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Wednesday, July 29, 2020 7:47 PM | Alanna Mahlakolisane (Administrator)

OPINION: Government can do better for Australian industries in naval acquisitions

By Brent Clark, CEO-AIDN -29/07/2020

As a result of the release of the 2020 Defence Strategic Update and the 2020 Force Structure Plan which together outline a new strategy for Defence and the capability investments to deliver it, the Prime Minister has announced a commitment to spend $270 billion over the next 10 years on additional defence capabilities including $75 billion investment over the next decade for the Royal Australian Navy, building on the government’s 2017 Naval Shipbuilding Plan.

In this context, the Defence Industry Minister was quoted as saying, in part, “We’re talking about a generation of Australian jobs, and a substantial level of Australian industry involvement in these major acquisitions”. What has not been addressed in the Minister’s statement is any reference to the manner in which Australian industry involvement will be optimised as a fundamental and integrated part of a capability life cycle approach to both the acquisition and sustainment of naval capability over generations.

It has been reported that to support a larger and expanded fleet, up to $12 billion will be invested in developing the infrastructure necessary to support the capabilities of our naval fleet during construction, operation and sustainment, noting that the future of maritime sustainment in Australia is set to change with Navy’s Plan Galileo laying the foundations for an integrated and consistent approach to maritime sustainment by leveraging opportunities created under the government’s Naval Shipbuilding Plan.

Successive governments have, over time, undervalued the importance of optimising Australian industry involvement including the sustainment of naval assets. Aiming at achieving a substantial level of Australian industry involvement without the government mandating and contracting minimum levels on both acquisition and sustainment elements on a project by project basis does not do justice to Australian industry.

Taking a life cycle approach to the acquisition and sustainment of a naval project has to commence at the concept stage rather than the emphasis initially being on the acquisition of the capability – early consideration of sustainment of the asset can have a profound impact upon the quality, size and effectiveness of the industry program.

A strong government commitment to the early and integrated engagement of Australian industry, with emphasis on the significant role of SMEs in the ongoing sustainment activities, as part of the development of a project capability life cycle will achieve optimised levels of Australian industry involvement during the sustainment over extended periods.

The government has recently committed to placing significant additional emphasis and funding on enhancing Australia’s trade/technical and technological skills base. Earlier engagement by government with Australian industry will provide the incentive to industry to invest in their skills base and capability in order to optimise their participation in the sustainment of naval assets into the future.

Australian industry has demonstrated in the past that it is capable of cost effectively committing to and optimising its involvement in the sustainment of naval assets (e.g. Collins Class Submarines, ANZAC frigates and mine-hunters to name a few).

The government needs to do much better than to seek non-binding undertakings from overseas primes to maximise Australian industry involvement during the acquisition phase of naval assets.

The government needs to provide the incentive and appropriate guidelines to its procurement agency, CASG, and to Australian industry, for its binding and optimised involvement and sustainment outcomes.

Editor’s Note: Brent Clark is the chief executive officer of the Australian Industry & Defence Network. He served as a submariner and officer in the Royal Australian Navy before joining AIDN and has held a number of senior corporate positions, including with Thales; Saab; and Naval Group. Opinions expressed in the essay are his.

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