Backgrounder: Long Term Acquisition Funding of Canadian Armed Forces Capabilities

Canada’s defence policy – Strong, Secure, Engaged – commits to significant long-term investment, ensuring the Canadian Armed Forces (CAF) have the capabilities required to guarantee Canada’s strength at home, security in North America, and engagement in the world.

This policy provides $33.8 billion for 52 critical new equipment, infrastructure, and information technology projects on an accrual basis. This equates to $47.2 billion on a cash basis. (See Table on page 2)

In total, this new vision for defence provides $108 billion on an accrual basis for the development and acquisition of capital equipment over the next 20 years.

All costing methodologies underwent a third party review conducted by five external accounting firms: Ernst & Young, KPMG, FMC, Samson and Associates, and Raymond Chabot Grant Thornton (RCGT).

Defence also worked with external global defence costing experts from Deloitte, who brought their expertise gained from defence reviews in allied nations, to provide advice and support to this unprecedented process. This level of rigour ensures that the vision laid out in this policy is credible and realistic.

The following table reflects the planned use of the accrual budget and planned funding on a cash basis over the 20-year horizon of this policy. This will better enable long-term planning and enhance the transparency of Defence fiscal forecasting.

It is important to note that the table does not represent the total cost of all planned equipment acquisitions. For example, the first new Canadian Surface Combatant is scheduled for delivery in 2026, followed by the remaining 14 ships. As these ships have an expected service life of 30 years, a portion of the accrual costs will be incurred outside the 20 years reflected in the table.

Furthermore, as these are 20-year estimates, there needs to be flexibility to adjust our plans to meet new challenges as they unfold. The process to adjust or reprofile these estimates over time is through the investment planning process. For the first time Defence will publish a Defence Investment Plan in 2018. The Defence Investment Plan will include all approved capital projects under the policy and will be updated every three years. This will help ensure Canadians and Parliament can clearly understand future changes to the budget and to deliver on the Government’s commitment to transparency, results, and accountability.

Accrual Basis: the cost of acquiring an asset is spread over its useful life, rather than being recorded at the time the bills are paid. Operating funding for the asset is recorded in the year that the expenditure is made. Cash Basis: funding for cash payments related to the acquisition of capital assets and operating funding is allocated in the year in which the expenditure is made (immediately).

20-Year Accrual and Cash View of Planned Projects and New Investments ($billions)

20-year Accrual Basis 20-Year Cash Basis
Capability Investments to Fully Fund and Complete Planned Projects
(1)
New Investment
Strong, Secure, Engaged
(2)
Total Planned Projects and New Investments Total Planned Projects and
New Investments
Royal Canadian Navy

14.6

2.9

17.5

53.5

Canadian Army

10.1

8.8

18.9

23.2

Royal Canadian Air Force

26.4

20.1

46.4

64.4

Special Operations Forces

1.2

0.4

1.5

1.2

Joint/Emerging Domains

3.4

1.2

4.6

9.7

Infrastructure

4.5

0.4

4.9

12.0

Total Capabilities

60.1

33.8

93.9

164.0

Accrual Expenditure for Existing Equipment and Infrastructure (3)

14.1

-

14.1

-

20-Year Total

74.2

33.8

108.0

164.0

* Note: Totals may not add up due to rounding

  1. Strong, Secure, Engaged commits $74.2 billion over 20 years to fully fund 281 projects that were planned, but for which Defence had insufficient funding to acquire. Adequate funding has now been allocated to deliver these core equipment projects.
  2. Strong, Secure, Engaged commits $33.8 billion over the next 20 years to 52 new equipment, infrastructure, and information technology projects for the Canadian Armed Forces.
  3. This amount ($14.1 billion), on an accrual basis, represents previously acquired equipment and infrastructure. As they are already in service, there is no future cash requirement to purchase these assets.

Investment in the Royal Canadian Navy (RCN)

The Government will provide $17.5 billion on an accrual basis ($53.5 billion on a cash basis) to fund equipment projects for the RCN over the next 20 years. This includes:

The policy sets aside funding to enable the Navy to acquire the full complement of 15 Canadian Surface Combatants needed to provide capability across the full range of operations. Defence conducted a year-long re-costing of the Surface Combatants. This involved private sector firms as well as international experts, such as the U.S. Navy. Based on this review, Defence estimates the cost of 15 ships at between $56 - $60 billion.

Investment in the Canadian Army (CA)

The Government will provide $18.9 billion on an accrual basis ($23.2 billion on a cash basis) for Canadian Army equipment projects over the next 20 years. This includes:

Investment in the Royal Canadian Air Force (RCAF)

The Government will provide $46.4 billion on an accrual basis ($64.4 billion on a cash basis) to fund equipment projects for the Royal Canadian Air Force over the next 20 years. This includes:

Investment in Special Operations Forces (SOF)

The Government will provide $1.5 billion on an accrual basis ($1.2 billion on a cash basis) to fund equipment projects for Canada’s Special Operations Forces over the next 20 years. On a cash basis, the Government will invest $1.2 billion over this same time period to ensure the recapitalization of the Special Operations Forces. This includes:

Investment in Joint Capabilities

The Government will provide $4.6 billion on an accrual basis ($9.7 billion on a cash basis) for joint capability projects in domains such as cyber, intelligence, and joint command and control over the next 20 years. On a cash basis, the Government will invest $9.7 billion over this same time period to ensure the recapitalization of joint capabilities. This includes:

Investment in Infrastructure

The Government will provide $4.9 billion on an accrual basis over the next 20 years to infrastructure projects across Canada to maintain the necessary portfolio of real property holdings. On a cash basis, the Government will invest $12 billion over this same time period to ensure the recapitalization of real property infrastructure. This includes:

New Investments in 52 New Projects:

New Investments in the Royal Canadian Navy (RCN)

Serial Project List
1 Submarine Life Extension – Modernizes the combat systems of the Victoria-class submarines to allow the continuation of operations into the 2040s and to meet modern adversarial threats.
2 Lightweight Torpedo Upgrade Replaces obsolete components of the current Lightweight Torpedo used by RCN and Royal Canadian Air Force, improving the ability to meet evolving underwater threats worldwide.

New Investments in the Canadian Army (CA)

Serial Project Description
1 Canadian Forces Land Electronic Warfare Modernization – Modernizes and improves the ability of the CA to fully utilize the electromagnetic spectrum in a contested environment. It will replace obsolete systems employed in the Regular and Reserve Force.
2 Common Heavy Equipment Replacement Replaces obsolete material handling equipment such as bulldozers and cranes for domestic and expeditionary operations.
3 Domestic & Arctic Mobility Enhancement Replaces fleet of Arctic and Domestic vehicles (BV 206, Light Over-Snow Vehicle, All-Terrain Vehicle, and Light Utility Vehicle Wheeled Command & Reconnaissance). This will improve the CA’s ability to operate anywhere in Canada.
4 Forward Observation Officer (FOO) and Forward Air Controller (FAC) Modernization Upgrade – Improves target selection and planning tools employed by FOO/FAC teams by providing a digital interface. This will reduce human error, increase communications speed and designate threat targets with the necessary degree of precision required for precision guided munitions in accordance with NATO standards.
5 Ground Based Air and Munitions Defence – Provides a Ground Based Air and Munitions Defence system to defeat threats posed by airborne weapons such as potential adversary aircraft and remotely piloted vehicles.
6 Land Command Support System Intelligence Surveillance Reconnaissance Modernization Improves the overall ability of the CA to achieve and maintain situational awareness by modernizing land-based surveillance tools by providing state-of-the art sensors. 
7 Land Command Support System Tactical Command, Control and Information Improves the ability of tactical commanders and their staffs to plan and execute land operations by modernizing and re-capitalizing the in-service command, control, and information systems. The project will provide user-friendly hardware and software tools for use in command posts at all tactical levels.
8 Land Command Support System Tactical Communications Modernization Existing obsolete systems will be replaced to cope with the increased volume of voice and data requirements.
9 Light Force Enhancement – Equips CA Light Forces with Utility Terrain Vehicles, All-Terrain Vehicles, trailers, light weight generators and tents, radio rebroadcast kits, long range communications equipment, special insertion/extraction equipment, and aerial delivery kits to enable deployment and operations in complex terrain and challenging operating environments.
10 Light Utility Vehicle Project Recapitalizes the Light Utility Vehicle Wheeled, Military Commercial off the Shelf & Standard Military Pattern fleet.
11 Logistics Vehicle Modernization – Replaces existing light and heavy logistics vehicles for use in domestic and expeditionary operations, 50 percent of which are beyond economical repair.
12 Advanced Improvised Explosive Device Detection and Defeat Enhances CAF capability to mitigate the threat posed by improvised explosive devices (IED). It will enable operations by improving CAF's ability to anticipate, analyze and protect against IED attacks. The project will examine land and air based standoff detection, identification and defeat capabilities.
13 Anti-tank Guided Missile Replacement Provides a new multi-purpose anti-armour, anti-structure weapons system.
14 Armoured Combat Support Vehicle – This project will replace aging armoured command vehicles, ambulances, and mobile repair teams with a modern well-protected fleet.
15 Assault Rifle Procures 20,000 new assault rifles with upgraded sights and barrels for use by Regular Force and Primary Reserve units to replace the C7A2/C8A3.
16 Bridge and Gap Crossing Modernization – Modernizes the CA’s ability to cross rivers and gaps as the existing system cannot support the weight of many current CA vehicle types.
17 Camp Sustain - Reduces deployed sustainment costs with new camp utilities such as power and waste management systems that improve efficiency and reduce the environmental footprint of a deployed military base/compound.
18 Night Vision System Modernization Addresses upcoming capability gaps in our current systems designed to enhance observation in low light and poor weather. This project will provide modernized equipment such as thermal imagers, night vision systems, laser range finders, and laser designators.
19 Advanced Water Supply Systems Provides CA with a modern water supply system that will reduce the logistical burden of transporting water.
20 Tactical Power System Provides modern replacements for existing power systems (tactical generators from 2kW to 60kW) that will reach end of life over the next five years.

New Investments in the Royal Canadian Air Force (RCAF)

Serial Project Description
1 Multi-Fleet Air Traffic Management Avionics Ensures aircraft are compliant with new international flight management regulations. 
2 Multi-Role Tanker Transport – Delivers a new Multi-Role Tanker Transport to maintain air-to-air refuel capability beyond 2026.
3 Medium Range Air-to-Air Missile Sustainment – Replaces the AIM-7P Sparrow missile that is no longer in production and maintains the RCAF Fighter aircraft air-to-air combat capability.
4 Advanced Short Range Missile – Replaces the current short range missile that has reached obsolescence.
5 Future Aircrew Training – Delivers a new and cohesive training program that replaces the current Pilot, Air Combat Systems Officer and Airborne Electronic Sensor Operator training systems. This capability will improve the RCAF’s ability to train sufficient numbers of aircrew for various roles.
6 Fighter Lead-in Training – Provides a critical bridge between pilot training and the commencement of operational fighter training.
7 CH-149 Cormorant Mid-Life Upgrade – Upgrades CH-149 avionics as the current suite will increasingly restrict the ability to operate in all weather conditions.
8 Instrument Landing System Replacement Replaces obsolete precision approach aids at CAF Wings and airfields.
9 Canadian Multi-Mission Aircraft Replaces the current CP-140 Aurora Long Range Patrol Aircraft fleet which will reach end of life in 2030.
10 CC-130J Block 8 Upgrade – Upgrades hardware and software to ensure interoperability with coalition partners, compatibility with civilian airspace requirements, and engineering diagnostic capability.
11 CC-150 Life Extension – Extends the life of the fleet by balancing the total airframe hours between tanker and transport variants.
12 CH-146 Griffon Limited Life Extension – This tactical utility helicopter will be revitalized to prolong its service life. These helicopters provide reconnaissance, air mobility (both independently and through armed escort of larger CH-147 Chinook helicopters), and fire support for land forces. They are also a secondary platform for Search and Rescue.
13 Utility Transport Aircraft – Replaces the CC-138 Twin Otter before it reaches its end of life. This capability supports the defence of Canada including safeguarding Canadian sovereignty by enabling a tactical air mobility capability in the North.
14 Defence - Enhanced Surveillance from Space Project – This project will replace the RADARSAT Constellation Mission in 2026. It will consist of a constellation of satellites configured with Synthetic Aperture Radar, Automatic Identification System, and other sensors to support of the Defence mission.
15 Enhanced Satellite Communications Project - Polar – Provides both narrow and wideband voice and data satellite communications at the tactical, operational and strategic levels to provide assured, secure and reliable communications in support of Canadian and international operations in the Arctic. 
16 Surveillance of Space 2 – Follows-on the Sapphire satellite that monitors the trajectory of other satellites and debris in space to determine threats to Canadian and Allied space assets; contributing to the US Space Surveillance Network and strengthening key Allied partnerships.
17 Tactical Narrowband Satellite – Provides narrowband near-global communications between 65 degrees South and 65 degrees North latitudes to provide assured, secure, and reliable communications in support of Canadian and international operations.

New Investments in Special Operations Forces (SOF)

Serial Project Description
1 Next Generation SOF Fighting Vehicle This project replaces the existing fleets that will reach end of life in 2022.
2 SOF Commercial Pattern Armoured Vehicles – Replaces existing obsolete vehicles which are already at the end of their useable life.
3 Next Generation SOF Maritime Mobility Replaces current SOF Maritime Mobility assets when the fleet reaches end of service life in 2028. Project will provide the next generation of advanced SOF small boats and supporting maritime equipment.
4 Next Generation SOF Soldier System Integrated soldier system equipment will be modernized to further enhance interoperability and maintain technological overmatch against potential adversaries.

New Investments in Joint Capabilities

Serial Project Description
1 Secure (SEVOX) Radio Modernization Replaces secure radios to maintain interoperability with our Five-Eyes partners.
2 Meridian Standard - Delivers a deployable capability to produce actionable intelligence from electronic and communication signals and to defend against potential adversary surveillance capabilities.
3 Combined Joint Intelligence Modernization – Provides a modern deployable intelligence center for land based operations, building on the lessons learned in recent operations.
4 Advanced Cryptographic Capabilities Project Increment 1 Provides quantum resistant cryptographic algorithm software upgrades to CAF/ DND cryptographic end units, in order to maintain interoperability with our Five-Eyes partners.
5 Canadian Forces Electronic Warfare Support – Delivers an enterprise-level Electronic Warfare Operational Support System consisting of an Electronic Warfare (EW) data repository and analytical tools.

New Infrastructure Investments

Serial Project Description
1 Junior Ranks Training Accommodation – Canadian Forces Base Esquimalt – Provides a modern standard of training accommodations to junior members of the Royal Canadian Navy as they complete basic occupation training in Esquimalt.
2 Canadian Joint Incident Response Unit Infrastructure Enhancement – This project will construct new buildings to address current shortfalls and accommodate unit growth while disposing of some existing buildings to consolidate current holdings.
3 Command, Control, and Intelligence Center – Modern facilities will be constructed in the national capital region to house and synergize the interactions between intelligence workers and operational planners. This project will enhance the ability of CAF leadership to understand the operational environment and direct operations while further rationalizing the CAF infrastructure portfolio.

New Information Technology Project

Serial Project Description
1 Defence Resource Management Information System – Upgrades and modernizes Defence’s materiel and financial system of record. It is an integrated software tool used to conduct equipment and supply chain management activities such as the ordering of spare parts, tracking of supply commodities, and logging of maintenance work hours.
Date modified: