Australia’s defence supply industry is taking the opportunity of a Senate inquiry to call for improved Defence procurement systems to help sustain and grow the industry’s capabilities and innovation.

 

The inquiry into procurement procedures for Defence capital projects is being conducted by the Senate Foreign Affairs, Defence and Trade Committee.

 

Under its terms of reference the Committee is investigating procurement procedures utilised for major defence capital projects currently underway or foreshadowed in the Defence White Paper, including the operations of the Capability Development Group and its relevant subcommittees;  the timeline proposed for defence modernisation and procurement outlined in the Defence White Paper; and accountability and availability of public information and parliamentary oversight and scrutiny of defence procurement.

 

Twenty submissions have been received by the inquiry, and are publicly available at http://www.aph.gov.au/senate/committee/fadt_ctte/procurement/submissions.htm

 

The Australian Industry & Defence Network Inc (AIDN), which represents Australian defence industry small and medium enterprises (SMEs),  said that there has been a slowdown in approval rates for major defence capital projects. This has had “a negative impact on the defence industry, has the potential to delay capability needed by the ADF and, through the delay, increase the cost of providing that capability.”

 

The AIDN argued that Military-Off-the Shelf (MOTs) procurements, which may

mitigate risk and cost in the acquisition phase of a capability, can actually increase risk and costs when sustainment and whole of life costs are analysed.

 

“The sustainment of ADF capability, an area where many SMEs operate, is the area of greatest cost to the Government in acquiring and maintaining capability yet draws relatively minor focus and analysis.” 

 

Regarding accountability, the AIDN highlights the importance of the Priority Industry Capability Innovation Program (PICIP) to defence industry innovators and future ADF capability.

 

The AIDN submission reccomends: the appointment of a defence industry Ombudsman; transparency of Rapid Acquisition requirements; the inclusion of Priority Industry Capability (PIC)/Strategic Industry Capability (SIC) value in developing project value-for-money determinations; and base lining current defence industry PIC/SIC capabilities to identify industry capability ‘gaps’ for delivering of the Force 2030 ADF capability.

 

The Australian Business Defence Industry Unit, part of the NSW Business Chamber, submitted a Defence Industry Policy Priorities Paper which sets out a number of priority issues for the Federal Government to address in defence industry policy.

 

The Unit maintains that The Priority Industry Capabilities (PICs) and Strategic Industry Capabilities (SICs) in the Defence Industry Policy Statement 2010 are too broad and Government funding for the new projects and sustainment work in these areas too uncertain to give industry the guidance or confidence required to invest.

 

“In addition, industry needs to know how the Federal Government will promote investment in PIC and SIC areas. A public commitment to regular tranches of new Defence projects and sustainment work for PICs and SICs would be a start to giving industry the confidence to invest in these priority capabilities.”

 

The Unit warns that with procurement cycles for all major ADF platforms already in place for the next decade, there were few new opportunities to maintain and grow defence industry’s capabilities.

 

“To deliver new platforms and systems beyond the next decade industry will need to build and grow skills in capability development, design, engineering, project management, assembly and systems integration – workforces with these skills can only be maintained and grown through regular tranches of new defence projects between 2011-2019.”

 

The Unit highlighted the need for reliable evidence to support industry investment in defence requirements, and called for the Federal Government to provide an annual independent and public report on the performance, including financial results, of the Global Supply Chain, Defence Export Unit, RPDE, Capability Technology Demonstrator and Minor Capital Projects programs.

 

It argued that partnerships between Defence and industry early in the development of capability concepts and then through the lifecycle of systems would result in better capability, better technology and lower life-cycle costs.

 

The Senate Committee will report by 30 November 2011. More information is at http://www.aph.gov.au/senate/committee/fadt_ctte/procurement/info.htm