Mortimer - some of the implications of his Review

The Mortimer Review of Defence Procurement and Sustainment is a fascinating document. It makes a lot of sense, and there would be few who'd criticise defence minister Joel Fitzgibbon for implementing most of David Mortimer's recommendations.

Turning the Defence Materiel Organisation (DMO) into an Executive Agency would be an important step towards achieving the culture change that both its head, Dr Steve Gumley, and Australia's defence industry are keen to see. While this might make the DMO more distant from its principal customer, the Australian Defence Force (ADF), there's no evidence that the current relationship supports their mutual goal of delivering equipment and capability on time and to the required level of functionality.

However, while many will focus on Mortimer's analysis of the DMO, he also makes some very important comments about the Capability Development Group (CDG). This is responsible for identifying capability gaps and setting operational requirements for new equipment, but its people don’t understand the commercial and technical risks associated with military equipment acquisitions, Mortimer believes. “Defence has often pursued a unique Australian solution or modified an existing solution without appropriate understanding of the attendant risks to cost, schedule and delivery. It is important that this be avoided in the future,” he said.

Part of the problem, he believes, lies in the inexperience of ADF officers posted into the CDG. Not only do they lack project management skills, their postings last an average of only 18 months, despite the complexity of the projects they are working on and the lengthy deliberations and analysis required to develop them adequately.

Mortimer rightly points out that many defence procurement problems have their genesis at the Capability Development stage: "It is no exaggeration to say that the work of CDG is critical to the success or failure of the acquisition that follows." Defence acknowledged many of these issues when it implemented some of the recommendations of the 2003 Kinnaird Review, and both the DMO head, Dr Steve Gumley, and his counterpart at CDG, LTGEN David Hurley, emphasised how closely they were working together to improve Defence's capability development and acquisition processes.

But the CDG needs much more expertise in cost and schedule estimation and project management, believes Mortimer, as well as the project management skills necessary to deal with the inherent ambiguities at the early stages of major defence projects: “it is unrealistic to expect military personnel with limited training in project management to plan major acquisition projects,” he said flatly.

Defence has been a founder member of a new College of Complex Project Management, to which Dr Gumley attaches great importance. But the expression 'Complex Project Management' doesn't simply refer to the contractual and and engineering challenges of building and delivering a piece of defence equipment. It also embraces the uncertainties and ambiguities of the project's requirements definition stage: that's where the complexities lie. That is where the systems engineering approach must be applied by masters of complex project management - and that mastery must extend into the DMO also to ensure a continuum from conception to delivery, says Mortimer.

Mortimer recommends buying lots more defence equipment off the shelf; he argues a strong case, but as a separate post on this Blog points out, it is possible to reduce project cost and schedule risks while supporting an expanded role for Australia's defence industry: all it takes is the political will to make it happen, and a bit of enlightened self-interest by the ADF in supporting its domestic industry sustainment base.

White Paper - the industry policy challenge

With public submissions to Australia's new Defence White Paper due to close on 1 October, I couldn't resist making one myself. There's a copy on my Rumour Control web site, if you're interested - www.rumourcontrol.com.au - click on 'Hot Topics'

My submission makes what to me is a fairly obvious point: a technology-dependent defence force requires a technology-savvy defence industry to support it. But if the Australian Department of Defence doesn't help create a more supportive environment for local manufacturers it risks losing the non-manufacturing skills base required to sustain the Australian Defence Force (ADF).

The Mortimer Review -
http://www.defence.gov.au/publications/mortimerReview.pdf
recommends that the ADF make more use of Military Of The Shelf (MOTS) equipment. The reasons for this are understandable and well argued. But I would argue also that if the Defence Materiel Organisation (DMO) plans to spend $100 billion over the next decade on buying and sustaining equipment for the ADF, then as much of that money as possible should be spent in Australia.

This isn't to say we should try to make all of our own equipment, or that the Australian taxpayer should pay a premium to create and prop up low-value jobs in an uncompetitive defence industry: that way lies madness. But Australia can do more to help its defence manufacturing companies, especially its SMEs, win positions on merit in the global supply chains of the companies which supply the ADF. Defence and the DMO have recognised this and the Team Australia initiative has been fairly successful in programs such as the Joint Strike Fighter.

This is an implicit acknowledgement that the global defence market is not a level laying field: in fact it is deeply distorted and heavily manipulated and governments have an important role to play in ensuring that their defence companies enjoy a fair go. But first they need to acknowledge their self-interest in doing so, and then frame a policy that supports it.