The Defence Strategic Review was scathing of the current Australian acquisition process, describing it on page 20 as not fit for purpose. Just as bluntly, it calls for the system to be scrapped and replaced with something that delivers capability faster and does not let the search for the perfect become the enemy of the good. Basically, it concludes that we need to be more focused and move faster.
The report also calls for more off-the-shelf purchases – though it is difficult to see how this is compatible with a greater role for Australian industry. The sad truth is that local industry is tiny compared with the large amounts being spent on Defence, precisely because for decades the system has been oriented to purchasing stuff from existing production lines, especially those in the US, rather than spend on developing our own capabilities. We are now reaping what Defence and successive governments have sown.
The question is how these seemingly incompatible directives of the DSR can be implemented. The Review itself does not deal explicitly with the future of CASG – the Capability Acquisition and Sustainment Group (the successor to the Defence Materiel Organisation) – saying instead that various options need to be developed as soon as possible. For example, on page 90 one of these options should examine how to:
“…. streamline and accelerate the capability acquisition process for projects designated as strategically urgent or of low complexity.”
Worryingly for Australian industry, the preceding point is that the need for local content and manufacturing has to be balanced against the need for speed.
One possible way around this dilemma is to involve Australian industry at a far earlier point in the whole capability development cycle to make quicker and smarter decisions about what can and can’t be done locally. As a brief digression, this is what the US tech disruptor Palmer Luckey – who has regularly featured in these pages – advocates via his company Anduril Industries, currently co-developing the Ghost Shark XL-AUV with the RAN.
Another example of a successful industry-led acquisition process is LAND 159 where a local company has been tasked with testing, acquiring and delivering various weapons to the Army. The Head Land Systems, Major General Andrew Bottrell announced on September 20, 2022, the awarding of the Lethality System Project (LAND 159) Tranche 1 contract to Queensland-based company NIOA.
He explained that between now and the mid-2020s, NIOA will use a range of sub-contractors to supply new sniper rifles, pistols, shotguns, personal defence weapons, fighting knives, and an assault breaching system to the ADF, with many of the new weapons to be on display at Land Forces.
Major General Bottrell said the contract would include munitions and ancillary equipment including optical and laser systems, torches and suppressors for the new generation of small arms.
“Under the contract, NIOA will be the prime contractor, working with local and international suppliers and weapon manufacturers on the acquisition, integration, delivery and ongoing support of the new weapon systems from 2023.”
“This is a bold step into modern weaponry to quickly improve Australia’s defence preparedness.”
“NIOA has demonstrated a long‑term commitment, private investment, and a focus on growing sovereign industrial capability to support Australia’s war fighters.”
“The collaboration between Defence and industry means we will acquire the best available weapon systems for our troops.”
The role of NIOA has been to approach the market on behalf of the Commonwealth to identify and evaluate Tranche 1 weapon systems and provide acquisition and support recommendations to Defence, along with all cost data. Defence reserved the right not to accept recommendations, but the reality seems to be that the system has worked smoothly.
To guard against things such as potential conflicts of interest, Defence has specified that the contract will be conducted in an open, impartial and transparent manner. It includes performance-based measures which are supported by a governance framework.
For their part, NIOA believes that the contract has gone extremely well, though preferred not to contribute directly to this article. Evidence from various suppliers supports the view that the process has been rapid – much more so than if this had been a traditional Defence tender.
An example is ZU Bladeworx Australia – a small company with a very funky name – which is contracted to NIOA to manufacture the new close quarters combat fighting system for Defence. The company says this system includes a double-edged combat knife, designated the H2HFW, along with a trainer blade and a machined hard case sheath.
Managing Director Matthew Lucarnus told APDR:
“NIOA continues to demonstrate their commitment to Australian Sovereign Capability by supporting a local small business, ZU Bladeworx Australia, to produce this weapon system 100% in Australia. We have found Nioa’s support instrumental in helping us compete at the high level required of a major government contract.
“From the very start, NIOA has provided us with crucial support to help us complete the contract milestones. This has included numerous members of their staff being dedicated to helping us with everything from understanding complex government contracts, understanding our workplace health and safety requirements, adherence to engineering standards, and locking down quality assurance procedures.
“We feel like we are part of a much bigger team as NIOA has taken a mentoring role with us, which we are very grateful for. As we continue to roll the product out successfully, the assistance that the team has provided so far is evident in the successful production results we are achieving.
“It is amazing that a Prime Defence contractor like NIOA can help a small Australian business like Zu Bladeworx provide a world class product, locally produced, that can compete on the international stage.”
The contract with NIOA to provide a multitude of services has relieved Defence of a large amount of work, with the prime contractor issuing and evaluating various responses from the more than 200 companies who have registered interest in the project. This has led to 29 RFT suites to 35 Australian and 17 international producers of weapons, munitions and various sundry items.
To give a further indication of scale, NIOA has received around 1,300 items of hardware as part of its evaluation process, with everything needing to be tested, stored and catalogued. This involved 800 weapon firings using 31,000 rounds and was conducted during a remarkably short three month trial period – which might sound like a lot of fun but is actually hard work.
The consequence is that Tranche 1 will deliver a significant capability enhancement to Sniper and Close Combat Capabilities, with the following mission systems approved by Government for acquisition:
- Anti-Materiel Sniper Capability
- Long Range Sniper Capability
- Sniper Surveillance Capability
- Sidearm Weapon System
- Hand-To-Hand Fighting Weapon System
- Personal Defence Weapon System
- Combat Shotgun System
- Assault Breaching System
As well as testing all the various weapons and products, NIOA – which is 100% Australian owned – will also be responsible for their introduction into service but also their through-life support, including modifications and upgrades.
Given this success story, it would seem logical in the light of the DSR for this Australian industry acquisition model to be used more frequently. We asked Defence to contribute their views via a series of questions. For reasons known only to themselves, they have declined to provide even a single sentence to this article.
For Editorial Inquiries Contact:
Editor Kym Bergmann at kym.bergmann@venturamedia.net
For Advertising Inquiries Contact:
Director of Sales Graham Joss at graham.joss@venturamedia.net
I think you are right – industry does need to be involved early on in a project. We have to build industry capability and capacity if we are serious about being self reliant in terms of military equipment and systems.
Australian industry is world leading in a lot of areas and with the right investment and opportunities or encouragement we can achieve so much more.
It is almost embarassing to see some of the cancellations and backflips made in recent times with respect to major defence projects.
The cancellation of the French sub procurement and the switch to a nuclear option. Yet be seen if this will come to fruition.
Potential cancellation of the Hunter class frigate project – or a downsizing in numbers at best.
Possible scrapping of the Arafura class in favour of a number of corvettes (lurssen are already circling with a proposal) and the handing over of the Arafuras to border force. The Arafuras have always, in my opinion, been under armed and little more than a big fisheries patrol vessel.
Drastic reduction in the number of armoured vehicles and including reduction of numbers of the Huntsman self propelled artillery
Whilst understanding budget pressure now is not the time to cut back on procurement. We need to do procurement a whole lot smarter, quicker and with a much reduced level of red tape. I honestly don’t know what the answer is but if it doesn’t get sorted out it will be decades before much needed equipment and systems are available to our front line troops.
Thanks Rod – I agree with all of that. Cutting back on IFV numbers will take about $10 billion out of the local vehicle industry making it uneconomic for many parts to be produced here. At least the Luerssen corvette option will maintain the Australian supply chain because the idea is to seamlessly transition from construction of Arafuras to the new class. The parent of the Arafura class – Brunei’s Darussalam class – has a 57mm main gun and 4 canister-launched Exocet SSMs. It was the brains trust in the RAN who decided that this level of weaponry was unwelcome.
It is entirely understandable why the Australian government would want to buy new military equipment for the Armed Forces which automatically falls in the off-the-shelf category – because an off-the-shelf equipment is a fully engineered and supported technical solution which satisfies the key user requirements at no additional cost or risk to the treasury, that is to say, it does not require any user-specified modifications or related development work laden with risk to be performed upon it, which everyone agrees has been the cause of persistent delays and cost overruns on defence procurement programmes for as long as anyone can remember.
Some people say that buying off-the-shelf equipment from abroad means that the ability of Australian industry to develop and manufacture indigenously-designed equipment is undermined. But the fact of the matter is that no matter how much public money is thrown at defence contractors, the government has always been rewarded with appallingly poor performance – characterised by persistent delays and cost overruns. The result is that they have failed to deliver equipment to the Armed Forces which is fit for purpose, adequately sustained in-service and constitutes value for money through-life.
Over the last several decades, defence equipment manufacturers have had every opportunity to build-up a portfolio of fully engineered, off-the-shelf products to satisfy the current and future needs of both, the Australian government and export customers – by investing in innovation, product research and development, creating intellectual property and upskilling employees – at a time when they were subsidised exclusively by taxpayers.
They have squandered this chance.
Hopefully the success of Land 159 will prove to be a light at the end of the tunnel for Defence Acquisition. For too many years promising projects have been derailed by both the DMO and CASG systems. Buying “Off the Shelf” has its pitfalls as modifications to suit Australian Conditions have to be made (Often discovered after the contract of sale has been signed). If you’re building a house, you chose a design, engage a builder and only get involved if a major design alteration is required. I understand,the more complex an acquisition is , the more complex the process but constantly changing the goal posts leads to over runs and cost blow outs…
Please have a listen to my next podcast, which comes out on Monday, where I canter through the absolutely disgraceful decision to buy the US SURTASS towed array rather than do the work in Australia. One of the worst decisions I have ever come across – and that’s saying a lot.