SYDNEY — Australia is launching a new independent acquisition system to better cope with increasingly complex weapons systems, one that will report directly to the defense minister and not pass through the secretary of the Defense Department.
“It is the biggest reform to the Defense Organization in 50 years,” Pat Conroy, the minister for defense industry, told reporters on Monday, “and it’s all about getting the equipment the brave men and women of the Australian Defense Force need into their hands sooner, while providing, as [Defense Minister] Richard [Marles] said, “better bang for buck for taxpayers.”
Conroy noted Australia’s military faces “a rise in complexity of projects: 15 years ago, 27 percent of defense projects were complex; that is now doubled to almost 60 percent of projects being complex.” On top of that, government audits and reviews have consistently noted for years that defense weapons programs are increasingly late and often over-budget.
The reform announced today creates the Defense Delivery Agency, which will report directly to the defense minister and the minister for defense industry. The new agency, which will absorb the Capability Acquisition and Sustainment Group, the Guided Weapons and Explosive Ordnance Enterprise (GWEO), and the Naval Shipbuilding and Sustainment Group, will be stood up on July 1 and led by a national armaments director. It will oversee roughly 40 percent of Australian defense spending, Marles said. The Australian defense budget is almost $60 billion a year, a figure set to rise to about $100 billion annually by 2034.
Marles and Conroy told reporters they don’t expect to cut any jobs when the new agency is created. Conroy said Labor had reduced the work of consultants while adding “500 highly skilled public servants.”
This is hardly the first call for acquisition reform in recent years. The main action in the last year has been to withhold large chunks of basic data for the country’s annual review of its major weapons programs, in a move government auditors say results in a “reduced level of transparency and accountability” to Parliament.
“Clearly, the reason this is happening is because the existing organizational structure is showing deficiencies in terms of delivering key defense projects on time and on budget,” Malcolm Davis of the Australian Strategic Policy Institute wrote in an email to Breaking Defense. “I think that given the on-going austerity drive in defense, in part to fund AUKUS and the General Purpose Frigates, the government is looking for both savings — by deferring and delaying or even cancelling projects — and now reorganization into a more coherent structure.
Continued Davis, “there are too many bureaucratic structures, with too many high level civilian and uniformed decision-makers that are contributing to a slow and inefficient capability development process. Defense is trying to do a lot, under limited funding without government willingness to increase that funding, so they will need to compensate by restructuring.”
However, without a funding boost, there is only so much that the new agency will be able to do, Davis warned.
“I think it’s impossible to know how long it will take for this new agency to actually see a turn-around in key projects,” Davis said. “Nor is there any real guidance as to how this new Agency will be different, beyond consolidating three separate organizations into one organization.”
The first test of the new approach may come next year, when the department will do its biennial National Defense Strategy and updates the Integrated Investment Plan, which guides weapons spending.
Davis raised questions about how and how well the three entities will integrate.
“It’s an odd fit between GWEO and ASA in particular, so I’m not sure how those areas are supposed to ‘integrate.’ Will CASG adopt a more responsive and rapid acquisition process as it’s ‘assimilated’ into the new DDA? Hard to say, as it is not just about reorganization, but also about the need for cultural change and challenging ossified practices and policies better suited for a different past era of defense acquisition,” he said. “I also can’t help but feel that we’re only seeing one side of the picture here, and that in addition to reorganization, the other shoe will drop with announcements about project cancellation, scaling back or deferral.”