Editorial: Will EW PIC health check force changes in programming? | ADM May 2012

AS we approach the Federal Budget, it seems that the short-term budget issues that Defence will face means that decisions are being made without long term goals in mind. And long term is where the organisation needs to think. I would like to think that the Priority Industry Capability (PIC) framework is part of that forward thinking drive on the contracting and industry side of the house.

In its 2010 Defence and Industry Policy Statement – Building Defence Capability: A Policy for a Smarter and More Agile Defence Industry Base, the Government announced that the PICs will be regularly reviewed and updated to account for any changes in Australia’s strategic environment, consequent changes to Defence’s capability needs, and any developments in technology, defence industry and market structures. This review occurs annually under the Defence Planning Guidance (DPG) process. Where any changes to PICs result, the Public Defence Capability Plan (DCP) and other direct announcements are employed as the principal means for communicating these changes to defence industry.

In conducting PIC health reviews, Defence assesses the health of each PIC, examines whether there are any policy implications for Government, and proposes appropriate market intervention strategies to assure PIC health, should intervention be required. As previous articles in ADM have repeatedly confirmed, PICs are not companies but rather capabilities which may be held across a wide array of companies but tend to be held in a handful in reality.

Over the past few months, the DMO has released a series of health checks (available on the DMO website and D+I portal for those interested) on the state of each of the PICs they have examined thus far. It’s also widely acknowledged that the ‘easy’ ones are out of the way. The DMO is aiming to complete the remaining health checks this year. One of the upcoming health check reports, on Electronic Warfare (EW), will make for some very interesting reading.

The EW PIC has been defined in the following way. “These industrial capabilities include EW countermeasures development and validation; EW reprogramming, system integration and ‘tuning’ of overseas developed EW systems to meet our operational needs; the management of threat libraries; and, importantly, selective strategic product development to maintain high-end EW knowledge and capability. As EW provides an essential capability edge for many of our major war-fighting capabilities there is a need to have a responsive and effective indigenous EW industry sector that can be relied upon to adapt and integrate new systems to meet the needs of our operational posture, including maintaining those elements essential for operational military and security requirements.”

I’m going to go out on a limb and assume that this may be the first health check where DCP program timing may be changed to support a PIC. For many years, both industry organisation and companies in the EW space have made the case for more indigenous EW projects, both in terms of design and upgrades. Much of the EW technology that Australia possesses at the moment and plans to get into the future are connected to international programs where local smarts don’t get that much of a look in.

Also on 5 September 2011, Minister for Defence Materiel Jason Clare, announced the release of guidelines for the PIC Innovation Program.

“Under the program, the Government is contributing up to $44.9 million over eight years towards new developments in defined PIC areas. Under this program, multi-year grants of up to $4 million per project will be made to eligible applicants. Grants must be matched dollar for dollar by the receiving industry company and, depending upon the commercial success of the project, the grants may become partially or fully repayable. Australian-based companies will have the opportunity to apply for funding during the first application round that is scheduled to open later this year.”

It will be interesting to see how this $44.9 million is allocated over such a long period.

By the time this edition of ADM hits your desk, the next Budget will have been handed down. Our June edition will have the complete breakdown of the budget where the current government has vowed to return to surplus and the ADM website will have the immediate Defence highlights. The three per cent real growth on average that has been promised out until 2018 for Defence is a wonderful promise for the defence community. I suspect that it might just be a theory if my budget predictions are on the money, or lack thereof.