Royal Canadian Navy

Total of 4 contracts with McKinsey & Company

Overview

Key Facts

Background

Context

• RCN undertook a series of four contracts to ensure that all aspects of its organization – including financial, human resources, engineering, logistics, training, and operations – were fit for purpose for the digital age.
• Each contract produced specific deliverables and, in some cases, generated results that strengthened the in-house tools and skill set with the RCN and National Defence more broadly.
• Primary deliverables included the RCN’s Digital Navy Initiative (DNI) delivered in 2021, and its corresponding Action Plan. The DNI is guided by six strategic objectives to:
  1. Deliver a digitally-enabled future fleet;
  2. Leverage digital technologies to attract and retain a motivated, technologically-oriented RCN workforce;
  3. Increase the use of digital technologies to improve the delivery of materiel sustainability for the RCN;
  4. Further exploit digital technologies to improve the delivery of individual training and military personnel readiness;
  5. Increase the use of digital technologies to enhance the delivery of readiness and combat effectiveness; and
  6. Advance business management and communication practices through the innovative use of digital technologies.

Summary of Rationale

• The RCN did not have the ‘in-house’ expertise needed to execute the analytical and technical work required to assess its digital needs, develop a strategy and action plan and then implement these. As such, it leveraged a Public Services and Procurement Canada National Master Standing Offer with McKinsey & Company on three occasions. The RCN’s fourth contract with McKinsey & Company was a supply arrangement.

Summary of Results

• Over the course of these four contracts, the RCN learned a unique methodology to solve problems in a digital environment.
• The single non-competitive contract with McKinsey & Company in 2019 to deliver a workshop for the RCN and other Defence Team members served as a crucial pre-cursor to subsequent work on digital transformation that is outlined in the three remaining contracts. This contract enabled the RCN to gain insight into modern design methodologies for digital strategies.
• To retain this expertise in-house, the RCN worked with McKinsey & Company to develop a product called “Playbook”, where it captured the methodology and processes for the future use.
• The totality of McKinsey & Company’s products delivered to the RCN was shared with organizations across the Defence Team who were interested, thus amplifying value for investment for the broader department.

Digital Navy Readiness

Key Facts

Background

• The RCN’s digital transformation is guided by a number of foundational policies, including Strong, Secure, Engaged, the Digital Navy Initiative (DNI) and the Digital Action Plan.
• In order to help guide this transformation, the RCN leveraged a Public Services and Procurement Canada NMSO with McKinsey & Company.
• Specifically, the RCN sought analysis from the vendor by using McKinsey’s unique benchmarking tools, where the vendor ran a large stakeholder engagement with over 100 candidates through workshops and interviews.
• McKinsey & Company then compared results with international firms in the digitalization area to produce recommendations for the RCN.
• McKinsey’s digital strategic plan report (the third deliverable) proposed a roadmap for prioritizing, sequencing, and resourcing the in-house activities necessary for the successful implementation of the DNI and Action Plan.

Artificial Intelligence Fleet Management Assessment

Key Facts

Background

• With constant international demands, the RCN needs to be efficient when dispatching personnel to various missions simultaneously. Having an application to assist RCN’s decision-making process in determining when to allocate personnel to ships and how to optimize crews to meet RCN operational obligations is crucial.
• To achieve this goal, the RCN leveraged a Public Services and Procurement Canada National Master Standing Offer with McKinsey & Company to assess the RCN’s digital state, as well as to provide a roadmap for the RCN to develop and deliver a modern Artificial Intelligence powered Fleet management tool in-house.
• Under this contract, McKinsey performed various analysis through design thinking workshops, interviews, and surveys to help define the problem.
• On the basis of the data gathered, McKinsey provided a plan to the RCN to develop a potential solution that the RCN could execute internally. In time, this solution will also come to include the optimization of training, maintenance and ship program scheduling, as well as providing tools to simulate “What-If” scenarios to facilitate and enhance RCN decision-making.
• McKinsey’s analysis provided the RCN with the basis to build a modern, agile team to develop the Digital Parade State application (see also RCN Contract: Digital Navy Capability Assessment). DPS will:
  • Address limited visibility of sailor availability, status, and qualifications across the RCN fleet;
  • Increase confidence in data accuracy and quality with a ‘single source of truth’, rather than individual units’ “shadow systems” or inconsistent Excel spreadsheets; and
  • Visualize personnel shortages to empower informed decision making related to crewing and personnel management.

Digital Navy Capability Assessment

Key Facts

Background

• This contract was pursued to further support the development of the RCN’s DPS application (RCN Contract: Artificial Intelligence Fleet Management Assessment).
• The DPS will digitize business processes, providing a one-stop shop where fleet staffs can get an overview of all ships and who is available to sail and who is not.
• The DPS will address crewing shortages and improve personnel management by providing a real-time view of billet status and key statistics, addressing limited visibility on sailor employability.
• The playbook was also shared with organizations across the Defence Team for their information and potential use in their own future digital transformation initiatives.

Digital Use Case Workshop

Key Facts

Background

• To support the development of its digital transformation strategy, the Royal Canadian Navy (RCN) leveraged a non-competitive contract with McKinsey & Company to better understand best practices for digital transformation employed in the commercial sector.
• The RCN and other Defence Team members attending gained first-hand experience into modern design methodologies.
• The lessons learned from this engagement helped to inform strategic thinking in the Navy and work in subsequent years on the Digital Navy Initiative follow- on action plan.

Contracting Details

• The RCN hosted an industry engagement on June 18, 2019 to socialize its, then nascent, draft digital transformation strategy document.
• An industry day like this is a common practice when delivering a specialty procurement and provided the RCN with the opportunity to engage and understand what industry could offer, including McKinsey.
• The RCN subsequently conducted a procurement analysis and deemed that McKinsey offered a cost-effective solution with the ability to meet the required schedule.
• The RCN invoked Section 6(b) of the Government Contracts Regulations and raised a low-dollar value (<$25,000) sole-source contract to McKinsey to fulfill its requirement.