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There's no I in team - The ever-improving relationship between Defence and Industry

bae systems australia

The key to a strong defence sector is an effective relationship between defence and industry, and this is something that is "constantly improving".

In the 2016 Defence White Paper, the government pointed out the importance of Australian industry in delivering those capabilities.

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The government's 10-year Defence budget plan that carries through to 2025-26 aims to grow from $32.4 billion in 2016-17 to $58.7 billion by 2025-26, an increase of nearly $30 billion.

Dr Marcus Hellyer, senior analyst focusing on Defence economics and military capability for the Australian Strategic Policy Institute (ASPI), said a big push from the government has helped Australian businesses seize these opportunities more effectively than previous times.

"The increase of defence funding means there is more money going to industry and more security for these businesses. Defence investing means the industry can also invest so there's a bigger pie for people to share, which is creating a better climate," Dr Hellyer said.

Dr Hellyer also noted that Minister for Defence Christopher Pyne has been a major influence in this area.

"Another key reason is Minister Pyne’s personal commitment to fostering Australian commitment to industry in the past few years. In conversations I’ve had with people in Defence and industry, I think there’s a general acknowledgement that his intervention has helped the overall culture, particularly for Australian business," he said.

Michael Halloran, managing director of Supacat, also complimented Minister Pyne's influence, saying that his company has been "encouraged" by the government's initiative in building relations between Ddefence and industry.

"Our relationship with Defence is broadly positive, and part of that has been helped along by Minister Pyne, as well as [Minister for Foreign Affairs Marise Payne]," Halloran said.

"Defence has reacted to those government initiatives and everything is heading in the right direction."

Part of the shift can also be credited to a shift in mindset from the top-levels in defence, which used to be what can be described as "purely transactional", according to Dr Hellyer.

"Defence has been taking a more programmatic approach to projects, which means picking a winner early on. Across Defence there is more of a willingness to take those risks, instead of a full competitive process because you know these companies have delivered in the past and you think they’ll deliver in the future," he said.

These thoughts were echoed by recently retired, Major General Gus McLachlan, Commander Forces Command, in his podcast interview with Defence Connect.   

"The work that was done through following first principles review and then the current government's focus on defence industry. Really clear direction that industry as a player in the process was the first important step, and I think, to be honest, for Army that was a new space," MAJGEN McLachlan said.

"We'd had capability development group who predominantly did that industry facing stuff, and we got on with the business of the back end developing that back part of the capability life cycle, training plans and so on."

Despite the shift in ideology for the most part, that is still an area that needs improving, according to Halloran.

"I think there’s a natural tendency for competition in my experience. Competition is the first bow in the quiver for KSG. There’s a bureaucratic element to that due to using taxpayer money," he said.

Halloran suggested that it could require a generational change for that ideology to be properly reflected, but said that once that happened, the relationship between Defence and industry would be "extremely powerful".

However, it's always easier said than done.

The taxpayer money aspect is something that is rightly scrutinised, and that means there will always be, at some level, a necessary competitive process. Justification for a project blowing its budget can't just be attributed to "using local business" when taxpayers are the ones funding the project.

Another challenge facing the improvement of these relationships is the protection of intellectual property between businesses, according to MAJGEN McLachlan.

"What that has resulted in, perhaps for Army more than the other services, is a disparate group of technologies that don't talk to each other. When I was a brigade commander in Darwin, my tank simulator couldn't talk to the lab simulator that was across the road, and it couldn't talk to the simulator that was down the road," MAJGEN McLachlan said.

"We need industry to work with us to keep that progression towards open architecture. Easier to say than do, of course. But around an agreed set of protocols and what I keep hearing is engineers are all over it, but lawyers are pistols at 20 metres."

Competitiveness among businesses is understandable, but something that undoubtedly slows down synergy between the marketplace.

Another area that could be improved, according to Dr Hellyer, is the involvement of SMEs with prime contractors.

"While there are many SME success stories, there’s also some unhappiness among SMEs that they’re at the mercy of the primes," he said.

This is because while projects come knocking often for primes, SMEs need to be part of a competitive process themselves to be able to become part of these programs.

Halloran said Supacat operates with loyalty in mind when making these decisions: "In my world, I’m much more interested in relationships, and I’m much more interested in using companies again if they’ve done a good job for me in the past."

Supacat's website reads: "Supacat has successfully delivered a number of major Defence projects by partnering with like-minded companies who have existing capability and a track record of performance on similar programs. Supacat is committed to partnering with Australian industry and is delivering development, production and support programs with our Australian partners under the Supacat Team Australia banner."

Relationships are constantly improving in between businesses too, shown by events like the Hunter class frigate and Global Access Program event in Adelaide.

The event brought in around 100 Australian businesses and 30 original equipment manufacturers that are partners on the Hunter Class program, and gave the opportunity to pitch business ideas to supplier representatives coming from around the globe.

"Industry engagement plays an essential role in Defence capability, which is why this two-day networking event is a fantastic opportunity for Australian businesses to engage with our global suppliers, who are already doing great things with us on the program," BAE Systems Australia Hunter Class frigate program managing director Nigel Stewart said.

"We are committed to working with our major suppliers and ensuring local businesses understand the opportunities available in the program, and we hope this event leads to new opportunities for Australian industry, both on Hunter and for future exports."

Additionally, Australian industry participation in the global F-35 Joint Strike Fighter program has resulted in nearly 50 companies being involved throughout the manufacturing process with many to continue their support as production and sustainment operations continue to ramp both at home and with allied partners around the world. 

Early commitment to the global co-operative F-35 program has secured Australia as a key strategic partner and enabled Australian industry access to global supply chains. 

This model of early, integrated engagement has already contributed significantly to Australia’s economy, with Australian industry having secured over $1.3 billion in production contracts to date through the global F-35 program, with additional work expected as the production rate ramps up over the next three years.

"Every F-35 rolling off the production line in Fort Worth has Australian components. Who makes these components? It is small and medium-sized companies that proudly contribute best-of-breed components, made in Australia," Lockheed Martin Australia chief executive Vince Di Pietro told Defence Connect.

It is clear that a robust relationship between defence and industry will require continued and frank engagement between industry and defence, particularly as major projects like the Hunter class frigates, F-35 Joint Strike Fighter and LAND 400 Phase 2 and Phase 3 continue to gather pace.

Such engagement presents an ideal opportunity for defence and industry to move away from the "transactional" approach of the past toward a more collaborative and beneficial model for, defence, industry and the Australian taxpayers, well into the future. 

There's no I in team - The ever-improving relationship between Defence and Industry
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