms? Training? How about GMC truck chassis that could be supplied to people like Roshel for customizing and resale?
Buy this from GMC with a Government of Canada OEM discount.
Contract Roshel to customize to suit the needs of the end user (eg Ukraine).
Sell or donate or sell at a reduced price to Ukraine.
....
And yes
@KevinB , I am fully aware of the jiggerypokery that accountants can pull with a system like this, and that FMS sales numbers should not be taken at face value.
I consider that a feature and not a bug.
en.wikipedia.org
www.international.gc.ca
