Editorial: A short pause | ADM May 2011

Katherine Ziesing | Canberra

Ladies and gentlemen, there will be a short pause in my communications whilst I head off on my own capital acquisition project for a few months of maternity leave. Hopefully any possible ANAO report of the project will have cost and schedule in line with internal projections. Fingers crossed. I leave the print magazine in the hands of an incredibly capable team led by Editor-at-Large Gregor Ferguson and the digital side of the house to Dylan McKinn.

It strikes me that this is a perfect time to reflect on the last 12 months and some of the issues that have been covered in ADM. There has been a growing frustration at the lack of firm facts and figures from the Strategic Reform Program, the cancellation and delays of a myriad of Defence Capability Plan projects and the feeling that Defence just doesn’t understand the conditions that Defence industry is facing and vice versa. A sense of reform/review fatigue is also palpable as is the feeling that the next few years will be tough given the budget climate. Our June Budget edition will look at this issue.

But one issue that has generated debate on both sides of the Defence equation has been hospitality: who provides and who partakes. Our View from Canberra this month looks at the issue in a little more depth but the basic issue boils down to one of trust and integrity – and Australia’s defence business environment is regarded around the world as a model of probity and integrity. I don’t think there are many readers who would seriously think that any project would be decided in a corporate box at a Brumbies game or down on the chalet line at Avalon.

“Modest, appropriate industry hospitality has been a feature over many years in assisting to develop and foster closer communication and better working relations between Defence and industry,” according to John O’Callaghan of the Australian Industry Group’s (AiG) Defence Council. “This is entirely consistent with long-term defence industry policy, which was re-affirmed by former minister for defence materiel Greg Combet, when he released the Defence Industry Policy Statement.” While AiG (and AIDN) have been silent in public about the issue, ADM was assured that the groups are working behind the scenes to make industry’s case heard on the matter. But it’s in the public domain that this battle needs to be fought.

Defence is paranoid about a Freedom of Information request and such quotes as ‘prolific luncher Warren King’. For the record, the article that coined the tag saw the DMO’s second in command record 25 lunches over the period. That period was three YEARS. Given the amount of conferences, presentations and events that Mr King attends as part of his working life, I’m surprised it wasn’t more, frankly. Everyone, including DMO officials, need to eat.

Business is about people and relationships not contracts and process. The occasional lunch or dinner is about building that relationship. A little trust and integrity on both sides is all that is needed.

Gregor Ferguson | Sydney

Change is Goodness

As somebody once wisely said, “If nothing changes, then nothing changes”. This is certainly true in Defence. Despite the best efforts of the CEO of the DMO, Dr Steve Gumley, fundamental improvement in Australia’s defence acquisition system remains elusive.

It’s not for lack of trying: Dr Gumley and his leadership team have determinedly professionalized the DMO and have tried to make the organisation as businesslike as possible. As he points out regularly, the majority of defence projects stick to their budget – and this is a major achievement by both the DMO and industry.

But schedule is a challenge, one that Dr Gumley is throwing back at industry. Schedule delays attract censorious headlines and hard-nosed ministerial and parliamentary scrutiny. The causes of schedule delay frequently lie in the advanced technologies and complex commercial arrangements at the heart of many projects. The DMO doesn’t always manage these well - and sometimes industry simply screws up, and should have the good grace to admit it.

A more businesslike approach from the DMO would help, but the organisation is hamstrung: for as long as it remains an organic part of the Department of Defence it will remain bound by the processes (and culture) of the Commonwealth Public Service. Industry needs to understand that the DMO’s freedom of movement is limited. The ADF needs to understand this as well: it has resisted calls by Mortimer and Pappas to make the DMO an independent Executive Agency with the powers to hire and fire the right talent and reward and promote high performers.

Making this change would result in a gradual transformation of the DMO’s ability to manage complexity and risk and better balance the asymmetries that currently blight its relationship with industry. Resisting this change denies Australia the better outcomes its taxpayers (not to mention the ADF) demand and deserve. “Change is goodness”, according to a DMO coffee mug now in my possession – Defence needs to embrace this view.

Speaking of change, Katherine’s departure on maternity leave means a temporary change in ADM’s leadership. I’d like to take this opportunity, on behalf of the entire ADM team, to wish Katherine and Rowan all the very best, and to promise her a warm welcome when she returns to the Editor’s chair.