Future-Proofing Australia’s Defence Procurement Cycle

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Last year, Australia’s Chief Scientist, Professor Alan Finkel, warned that emerging technologies are “poised to disrupt almost every fabric of Australian society”. Since then, Professor Finkel’s analysis has been magnified by the effects of COVID-19, albeit by a different disruptive mechanism.

There are few more vital components among Australia’s societal fabric than national defence. And within Defence, the procurement cycle is one of its key components. Militaries that don’t have equipment or guaranteed supply lines are likely to fail when we need them most.

Curiously, the COVID-19 pandemic has obliquely (and belatedly) compelled Australia’s government to acknowledge this operational imperative by taking measures to strengthen our fuel security. While welcome, that initiative highlights the shortcomings of almost every other component of our defence procurement cycle.

Typically, procurement cycles have been based on 20+ year capability life cycles. One example is the Collins-class submarine replacement, which is designed to finish around 2050. With the current rate of change, it’s difficult to predict what may be needed or available in the next five years, let alone the next 25 years. This has led to some understandable public debate on the topic.

Fundamentally, the challenge is about achieving a balance between rapid acquisition and the time frame needed for development and certification of increasingly complex systems. Maintaining procurement cycles at the pace necessary to be responsive to rapid change may require a new approach.

A new approach will need calculated risk-taking in investment and innovation to ensure the best capabilities are being provided in a timely and adaptive manner. This will call for basing procurement requirements on technology available now with planned upgrades and scope to incorporate new technologies as they mature into an evolving design.

An evolutionary approach enables access to leading-edge capabilities available today while also maintaining an understanding of still developing technologies that may mature in the future through investment in research and development (R&D). This is comparable to the spiral development methodology used in IT. Colonel Glenn Henke identified a similar process to introducing and sustaining new capabilities in his article ‘Avoiding Army Modernisation Pitfalls’.

The P-51 fighter from World War II is an example of the evolutionary approach needed for the future. This aircraft went from proposal in 1940 to combat operations in 1942. This is a development and procurement cycle of only two years. One year later, the P-51 had evolved into its most successful iteration, the Merlin-powered P-51D.

The Big Five: UH-60 Blackhawk, M1 Abrams, M2 Bradley, Patriot air defence system, and AH-64 Apache, offer modern examples of an evolutionary approach. Such feats would be unlikely today, whether at war or at peace, due to complexity, risk, and scale of modern platform procurements. This does not need to, nor should it, be the case going forward.

In a period defined by numerous and constant ‘bite-sized’ changes leading to tipping points, the scope for long-term, single purchase procurement projects is rapidly diminishing. It suggests moving from including ambitious requirements as part of the minimum viable product towards introducing those same ambitious requirements over time through an evolutionary process of the product as the relevant technologies mature.

‘Project Greyfin’ appears to be a good example of this new approach, utilising a mix of buying what’s available now and investing in new technologies as part of a cycle of rolling investment. In an article by Michael Shoebridge, ‘Greyfin’ needs to be a pathfinder for “Australia’s national security community in another way—establishing how procurement principles and practice can change to shift the risk approach from one concentrated on reducing project risks to one that’s more focused on limiting capability risks by embracing more rapid technological change.” However, it will be crucial to balance upgrading and evolving current capabilities with the drive for new capabilities as the world changes.

The drive for new capabilities should avoid replacing capabilities like-for-like without deciding on the future value of that specific capability. This means fitting procurements to future direction and changes in war without over-emphasising or under-emphasising the role of historical capabilities. This utilises a futures-based approach to forecast capability requirements and force designs in both the near and long-term. While this may not supply the perfect answer, an increased effort in this area may help to highlight trends that can help us invest more intelligently.

To help sustain this new procurement model, it will be essential to avoid the sunk cost fallacy. This means ignoring prior costs when making decisions today about capabilities tomorrow. As highlighted by Andrew Davies, “the only thing that matters for investment decisions are future costs and benefits.”

Experimentation will be a vital part to having a successful evolutionary design. To achieve effective experimentation, a modernised version of the US Navy’s ‘Fleet Problems’ wargame series could be used. These annual (and joint) exercises would allow for testing assumptions about capabilities and generating new practices and theories around those capabilities and their employment. This was exactly what the original ‘Fleet Problems’ enabled the US Navy to do, leading to the development of techniques crucial to success in the Pacific War.

To maximise the benefit of experimentation, the technologies should be included as early as possible, the idea being to fail (and fix) early. Experimentation, both practical and theoretical, is critical to developing important conclusions for how to utilise new technologies in real-world conflicts.

Initiatives such as the Defence Entrepreneurs Forum (DEF) offer an excellent way to support evolutionary cycles and experimentation within Defence. However, it isn’t enough to run an annual, shark-tank-style event to promote adaptive procurement and experimentation. These need to be incorporated into the foundations of organisations. For example, the winner of DEFAus in 2019 was a proposal to place the standard supply system in competition with 3D printing when it comes to supplying non-critical parts for a year. An excellent idea, this is something that could have already been under exploration as part of future-facing procurement efforts.

Even with futures-based procurement and spiral development, bottom-up innovation will be essential to finding and implementing the best ideas to be ready for future wars. By allocating unit R&D funds and by introducing an overarching joint office to monitor and integrate the results into larger R&D or procurement projects- as well as connecting similar or related unit R&D projects- this could be an effective way to experiment with existing and developing technologies as part of evolutionary procurement cycles.

Evolutionary procurement cycles will supply the iterative adaptation to harness today’s leading-edge capabilities, invest in tomorrow’s, and challenge assumptions through experimentation. Without this, it will be near impossible to keep any kind of capability edge over our near-peer adversaries. Maintaining technological currency will become more challenging in an increasingly uncertain and rapidly changing environment. The trick to success here will be to develop processes that thrive in uncertainty and are adaptable to change. This is what our future procurement cycles need to be: adaptive, exploratory, and iterative.

About the Author: Chris Wooding is a Trainee Officer in the Australian Army studying at the Australian Defence Force Academy. You can continue the discussion with him on Twitter @cr_wood1.