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The State of Australian Defence

A couple of days ago a mate was wondering how many like himself had received recent letters encouraging them to re-enlist.  From the look of this you'd guess there's plenty.  Defence Minister Joel Fitzgibbon gave this speech at the Australian Strategic Policy Institute in Canbera last night.  In it he discusses the recruitment problems, the new White Paper, and the Rudd Government's perception of the ADF's role.  On reading it you begin to wonder how long it will be before conscription becomes necessary.

Looking forward to the three years ahead, I have set for us four key objectives.

1.    A new Defence White Paper
2.    Putting the Defence Budget back on track
3.    Putting defence procurement and capability back on track, and,
4.    Dealing with what may be our biggest challenge of all - our people and skills shortages.

The New Defence White Paper
During a visit to the Australian Defence Force Academy in February, I formally announced the commissioning of the new Defence White Paper.  The need for a new White Paper was a consistent theme for me during my twelve months as the Opposition spokesman.  White Papers are a rare event - this paper will be only the fifth since the end of the Vietnam War.  

A Defence White Paper and the strategic guidance it provides are critical to success in developing Defence policy.  In the absence of an up-to-date strategic plan, Government decisions in Defence can become ad hoc and misdirected.  This, I would argue, is exactly what happened here in Australia over the course of the past few years.  The document the former Government was working from was developed in the late 1990s and released in the Year 2000.  

The world has changed so much since then:
·    September 11 and subsequent terror events in Bali, Jakarta, London and Madrid;
·    The wars in Iraq and Afghanistan;
·    The nuclear ambitions of rogue states like North Korea and Iran;
·    Big shifts in the global distribution of power including the rise and rise of China: and,
·    Failing states in Melanesia and the south Pacific.

Given these changing circumstances, a review of Australia’s strategic outlook is well overdue and we hope to have our review complete by the end of this year.

In the past, White Papers have rightly had a major focus on strategy, force structure and capital investment in major military platforms.  But the current project will do that and more.

The new White Paper will be unprecedented both in its broad scope and the demands it will place on my Department.  For the first time, the Australian Government will have a comprehensive picture across a range of Defence issues including:
·    the current security environment;
·    our force structure requirements and the levels of preparedness required to meet Australia’s defence needs;
·    capability needs and choices;
·    the defence budget;
·    the size and composition of our uniformed and civilian workforce;
·    force disposition;
·    future challenges in supplying and sustaining deployed ADF elements;
·    Defence’s information technology needs; and, finally
·    the requirements of defence industry.

The crucial starting point for the White Paper process will be a wide-ranging review of our security environment, our strategic interests, and determining the future tasks and roles for the ADF.  Unless we start from this base, future decisions about the ADF's force structure and key defence capabilities will be neither rigorous nor disciplined.  In consultation with other agencies, Mike Pezzullo, the Deputy Secretary for the White Paper and his team have already begun this wide-ranging strategic review.

During this phase, we’ll be trying to answer a number of questions including:

·    What is the likely future role of force in the international system?  
·    What is that system going to look like in, say, 2030 - when a number of emerging major powers will have attained considerably more economic, strategic and raw military power than they currently have today, or have had in the past?
·    Will the era of major state-on-state conflict in the international system have come to an end - superseded by an era of intra-state conflict and threats from so-called non-state actors?  
·    What risks and threats will we face in the emerging strategic environment?  Will changes in the planet's climate and environment create new sources of tension and conflict?  ·    What role should our armed forces - which are largely trained and geared for war - play in any future environment.

These are the big questions the Government will need to turn its mind to over the course of the coming months.  We will need to "look through the data" as economists like to say, and discern enduring trends, risks and threats, as well as abiding interests.

Of course, getting these judgements right is the biggest challenge we collectively face.  Could anyone in this room honestly claim that when the 1987 White Paper was being developed, they predicted the collapse of the Soviet Union, or that NATO would be in Afghanistan confronting those who, in some cases at least, had fought the Soviets in the 1980s.  Or indeed that a NATO meeting would be held in Romania or Lithuania!  Once we have worked through these complex issues, the Government will be able to more confidently turn its mind to issues such as force structure and our key capability choices.  

The White Paper’s Force Structure Review will:
1.    identify the likely future tasks for the ADF;
2.    recommend which capabilities will be needed to undertake these tasks; and,
3.    recommend appropriate force structure and capability options to deliver these joint capabilities.  

These options will be set in the context of joint, interagency and coalition operations - and will carefully consider key issues such as concurrency, preparedness and sustainability.  
Above all, the Force Structure Review will develop options for Government for a capable, sustainable joint force which leverages the whole Defence establishment.  

Supporting the White Paper process will be a number of Companion Reviews, which will give consideration to the needs of all the supporting functions I mentioned earlier.
These functions are a crucial, though sometimes hidden, part of the Defence system. The reviews will examine the connections between each of the supporting functions and the ADF’s force structure.  

This is a very complex process because Defence is such a highly inter-connected system.  But it is also an essential task if we are to achieve - for the first time - a fully integrated Defence White Paper.

The Defence Budget and Capability Costs
Our capability choices are just as important.  Every limited dollar spent on one item of capability is a dollar not available to spend on another.  We have an obligation to get it right.

Tonight is not the time for political point-scoring.  But no serious discussion about future capability and the funding of it can be held without acknowledging at the outset that the Defence Budget is a mess and many of the capability projects we’ve inherited are more than problematic. And the cost of sustaining capability has been alarmingly under-estimated and under-funded.

This shortfall in Net Personnel and Operating Costs presents the new Government with a huge challenge. These are the costs involved in manning and sustaining our ships, tanks and aircraft - and I’m advised by my Department that the shortfall may be up to $6 billion over the coming decade.

The Howard Government was committing to new capital projects without taking proper account of their ongoing funding requirements.  It’s like factoring the cost of a new car into the family budget, without making any provision for fuel, insurance, rego or maintenance.

Putting the Defence Budget back on track and stopping waste and mismanagement in defence procurement will be big challenges for the Government but we are determined to prevail.  My Parliamentary Secretary for Defence Procurement, Greg Combet, is working very hard to make sure that we do.

At 2 percent of GDP, our current level of Defence spending may or may not be enough.  But one thing is certain, we cannot afford to waste a cent.  The opportunity-costs of a dollar well spent is a big enough challenge in itself, so anything less than optimal investment is just not good enough.

As you know we remain committed to growing the Defence Budget by 3 percent real out to 2016.  This is a big call given the inflationary environment we’ve inherited. But we will do it because as the Prime Minister says - we see Defence as “core business” for government.  But that’s not to say we won’t be looking for savings.  Indeed, given the difficulties we’ve inherited, we will need 3 percent real growth and more, and the “more” will need to come from internal efficiencies.

I have tasked my Department to carefully search out duplication and waste. There is a pressing need to save money in unnecessary overheads so that it can be reinvested in the Defence enterprise.

People Shortage

As big a challenge as these all seem, possibly the biggest challenge of all in Defence as we look ahead is our people and skills shortage. The seriousness with which this Government views that challenge is demonstrated by the fact that recruitment and retention is such a large focus for Warren Snowden the Minister for Defence Science and Personnel.

Already reaching crisis point, the need to crew three new Air Warfare Destroyers and two new amphibious ships while raising two new Army battalions, makes recruitment and retention a task of enormous proportions.

Currently the Australian Defence Force is going through one of its busiest operational periods since the end of the Vietnam War.  This year alone Defence is authorised to deploy about 3,900 personnel to nine overseas operations.  This means that up to 12,000 Defence Force members will be in the operational deployment cycle in the next twelve months - working up, deploying and the reconstituting.  Alongside this, about 550 personnel will be conducting mainland Australia and maritime protection operations.  We achieve this with a relatively small force of just over 51,000 full time members and just on 20,000 Reservists.  

The Defence Organisation is under significant pressure in maintaining this tempo and the requirement for frequent deployments is likely to continue for some years.

When I attend NATO meetings and tell them we are a Defence Force of just over 51,000 they look at me with surprise.  When I tell them that around half of our Infantry and Cavalry are currently tied to overseas deployments they respond with a look of shock and disbelief.

I’ll return to make some more comments on some of our deployments in a moment.

But first let me say that if we don’t soon begin to make more progress on the recruitment and retention front we will not be able to meet future challenges with success.  Success will require a more innovative approach on a number of fronts including producing greater incentives to stay for those currently serving.  Some of these will need to be directly financial in nature.  Others may be less direct, like our attempts to extend free medical and dental cover to Defence families.  In this strong labour market we can’t always compete on the salary front so we must find alternate initiatives for Defence families to consider as they sit around the kitchen table trying to decide whether to leave or to stay.

On the recruitment front, we must grow better at talking to Generation Y in their own language through the mediums they rely upon for their information. And we must strive to broaden our recruitment pool by sending a stronger message to women that there is room for them at the most senior levels of Defence.   All the capability in the world is no good to a defence force without the requisite people to operate and maintain it.

On the White Paper process can I say that I firmly believe in obtaining broadly-based advice. That’s why I’ve appointed an external advisory panel to advise me on key issues relating to the White Paper. As I’ve previously announced, the panel will comprise Professor Ross Babbage, Major General (retired) Peter Abigail, and Dr Mark Thompson - and I’m pleased to see all three of them here this evening.

When I announced the White Paper, I also indicated that I would establish a community consultation panel and program to enable all Australians to contribute.  This will encourage community debate across Australia about what sort of defence force Australia should have, how it should be used, and how to best support the organisation and its people.  As we all know, a strong ADF requires strong community support - and engaging the Australian people in the White Paper process is an integral step in building their understanding and support.  

I am pleased to announce tonight that the Community Consultation Panel will be chaired by Mr Stephen Loosely.  It’s Deputy Chair will be Mr Arthur Sinodinos.  Of course, Stephen was the Deputy Chair when the consultation process was undertaken as part of the 2000 White Paper process.  He is also an ASPI Board Member and a former Chair of the Parliament’s Joint Standing Committee on Foreign Affairs, Defence and Trade. Stephen is well known for his interest in the strategic policy area and is with us tonight.  Arthur?  Well Arthur kept John Howard in office for more than a decade!  I note that Howard’s reign came to an end not long after Arthur departed. His credentials speak for themselves! The fact that he is not here tonight is my fault not his.

I will announce the balance of the Community Consultation Panel in the not-too-distant-future. I want to make sure that the representation is broad and the gender and geographical spread is right.  The Panel will consult widely with the Australian community, as well as with State Governments, relevant think-tanks, defence industry, and with the veterans’ community.  I’m really looking forward to that part of the process.

Iraq, Afghanistan and our Region

Let me return to a couple of deployment and relationship issues and then I’ll take some questions.

First, Iraq.  No doubt there are some who think our commitment to bring our combat troops home from Iraq was populist.  Nothing could be further from the truth.
There were two key drivers.  First, our concurrency issues.  Our forces are over-stretched.

As I said earlier, with substantial deployments in Iraq, Afghanistan and East Timor, and smaller but important contributions elsewhere, around half of our Infantry and Cavalry are committed.  

Our Army has a total of six battalions and our deployment numbers in Iraq, Afghanistan and East Timor roughly number three battalions.  Others are getting ready to go or reconstituting after returning home.

We urgently need to free-up numbers in order to be ready to meet contingencies which may arise closer to home.

Second, the work of our Battle Group in Iraq was complete.  In more than 18 months the Iraqi Security Forces have not required our assistance in dealing with local events.  

The new Government remains committed to Iraq and its people.  Our Security Detachment in Baghdad will stay in place.  Our ship will remain in the Gulf and our Orions will continue to fly in the region.We continue to look at what more we can do in the form of non-military assistance. But having so many people and resources tied up in an over-watch role was not sustainable.

Quickly, on Afghanistan, because you’ve no doubt heard me say it before. The Government remains committed to the project but is frustrated by the lack of progress. The Prime Minister and I travel to Bucharest in a couple of weeks and there, we will continue to push for a new road map and a greater commitment from under-committed NATO partners.  I am pleased to be able to confirm tonight that NATO has now provided us with the draft papers for Bucharest and we have been given an opportunity to feed in our views ahead of the summit.  I am hopeful of securing good outcomes in Romania but of course, as always, the effectiveness of the document will reside in its implementation. 

In our own region, we must work with our neighbours to promote stability and to build economic capacity. Both are preconditions for Australia’s continued prosperity and security.  Close to our doorstep, the ADF is playing a crucial role to create and maintain stability within Timor-Leste.  Success in this role will be essential to ensuring that the Timorese have every chance to build a cohesive and prosperous society.

Of course, the recent events in Timor-Leste demonstrate the need for Australia to retain a constructive involvement in promoting stability within our immediate region.  In the South Pacific the Prime Minister has demonstrated a clear determination to do more.  To repair relationships and to do more on the capacity building front.  Our work there must amount to more than an on-again-off-again cycle of military intervention.

We must do more in promoting good governance and economic development. The new Centre for Civil Military Co-Operation being established by my Parliamentary Secretary Mike Kelly will no doubt play a major role in developing policy ideas for the way ahead.

In conclusion, I want to say what a privilege it is to serve as Australia’s Defence Minister.  We have set for ourselves an ambitious agenda but I’m confident it’s an achievable one.   I’m fortunate to be surrounded by good people; a Prime Minister who understands Defence,strong leaders in both the CDF and Secretary, both of whom have good people behind them and are with us tonight, and of course, my Parliamentary team.

I look forward to working with you all as we embark on this journey and I wish Mike Pezzullo and his team every success in their role in guiding the White Paper Process.

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Collins class submarine and other Australian success stories

From its inception in 1978 the project was seldom far from controversy and it was mercilessly attacked by the media and the Howard government for a myriad of technical failings - real, exaggerated and imagined. It is widely believed to have been a financial disaster, yet it is one of the few military purchases where the original budget was still relevant at the end of the project. Further, Australian industry responded successfully to the challenge of building submarines in this country, an achievement widely believed to be beyond Australian capabilities and one which many other countries have failed disastrously....... /p>

Amazingly, the project's objectives were largely delivered. Today, Australia operates a sophisticated long-range submarine. Peter Sinclair, the first skipper of HMAS Collins, who has wide experience with other conventional submarines, believes that the Collins is more capable than any conventional submarine at sea, with a turning circle second to none and 'super quiet at slow speed, quieter than anything else in the world.'

To successfully defend Australia we need a viable defence industry. The building of the Collins class submarines is a success story that should be built on. In the 1960's I was on HMAS Derwent which test fired the Australian built submarine missile Ikara.

Ikara was an Australian designed and manufactured anti submarine guided weapon system. It employed a radio-controlled carrier rocket to deliver a lightweight homing torpedo strategically close to a hostile submarine. The word ‘ikara’ is purportedly an Indigenous word meaning ‘throwing stick’.

In 1960, the proposal finally approved, the Government Aircraft Factories guided weapons design team was moved to the Aeronautical Research Laboratories to design and develop Ikara. The resulting missile system was favourably compared to its American counterpart at the time, ASROC. Ikara’s superiority was in the accuracy of its radio guidance, with the possibility of manoeuvring after launching should target movement or target priority necessitate. Ikara was successfully exported and by the late 1960s – early 1970s was in service with the Australian, British and Brazilian Navies.

We had the technology and the industrial power to build ships. In the 1950's we built the Jindivik pilotless aircraft.

The Jindivik made its first flight, from the Australian test facility of Woomera, on October 31, 1950, and is the forerunner of the current unmanned target vehicle used by AGWOEU. The UK acquired a total of 267 examples and is now the only country using Jindiviks. They have been flown from the DERA operated airfield at Llanbedr in Wales since 1960, and the current examples are from the 700, 800 and 900 series. This latest version is capable of speeds in excess of 500mph (800km/h) and altitudes over 80,000ft (24,383m).

Australia's most successful home grown aircraft, the Jindivik (Aboriginal for 'Hunted One') has been in production for five decades. Originally designed to a British specification for a high speed target drone, the Jindivik has grown to cover a large range of tasks including surveillance, target towing, and cruise missile simulation.

The ship I served on in 1965 until 1968 was the HMAS Derwent a type 12 frigate built in Williamstown dockyards Melbourne.

In August 1950 the Australian Government decided to acquire a new generation of anti-submarine frigates. Initially six vessels were to be built, three each in the dockyards at Cockatoo Island, Sydney and Williamstown, Melbourne, however, in the event, only four hulls were ordered. The ships were to be similar to the Royal Navy Type 12 or Rothsay class, but with modifications in habitability and equipment to meet specific RAN needs.

The Type 12 has proven to be one of the most successful British frigate designs since the Second World War. The ships were designed to protect convoys and to be effective submarine hunters. A total of 41 were built for the Royal Navy as well as a large number for service with the navies of other countries, including Australia.

Australia's Owen Sub Machine Gun.

"LOOK after her well! " he said, as he handed her to me, "and she'll never let you down when you're in trouble. Study her and get to know her ways - after you've lived with her for a while, you'll find she's your best friend."

The phrase sounded vaguely familiar; they'd told me the same thing about a rifle, long and slim and deadly, when I first joined up, and then about a Tommy gun, short and squat and ugly, and now they were saying it about this-this bit of wood and iron, roughly painted yellow and green and about as substantial-looking as the fairy off the top of the Christmas-tree. Well ...

It all began years ago, in Port Kembla in New South Wales, when a young plasterboard manufacturer, working in a tin shed in his spare time, dreamed up out of the years of experience he'd gained as a hobbyist gun-maker something which he thought would be just the thing in case there was a war. So he laboured lovingly to perfect his design, roughed out a working model and submitted his baby to the Army.

But that was before the war and, as the Navy, Army, Air and Munitions journal of the day succinctly puts it, "its merit was not immediately recognized". A masterpiece of understatement! Evelyn Owen, the inventor, was on his final leave before going overseas in the A.I.F. when he was recalled to demonstrate the weapon he had offered years before. She passed the most gruelling tests with flying colours, and rightly claimed superiority over the American Tommy gun, the German Bergmann used by the vaunted Nazi paratroopers, and the British Sten. During those tests handfuls of sand were thrown over the gun to simulate desert conditions, and it continued to fire when the Thompson and the Sten jammed; when buried in a heap of sand the Owen gun was the only one of the three to continue firing; when plunged into a tub of water it fired more evenly than either of the other types. In its final tests, submerged in a mud-bath, it continued to operate after the others had stopped.

In the past we have had many successful stories of home grown weapons. Now we tend to import our defence equipment. In time of war we need to depend on our own resources as the WWII taught us. We need a strong defence industry to support our defence forces. We have a track record of success. When we buy from the US or elsewhere we get sub standard equipment.

The US refused to consider selling the F-22 to Australia, its other closest Pacific ally, but Prime Minister Shinzo Abe is expected to raise the matter when he meets George W.Bush in the White House on Friday.

Japan's Defence Minister, Fumio Kyuma, will ask his opposite number, Robert Gates, for access to F-22 performance data, transfer of which is also forbidden by US law, when they meet next weekend.

Corporate overspending a myth?

Welcome  to Webdiary, Bruce, it's an honour.  I'd be interested in your opinion on the ten billion cut on civilian industry related defence spending announced last week.   Is this a reaction to grumblings of overspending in salaries and material by some commercial defence organisations?  If so, from what you say it would seem that those kinds of opinion are incorrect. Are such complaints merely those of ADF staff jealous of the salaries of their consultants, or is there more to it?

As an example, couldn't we be using ADF trainers and technology to train pilots to fly Tiger helicopters?  I guess what I'm getting at is a question of whether the announced cuts are purely political, and where such reductions could be applied in a way that's not detrimental to the ADF?

Response to your thoughts...

Richard Tonkin, the announcement by the Minister announced cuts to the non-uniformed staff of the defence force. The total cuts amount to approximately 2.5% of the total annual budget for defence.

The cuts will mostly affect the public servants that provide support to the defence force. Example roles are lawyers, contract managers, PR people and procurement managers.

Public servants are ranked using similar methods to that of the defence force, so generally pay scales would match. Some defence related income would result in uniformed staff having higher income (flight pay, retention bonuses etc).

There are issues of culture clash between the uniformed and non uniformed elements of the defence force. Defence uniformed staff are highly motivated, trained and carefully selected. They undergo rigorous selection and training processes to gain advancement. Most roles are maintained for around two years for officers.

In addition the defence uniformed force is very tight, with high levels of relationship, commitment and trust in each other. The individuals are dedicated to the missions that the defence for is focused on, and they really see that their job is to give the best possible protection to Australia. This belief in the role of defence is deep and pervasive.

The Public Sector however has a different culture. This culture is more stewardship based. Public servants generally are focussed on control and accountability. That is, they see that their job is to ensure that the interests of the tax payer are maintained. Often this is focused on cost containment, due diligence on spending. This is some contrast to the outcome and time frame focus of the uniformed defence force.

This cultural clash can create serious tensions within defence as the uniformed staff try to manage the tensions between heavy ongoing operational demands and decaying equipment. (Part of the need for the increase in defence spending is actually a catch-up to the delays in the replacement pipeline created by the Kinnard report, which essentially placed a hold on main platform replacements for 3-4 years).

The relationship with the defence industry is generally a very good one between the uniformed staff and the defence players. This is because many of the defence industry people came out of uniformed roles.

The defence industry is currently focused on working with Defence and the DMO on finding ways to cut ongoing sustainment costs. In addition they are looking to support the defence forces need to move more uniformed staff into the pointy end.

There is some movement to have more activities paid for on a power by the hour basis. This approach should free up uniformed staff from some of the more mundane task to focus on high value added ones.

Examples of such activities are basic flight training, basic barracks, maintenance and similar. This is in contrast to the idea of having the real warfighting activities remain in Defence.

On this basis I need to correct your statement on Tigers. All Tiger flight crew training will be completed by Defence flight instructors at Oakey at the Helicopter School. The only involvement from defence industry in training is the support and operation of the flight simulators by Thales. This is consistent with the general thrust of flight training, which is to have combat and advanced training conducted by Defence units.

There is a belief (not necessarily based on reality) that there is an overabundance of oversight, and that this oversight is focussed on process compliance, not necessarily on outcomes.

Our (Helmsman Institute) review of the ANAO audit approaches is that there is a severe deficit in auditing capability with respect to complex projects. In most project reviews the focus is on process adherence failure, rather then project management failure. The issues that are picked up are not in most cases material to the project performance.

Issues such as change management, cultural acceptance, proper project planning, project leadership, resourcing management, technological risk, commercial constraints etc are seldom mentioned, or understood.

In a similar vein, one concern we have is that the salaries paid to singularly most important person on the project (the project manager) are woeful compared to commercial rates in ALL other industries. In the other industries a project manager working on a similar value and complexity as the FFG, Tiger, EW&C etc projects would earn around $400,000, the similar role may get a Defence employee $140,000.

We find it surpassingly strange that billion dollar projects are run by people being paid peanuts, and people complain about hundred million dollar cost issues.

Spend some money where it counts (in the thousands) for project managers, and save money where it counts (in the billions) in project performance.

In the same vein, cut the audit groups, make the project managers more directly accountable, create better accounting systems and get out of the way.

There is too much detailed control (a very expensive) option, and not enough performance management. Pay fewer good people more, and the Defence Department would work dramatically better.

Bruce Ferguson Chairman Helmsman Institute

Money well spent

Bruce, if the tightening of inefficiencies will bring about the levels of cost effectiveness that you outline, then this should be the ADF and the Rudd Government's highest defence priority.

Apologies if I'm confused regarding the Tigers.  I was more referring to KBRs involvement, which was more the development and implementation of the training program.  Reading lines like...

The extent of industry responsibility for training on ARH is much higher than for any other Army aircraft and, when mature, will allow a significant reduction in uniformed trainers over current training approaches.

.. in this Helinews piece on the program have probably led me up the wrong branch of the tree as well.

Since you've been writing here I've been doing some reading on the Helmsman Institute (here's the website for interested readers). It's an  impressive project, and I hope your advice is being taken on board.

Considerable efficiency intended

Richard, as is typical in Defence projects, the training packages, tools, curriculum will be developed by companies such as KBR, generally subcontracted to the prime (Australian Aerospace in this case).

They may also train the first QFI etc. However, unless I am very much mistaken the core combat training would be done by uniformed staff.

I do believe that there is considerable efficiency intended in the training approach using simulators, ground and full functional.

The actual simulator facility is fantastic, probably one of the more advanced ones in the world.

Surely this was an April Fool's

This is the sort of thing that gets up my nose.  Raytheon and Lockheed Martin have been squabbling over their Adelaide Warship jobs.  From the looks of this piece in the Australian it seems that Lockheed want the Aegis integration work that Raytheon's doing.  The piece was published on April 1.

One of Raytheon's roles in the project is to, according to Fisher a couple of years ago, "Develop the design of the complete AWD combat system in conjunction with the Commonwealth, the US Navy and its combat system engineering agent for the Aegis system, Lockheed Martin;"

 Raytheon chief Fisher is still harping on about the company's Reach Back program (now saying it reaches back to the US Navy as well.

Bruce, do you have any idea what happened to Gibbs & Cox?

As I wrote here last year, they were still advertising for workers for the Adelaide job on the day of the Navantia announcement.  The SA Opposition Leader tells me there was a "stitch-up" as the G&C deal also had scope to include a fourth destroyer.

It's all quite a mess for something that was intended to be a truly Australian project.

Probably good project management early...

Richard, you need to read a bit between the lines on this one.

1) Squabbling – probably not a real issue

The key point is that the “DMO's concern is that competitive tensions between the US titans could destabilise the relatively harmonious start to the project in Adelaide and disrupt smooth decision-making between the alliance partners and key suppliers, including Lockheed Martin”.

The current word on the street is that the team is working well together locally, and given the calibre of Ron Fisher and Paul Johnson, both really good performers, I would be surprised there would be any local issues. This may (I have no knowledge) be a pre-emptive risk management activity.

2) The critical need for reach back

The critical need for reach back is the ability to change things, get information on things and get things delivered as the program requires.

As we probably will never want to create our own fully fledged combat system (too expensive and risky) we need to be able to influence and engage those who know these systems best.

Reach back into core engineering capability is a key aspect of project performance.

3) Gibbs and Cox

On the Gibbs and Cox front, the main issue was that it was a new design as apposed to an exiting one, also larger, more expensive and higher risk. Under the Kinnard reforms the preferred option is an existing solution, and the F100 was the official option, in first pass approval.

“While Gibbs and Cox was named as preferred designer in August 2005, under the Kinnaird procurement reforms Defence must wherever possible compare expensive customised equipment with the value for money offered by cheaper off-the-shelf purchase.”


4) Being purely Australian

A key risk factor for defence at the moment is the shortage of local skilled engineers and trades (see previous responses). As such, in the current employment climate it makes sense to leverage off shore labour pools, and focus local content where we need it for long term support.

We will still have a substantial amount of work locally (the majority of costs are not in the steel bending bit, but are in the fit out and commissioning).


Bruce Ferguson Chairman Helmsman Institute

Leveraging Industry to free up defence people

One key area that the Defence Sector could leverage to reduce the people shortage is use more commercial capability. There are many areas of Defence that provide services that should be outsourced to industry.

While many areas are already outsourced, they are in the obvious areas such as barrack support. There is still many areas of technology maintenance, services and support that if outsourced would free up Defence staff to take on more "military" activities as opposed to "doing defence business" activities.

One of the issues is that the "costs" may appear higher on the surface to outsource some of these services. However, in our experience, typical financial analyses of these options does not properly account for all of the costs to the government.

We recommed that a focus on transferring services to industry be undertaken by Defence, and that better financial tools be created to support these decisions.

Bruce Ferguson

Chairman Helmsman Institute for Project Governance

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