COVID-19 and the unfolding geo-strategic competition has shed light on the vulnerability of global supply chains and, critically, the necessity for nations to have a local industrial capability – establishing and nurturing such a capacity over the long term is often contentious, however doing so needs not be a Machiavellian tale, explains AIDN chief executive Brent Clark.
Italy from 1450 through 1550 was a tumultuous time. The land comprised a series of independent city states that were often warring with each other, with the central papal authority and with external influences from France, Spain and Austria.
The princes of the city states were certainly living in (to use the PM's terminology from the 1 July Defence Strategic Update) a "challenging strategic environment", and weighty decisions over how to prepare their principality for conflict had to be made.
Foremost of these was how best to raise an army. Recruiting personnel, equipping them, training them was an expensive proposition. And the establishment of such an army was just the start, keeping the army available was a continuing drain of resources. Could this expense be justified if for most of the time the army was not actually being deployed?
And then there was the question of risk; would a home-grown army actually be effective?
These considerations led to an alternative approach becoming the norm; the use of mercenaries. This brought various advantages. Mercenaries offered a ready built ("off the shelf") system. All of the costs of raising and training an army were averted, as they were already battle-ready.
Mercenaries could be used for the shorter intervals of pressing need, and did not need to be engaged over a longer period. This was economically attractive.
An active market of mercenaries existed, so their supply was seemingly assured. Most of all, they had experience in war-fighting, experience that a home-grown army could not match.
From a rational assessment of cost, and an evaluation of the risk of campaign loss, the use of mercenary forces became the prevalent model.
The results were disastrous.
Ultimately, in the heat of battle, the agenda of a mercenary was not aligned with the agenda of the principality that hired them. If the battle turned, at the very moment that a prince really needed to rely on them, the mercenaries would melt away.
Prince Niccolò Machiavelli wrote: "I say, then, that the arms with which a Prince defends his state are either his own, or they are those of mercenaries or auxiliaries, or mixed troops. The mercenaries and auxiliaries are useless and dangerous."
What Machiavelli understood, but which the rational "value for money" assessment applied by the princes entirely missed, was the value of self-reliance.
Machiavelli's point has applicability well beyond the armed services themselves, and extends to questions of supply of equipment to our armed forces.
Which brings us to the current debate on military industrial supply.
Australia has a defence procurement model that has been designed for the more benign strategic environment that prevailed until recently. The underlying assumption has been that a market for supply will always be available, and that the rational choice is to select suppliers that are cheapest and have existing equipment that we can readily procure. This minimises the risk that acquisition projects will fail to deliver, or that costs will increase beyond planned.
The outcome is that Australia overwhelmingly imports the bulk of its military materiel.
Yet, in the more challenging strategic environment that Australia is now confronting, the question must be asked whether this procurement model remains fit for our purpose?
Clearly, Australia is not self-reliant for supply of the defence materiel the ADF uses. How much of a risk does this pose to Australia?
The view of AIDN is that the risk is substantial, and is being consistently underplayed by our procurement organisation.
Why? Consider what may occur should a serious theatre war arise against an adversary that is equipped with technologically advanced weaponry.
We will want our brave service people to not only have the best equipment possible on the day that such a conflict commenced, but continually thereafter and for the entire duration of the conflict.
That includes the resupply of consumables that are expended, and the rapid repair of equipment and assets to enable their return to the battlespace. Yet if much of our materiel is imported, would the ADF be reliant on repair facilities located offshore? This creates serious risks if sea lanes and air corridors are cut.
A more serious issue relates to addressing the accelerated obsolescence of military technology during armed conflict. Modern military systems are rooted in technology, yet unforeseen vulnerabilities of those technologies are rapidly exposed when fielded against an adversary that also has advanced technologies. Rapid evolution of technology is required so that the equipment in the ADF's hands stays a step ahead of the adversary's equipment. Yet if the ADF's technology systems are sourced from overseas, those updates will need to occur in foreign industry.
But will they be interested? Maybe their own forces will have their own pressing needs, and their engineers' attention will of course turn to meet the needs of their own forces first; "ADF, I know it is urgent, but you are in the queue, we are getting through our queue as quickly as possible".
Even if the foreign industrial resource is available to update the algorithms in our equipment quickly; how will we receive delivery? Use communications networks to "download" the patch? When confronting a technologically sophisticated adversary, such networks are vulnerable both to cyber and physical attack. Would we want to download an update to our sonar algorithms and risk having our adversary intercept that download and understand the updated design?
Reliance on foreign supply creates massive risks that the ADF will not be able to keep pace with the evolution of technology as the conflict progresses, and that our troops will be left vulnerable.
As with Machiavelli's assessment of the use of mercenaries over home-grown forces, the question of relying on foreign industrial supply over domestic supply boils down to a question of self-reliance.
Yes, there are costs associated with developing a home grown industry, and yes there are risks associated with asking Australian industry to develop certain technologies.
But what are the risks to the ADF by continuing a course of reliance on foreign industry?
Where and how does this factor enter into source supply evaluations routinely conducted by CASG?
Our world has changed. We are now in an era where the ADF may be called upon to engage an adversary significantly more capable than those it has confronted in recent times. Our procurement model must be changed to not only address the needs of our troops on day one of a future conflict, but on days two, three and throughout the full duration of conflict.
That means correctly accounting for the value to the ADF of an independent Australian military industry when assessing value for money of procurement decisions.
Brent Clark is the chief executive of the Australian Industry and Defence Network (AIDN).