Editorial: Trust and transparency | ADM Feb 2010

As we are now well aware, the Strategic Reform Program (SRP) is how Defence will save $20 billion across 10 years to fund the raft of new platforms and capabilities to be built in that time.

No savings means no new capability.

The reality couldn't be more stark.

This process will require vast amounts of change from both systems and people in order to be successful.

Shireane McKinnie, the Defence Materiel Organisation's SRP Director, says that change must become the new ‘business as usual' for DMO in her From the Source interview this month.

But change is hard.

It can be very hard if it requires changing processes that work for the uncertainty of new processes that demand new knowledge and even harder if they make a role redundant all together.

The word ‘reform' in Defence has become synonymous with the word ‘cut' thus creating an attitude of fear both in Defence and Defence Industry.

Who and what will be cut?

When will it happen?

Who will be affected?

And which federal and state seats are in the mix?

These are the details that people want to know now.

The change management program in Defence will need to communicate these details effectively at all levels if it wants a true change from staff and stakeholders.

The SRP will not be a pain free process regardless of how well the change management strategy is administered.

At the end of the day, power bases will shift, people will move and be re-skilled and some may decide they just don't want to adapt, and leave.

The relationship between Defence and the Industry that provides it with the technology and platforms that make the Australian Defence Force an effective force is also changing.

The ideal dynamic boundary between the two parties will require shared processes and partnering.

As major suppliers gain responsibility for in-service support, the boundary between the DMO and these suppliers, and the contractors they in turn use to carry out in-service support, becomes increasingly blurred, not least as contractors often use ex-service personnel.

This blurring of the boundaries raises a range of questions about, for instance, ownership, responsibility and cost.

Trust and transparency are ideal relationship attributes that are hard to come by when a contract is thicker than your arm.

As twee as it may sound, trust and transparency will either make or break the SRP, both internally and externally, as Defence manages a vast amount of upcoming change.

Lazy defaults disadvantage locals

Gregor Ferguson | Sydney

Defence's increasing tendency to pursue Commercial or Military Off The Shelf (COTS and MOTS) purchases is creating some interesting situations.

A MOTS purchase reduces cost and schedule risk.

It also generally requires the user to compromise on at least some of his operational requirements: very few MOTS or COTS products will match these exactly.

A MOTS purchase can deliver useable capability relatively quickly and efficiently.

There are plenty of defence products which Australia could only sensibly acquire off the shelf - main battle tanks, jet fighters and guided missiles, for example.

But there are times when a MOTS solution simply isn't good enough.

And a lazy default to a MOTS option without testing key assumptions also stifles local innovation, shuts down opportunities in design, development and manufacture and denies Australian firms the chance to compete on even terms.

And it denies Defence the opportunity to consider other value for money options.

A case in point is Project Land 121 Ph.4.

It appears Defence's favoured option for a Protected Mobility Vehicle - Light (PMV-L) is a MOTS purchase of whichever contender wins the US Joint Light Tactical Vehicle (JLTV) contest.

Despite the fact that Australian industry had proven itself capable of developing a world-class vehicle such as the Bushmaster, Defence chose to ignore local industry and instead to join the JLTV program at a cost of $100 million.

Belatedly Defence issued an RFP for a locally built PMV-L, but made no mention of funding for design or prototyping.

Defence faces an interesting choice.

It didn't specify any of the JLTV's capabilities and, frankly, has little chance of influencing them.

The final cost, weight and capability of the JLTV remains uncertain, and it's not clear what genuine opportunities exist for Australian industry involvement.

However, it seems the ADF would prefer to risk compromising its user requirements in order to accommodate a MOTS purchase than explore other options which might provide better value for money, a better fit with the ADF's requirements and a major opportunity for local industry.

A new Defence Industry Policy Statement, to be published during this election year, provides an opportunity to rectify the inconsistencies and weaknesses in Defence's internal processes which have led it to this unsustainable position.