Naval support - industry implications

One of the contracts Defence awarded recently went to BAE Systems Australia, for in-service support of the upgraded FFG frigates.

You have to feel sorry for Thales, which is just completing the much-delayed FFG Upgrade project. Nobody knows these ships better than Thales and one would have thought they'd be a shoe-in to win the through-life support contract. The company also lost out recently on the AWD sonar contract, and this seems likely to have a significant effect on its payroll over the next few months.

What this shows is that nobody can take defence contracts for granted in these uncertain times, and with contracts now in place for the AWDs and LHDs, there probably won't be too much new ship building work over the next few years. That means the naval contractors will be fighting for market share in the sustainment and support markets on both the east and west coasts, and the first battle has been fought and won already.

Defence repeatedly tells industry to invest in recruiting more people with higher skill levels; many long-established Australian defence contractors such as BAE Systems and Thales have been doing this for years, and have invested also in research and manufacturing facilities as well as in-service support capabilities. They won't continue to make such investments unless they can be sure the workload and opportunities are there to justify them.

The delicate balance Defence must make is between seeking value for money by opening tenders up to all comers, including new entrants to the market whose local footprint is small or non-existent, and honouring the commitments and investment made by long-term players. Plenty of local companies believe Defence doesn't understand the concept of 'value for money', nor the concept of 'sustainability' as it applies to important industry capabilities: I've seen industry executives shake their heads in despair when it appears contracts are going to the lowest bidder, regardless of quality and local employment.

That's not to say the AWD sonar and FFG support contracts want to the wrong companies, more an observation that some Defence planners believe they can treat Australia's defence industry base like an old-fashioned Stalinist-type command economy: that they can turn industry capabilities on and off like taps, and mix and blend colours and temperatures at will. Industry capability is like Defence capability - and I mean REAL capability, not just sheds on industrial estates and bodies in overalls or uniforms: real, effective, enduring capabilities take time to create, they are vulnerable to neglect and are very expensive to resurrect if allowed to atrophy.

It's not clear to me, nor to many industry observers, that Defence pays more than lip service at times to this fundamental truth.

Seasprite update

I've been away again - Melbourne and Adelaide, to catch up with my family pre-Christmas.

Meanwhile, Max and I have had a bit of feedback on our article about the Super Seasprite helicopter; the absolutely final version of this article, incorporating some of that feedback, is now up on the ADM web site:

http://www.australiandefence.com.au/adm/index.cfm/p/special.reports/

The feedback we've had falls into two categories: additional background information, which supports our central thesis; and requests for clarification to ensure the roles and responsibilities of certain individuals and organisations are presented correctly.

With that in mind, I'm very happy to emphasise to readers that the prime contract for Project Sea 1411 was signed by the old Defence Acquisition & Logistics Organisation (Defence A&L); the Defence Materiel Organisation wasn't created until 2000, by recently-appointed Under Secretary Defence Materiel (USDM) Mick Roche. It's been pointed out that Roche and the DMO inherited the problem and tried to deal with it as best they could; among the lessons they learned from this experience was the risk attached to operating an agglomeration of small fleets of different aircraft. One enduring legacy of Project Sea 1411 has been the ADF's helicopter rationalisation program under Project Air 9000 which will see a fleet of no less than ten separate helicopter types and marks in 2004 (Tiger, Chinook, Black Hawk, Iroquois, Bushranger, Kiowa, Squirrel, Sea King, Seahawk and Super Seasprite) reduced to just five: Tiger, Chinook, MRH90, the new training helicopter to be acquired under Air 9000 Ph.7, and the new maritime helicopter to be acquired under Air 9000 Ph.8. The DMO was one of the strongest advocates of this process, and I'm happy to acknowledge the fact.

Super Seasprite - What went wrong?

If you're wondering where the author has been these many weeks, take a look at the Rumour Control web site - www.rumourcontrol.com.au

You'll see there a link under 'Hot Topics' to an 18,500 word article written by myself and Max Blenkin on the demise of the RAN's Super Seasprite helicopter project. This is our contender for the prize put up by aviator Dick Smith and businessman Gary Johnston for the article that best describes what went wrong on this project.

You can also download it as a pdf - www.rumourcontrol.com.au/hot_topics/seasprite121208.html

Due to a scheduling problem of the author's own making this article won't be up on the ADM web site, where it belongs, for a couple of days, but check out the site anyway: www.australiandefence.com.au/adm

Max and I both know there are plenty of other strong contenders out there - between us all we should build up a pretty accurate picture of what actually went wrong.

To grossly over-simplify, this is what went wrong: Defence selected the wrong aircraft for the wrong reasons - its choice of helicopter was dictated by the Navy's plan to acquire a small, 1,250-tonne Offshore Patrol Combatant (OPC); but six months after signing the contract for the Super Seasprite, the Navy cancelled the OPC project. Defence then made the mistake of persisting with the Super Seasprite and compounded the error by mishandling the development and service entry of the helicopter, though the people involved generally believed they were doing the right thing, as they saw it.

It's a long, complex and very sad story. And it was all preventable.