Lockheed Martin. The announcement was made in the early hours of today, but a variety of sources indicate that the decision was taken by Defence several weeks ago. The choice goes against the explicit recommendation of the recent Defence Strategic Review that time and money be saved by purchasing an off-the-shelf product, which more closely matches the rival bid from Northrop Grumman.
Defence Minister Richard Marles disagrees, saying:
“The Review makes clear that an enhanced, all-domain integrated air and missile defence capability is critical in the face of Australia’s evolving strategic circumstances.”
The purpose of AIR 6500 Phase 1 is to deliver a Joint Air Battle Management System that will form the basis of a larger missile and air defence network that is being purchased in stages. The Lockheed Martin approach is to develop a product in conjunction with Australian industry, the RAAF and be based on their track record with extremely complex system integration contracts – for example the F-35 and the naval Aegis combat system.
In contrast, the offer from Northrop Grumman is a version of their existing Integrated Battle Command System (IBCS) that is in service with the US Army, and which has been sold to Poland. The company also has a hefty chunk of Australian content in the proposal, but presumably somewhat less than the far more developmental approach of Lockheed Martin.
However, a possible reason for a delay in making the announcement is that this solution runs directly counter to the DSR. Under the heading Integrated Air and Missile Defence, after disparaging the current approach saying it was pursuing a long-term solution at an unaffordable cost, it says bluntly:
8.80 In-service, off-the-shelf options must be explored.
But the government has already agreed to accepting all the DSR recommendations, so what to do? This might have led to a back-and-forth between the Ministers and the Department because there seems little point in accepting the DSR – described with an abundance of hyperbole as the most important national security policy document since the Second World War – if after just a few months its findings are ditched.
The project is very ambitious in scope and seeks to network assets such as F-35s; Aegis-equipped ships; Wedgetail AEW&C aircraft; JORN; CEA ground-based radars and Army’s short range air defence system being acquired under LAND 19 Phase 7. This will be a complex task because of the large number of legacy systems to be incorporated and will need to be done with open architecture software so that future weapons such as long-range land-based defensive missiles can be added.
As part of their offer, Lockheed Martin are in the process of investing $74 million of their own funds developing an Australian Air & Missile Defence Ecosystem. This is far from an act of charity as the company sees huge opportunities selling these sorts of systems internationally – and in this region both Japan and South Korea are watching Australia closely.
This story will be updated.
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Irrespective of the DSR – which I think we all agree was not great – we should be going for the option that best suits our needs. If LM have the greatest experience with integrating complex systems then that is what I would go for. An off the shelf option may not, in this case, be what we need.
Only time will tell though.
Agreed.
The power of lobby when your headquarters are walking distance from Canberra an awful lot of contracts fall in you lap 🤔
Well the positive is LM is a big corp with lots of experience in high end defence tech, so hopefully this can be turned into a success for this project (though there’s never any guarantees).
I also read another article where LM, in an interview, claimed that they saw the potential for up to $80billion in exports if they successfully develop this system here.
Wonder if that coloured the DOD’s and Comm’s thinking a lot?
Because NG’S offer was based on their US army ibcs project which had, I think, a number of server hiccups along the way but seems to be getting there now.
Just hope we haven’t bitten off more than we can chew, chomp, chomp.
That’s correct about Lockheed Martin’s assessment of export potential. I doubt that was a factor in Defence’s decision as they tend to stick to the evaluation criteria which typically concentrate on system performance, price and risk – but I might be wrong; it’s all very opaque these days.
Despite LM contributing $76 million the vast majority of funds needed to develop the system will come from Australian tax payers. When the UAE bought the F-16E/F falcon the vast majority of the funds for the development of that model was paid for by the UAE. As a result the UAE get a cut of any future sales of technology developed from funds they paid for.
As LM see this system they are developing as a potential opportunity to sell the system across the world I wonder if anyone in government was intelligent enough to write such a royalty clause into the contract with LM.
You are correct about Australian taxpayers will be funding this and you raise an interesting question about future royalties. I shall ask. I have wondered the same thing about Wedgetail – Australia paid a lot for that capability and logically new customers such as the RAF and USAF should be billed for the use of our IP. I’ve never received an answer on that one.
Yeah I was thinking about the Wedgetail as I was writing the comment. If Australia isn’t getting royalties for it It should at the very least be a very important learning lesson. The Wedgetail has become quite the commercial success with Turkey, South Korea, RAF and US Air Force all being customers.
I am a tad perplexed with the general acceptance that there is a clear winner in this case. A winner can only achieve the desired result with the aid of all the other primes throwing there considerable weight behind LM. The expertise needed to sew together all these areas of expertise is going to hinge on the primes agreeing to furnish their intellectual property in good faith and of course “costs” involved in the process. So, my question is, “Is this proposal” really a win for one prime or is that prime “a consortium?”. Is clarity at risk once again?.
Hmmmm. You are correct that the underlying assumption for all of AIR 6500 is that industry will work cooperatively with Lockheed Martin Australia as the prime systems integrator. On balance, I think that’s likely to happen for a few reasons: 1) companies have a commercial incentive to participate in the form of additional revenue; 2) if they did not wish to participate in a strategically vital project I assume Defence would take that into account for all future contract awards in every domain; and 3) Lockheed Martin has a huge amount of technical and commercial horsepower and if companies for whatever reason did not wish to be part of this approach I think various work-arounds are possible. But that’s just my guess.