It’s D-day again for defence — the ritual recoil in horror as a new government pulls back the veil on spending. So that’s D as in déjà vu.
This time the defence minister is Richard Marles, who has found that defence projects have blown out by at least $6.5bn and are running a cumulative 97 years behind schedule.
Timing is everything, of course. Marles’ announcement of massive cost overruns comes in the run-up to the budget. The defence minister is set to introduce a system designed to contain blowouts in the future. This would involve monthly reports to ministers and “early warning” rules that would act as red flags for closer scrutiny.
Does it feel like we’ve been here before?
Well, yes. So much so that the Australian National Audit Office (ANAO) — which routinely finds time and budget blowouts on major defence projects — has been moved to conduct its own review of defence spending reviews. That’s how intractable the problem has become. Talk about its own industry.
The ANAO found that “concerns over defence’s ability to deliver capabilities on time and on budget to specified technical requirements” had caused “successive governments and ministers to initiate reviews of the organisation’s management of capability development”.
“One of the most substantial reforms arising from these reviews has been two-pass government approval for major capability development projects, originally introduced as a result of the Defence Governance, Acquisition and Support Review in 2000. Two-pass approval was intended to give government greater control over capability development.
“The Defence Procurement Review, chaired by Mr Malcolm Kinnaird AO (the ‘Kinnaird Review’), followed in 2003. This review recommended strengthening the two-pass process and led to the creation of the Capability Development Group (CDG) in defence to give focus to and improve capability definition and assessment,” the ANAO reported.
“Later reviews, such as the Defence Procurement and Sustainment Review, chaired by Mr David Mortimer AO (the ‘Mortimer Review’) and completed in 2008, extended the thinking of Kinnaird and sought to strengthen the framework established after 2003. This framework — the two-pass system — remains in place and forms the backbone of capability development and materiel acquisition within defence.”
So there it is. Reviews in 2000, 2003 and 2008.
The ANAO reported all this in 2013 and added a prophetic conclusion.
“Most of the reviews acknowledged that defence can demonstrate incremental improvements in some areas of capability development but finds it harder to demonstrate lasting change.”
Why no change?
Defence officials argue that currency fluctuations and price indexation account for a proportion of cost blowouts. But that’s not the full story. Earlier defence reviews found that commissioning a bespoke design, as opposed to an off-the-shelf design — a MOTS (military off-the-shelf design), to use defence jargon — was safer and would cut down on budget and time blowouts.
Last year the ANAO reported that, from 2005, defence did indeed begin to increase the proportion of MOTS acquisitions, which it said were generally “lower risk” projects and therefore more likely to meet schedule timelines.
From 2014, though, the proportion started to slip, with a continuing trend, where “developmental projects had become more ‘Australianised'”. The ANAO noted this was an indicator of the difficulty associated with the procurement process.
In an interview before he left Parliament this year, former South Australian senator Rex Patrick cited government commissioning of “unique capability” design as a key problem. Patrick, who spent the bulk of his pre-parliamentary career in and around defence, pointed to the Hunter-class future frigate project as a case in point.
The design for the Hunter-class frigates — a fleet of nine anti-submarine warfare frigates — was modified to “meet Australia’s requirements”, according to the builder, BAE Systems Australia. The design is “based on” BAE Systems’ Type 26 Global Combat Ship for the Royal Navy, according to BAE.
“The problem here in Australia is we have [defence force heads] making recommendations to cabinet ministers who have no project management experience,” Patrick said. “They don’t understand project risk. So we end up with something like a bespoke design being presented to a cabinet by people who wear flashy uniforms, lots of gold on their epaulettes and off they take us down a pathway which is hugely risky, hugely costly and generally ends in tears,” Patrick said.
Add to this Australia’s fleet of eight nuclear-powered submarines, which are to be built under the AUKUS partnership, at a cost already estimated by the Australian Strategic Policy Institute to be close to $180 billion over the decades to come.
Plus ça change, plus c’est la même chose
Defence acquisition has almost always been thus. Even the change from the old black GP boot to the brown one when the camoflague pattern uniform was introduced in the late 80s. Multiple iterations of boots were gone through before one was found that actually didn’t destroy soldier’s feet.
The only acquisition in recent memory that went swimmingly was the puchase of the C-17s. Ahead of time, under budget, and a significant capbility boost. Because they were purchased directly off the shelf with no “alterations to suit Australian conditions”. Bog standard USAF units diverted from the USAF production line. If only all defence programmes could be done the same way and the brass stopped from tinkering with established available equipment.
??? This is surely completely wrong. Bespoke designs are the ones that cost far more to begin, and then incur all sorts of additional costs, as well as often being delivered late and failing to meet specification. It is far less risky to choose an off-the-shelf design with known capability. The only excuse for not doing so is when the off-the-shelf design is no good for the intended purpose and the buyer is forced to go bespoke.
Only someone with a vested interest (future board sinecures?) could claim that bespoke is cheaper that standard model anything.
The tailors of Saville Row or R/R engineers might suggest that quality lasts but that depends on integrity, an increasingly rare commodity.
Self-interest might explain some of decisions, but the psychology of it is more complicated. For a time I worked at a manufacturer of large items of industrial machinery. The basic models were quite capable of doing everything that most customers could reasonably want. Makling any change or variation at all from the basic design, no matter how minor, immediately incurred something like a 50% increase in price, and then all sorts of other costs were added according to the complexity of the changes and the additional items that had to be incorporated. But even so, hardly anybody ever bought a basic design. It seemed to me that it was a matter of pride for the buyers as much as anything. Also, the representatives of the customer wanted to incorporate custom features in order to justify their employment and demonstrate their expertise to their employer. After all, anybody could just order the basic design, nothing clever about that.
Yes I think he got that reversed. The big issue not covered so much is the political distortions of any process as the project is targeted to keep specific builders in Australia operating (which is semi-legitimate) and to earn political points in specific electrates and states (not legitimate).
God help us if the AUKUS submarine purchase goes ahead. It looks like a project designed to establish a world leading cost overrun.
We had the most pampered Poodle in the world, even before the pandemic. Ungrateful dog ran off and found a better family anyway.
Australia does not need nuclear boats to defend Australia. They are there so that Australia is available to join in they another GOP US military adventure, this time below the high seas.
Just as LNP governments lined in previous adventures, The Viet Nam Farrago, The Afghan Imbroglio and The Iraq Fiasco*
The US, the former USSR, now RFR, the UK and France have nuclear boats for use with their so called nuclear deterrent. They also have other nuclear boats as hunter killers for dealing with such missile carrying boats.
But in 2005, USS Ronald Reagan the newly constructed $6.2 billion dollar aircraft carrier, sank after being hit by multiple torpedoes.
This did not occur in actual combat, but was a war game simulation with a carrier task force including numerous antisubmarine escorts against HSMS Gotland, a small Swedish AIP diesel boat displacing 1,600 tons.
Yet despite making multiple attacks runs on the Reagan the Gotland was never detected.
The Gotland was able to evade the Reagan’s elaborate antisubmarine defenses involving multiple ships and aircraft employing a multitude of sensors and it was a cheap boat costing around $100 million—roughly the cost of a single F-35 stealth fighter today
Gotland-class boats, introduced in 1996, were the first with Air Independent Propulsion (AIP) systems using a Stirling engine.
The Stirling engine charges the submarine’s seventy-five-kilowatt battery using liquid oxygen.
So the Gotland-class can remain undersea for up to two weeks sustaining an average speed of 8-10 KPH or speed up to 40KPH using batteries.A conventional diesel engine is used for operation on the surface or with a snorkel.
Stirling-powered AIP Gotland class run more quietly than any nuclear-powered boat for those can never run silent as their coolant pumps are always running in the reactor. Shutting the pumps down can be done but then the heat has to be vented externally making them detectable by other means.
This outcome was replicated time and time again over two years of war games, with opposing destroyers and nuclear attack submarines succumbing to the stealthy Swedish sub.
Naval analyst Norman Polmar said the Gotland “ran rings” around the American carrier task force. Another source claimed U.S. antisubmarine specialists were “demoralized” by the experience.
These are the boats that are needed to defend Australian seas and shores
*Die Geschichte hat noch nie etwas anderes gelehrt, als dass die Menschen nichts aus ihr gelernt haben.”. Georg Frederich Hegel: Early 19th Century
History has never taught anything other than that people have learned nothing from it:
Er hat vergessen, hinzuzufügen: das eine Mal als Tragödie, das andere Mal als Farce.” Karl Marx: mid 19th Century
He, (Hegel,) forgot to add this: first as tragedy, second as farce:
“Those who cannot remember the past are condemned to repeat it.” Georges Santayana. Early 20th century
100% correct. It doesn’t matter what it is. Bespoke designs are always far more expensive than off-the-shelf. An OTS design that meets 80% of your needs is a pretty good fit.
Madness. Stupid waste and for what? People need education, housing, health support, infrastructure reliability.
Most of these purchases are unnecessary and nothing more than the defence establishment and the right wing war-mongers wanting their “macho” boys toys. Obviously the resulting waste is mind-blowing
Interestingly, as an example most of the World prefer the Rafael as the French are more willing to share their technology. Substantial US equipment ie planes F35 etc. and submarines etc have tamper proof to prevent the purchaser from repairing/modifying as aucurity against technology transfer.
Thus two reality choices.
a Don’t have an Australian Defence force – allow the US to have bases in Australia and charge abnormal high rents. Ie make a profit out of it.
b Decide to have an independent Defence Force not dependent on a foreign power.
Rafale is apparently the choice of the Indian Navy for their former Soviet aircraft carrier, and the Indonesian Air Force, locking out Russian or Chinese aircraft while there is interoperability (potential) between Rafale and allies’ aircraft systems.
Also shows that Australian media seemed to suggest that French does nothing in the Indo-Pacific vs. the US or UK, another bit of kicking for an EU nation in the Anglosphere which is an ally.
The next Armada invading Australia is going to be a big bunch of leaky boats, again.
And war these days, goes on 24/7, in the cyber world, in the markets, and as we have experienced for the last 3 years, now involves bio-weaponry.
Nothing like on-going pandemics to weaken a population pre-invasion. And how is that invasion going to happen, or is it all ready happening? Or is it even necessary? Land invasions are so passe.
Yes the war toys are just that. Unnecessary. Give Defence materiel a D. For Dinosaur.
So just buy off the shelf. Better parts availability as well.
The point I was trying to make, but fellow readers have cancelled out any likes!
I strongly agree see my post concerningthe LNP and defence boondoggles!
Totally agree as when governed by the LNP an inordinate amount of the blood and treasure of the Commonwealth of Australia has been wasted marching off lock step on USA military adventure…none of these have been declared wars as such in the Parliament of the Commonwealth of Australia…all have been attacks on countries that are no threat to Australia…none have been in the defence of Australia!
Most recently The Afghan Imbroglio,just “finished” after 21 years, c.$9.3 billion, the Iraq Fiasco cost in excess of AUD 5 billion with The Daesh Disaster, AUD?… across the ME which is but a very clear outcome of the Iraq Fiasco. Lest We Forget that earlier adventure the Viet Nam Farrago which in today’s dollars cost c.$1.3 billion.
Then there are such boondoggles as the Abrams M1…a fuel guzzling turbine engined tank built to charge high speed across the boggy, cold wet North German Plain to counter any USSR attack…not really suitable for the dry, dusty, hot deserts of the world and certainly not outback Australia…
The Joint Strife Fighter…single engined…supposedly stealth…but not so if it is carrying externally the proposed new missiles…it now appears there are not enough spare parts, as US officials warned in July 2019 that there is a chronic shortage of spare parts for international buyers…
Hence…F-35As are not mission-capable 48 per cent of the time.The network to distribute spare parts for the F-35 to international partners has not been established.
US official says the fighters “probably won’t” meet a September 2019 benchmark for capability
The Wedgetail AEW&C ordered in 1999 to be delivered in 2006..but delivery did not occur until the end of 2009…but not until May 2010 were the first two accepted into RAAF service!
Then there were the submarines, based on French Nuclear boat type, but to be just a standard diesel electric boat and not even AIP, see my post concerning such.
Which under what appears to be, USUKAU, are now possibly to be replaced by the boondoggle of nuclear boats form either UK or US at what cost?