Australia's Failing Defence Structure and
Management Methodology
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The
unnecessary premature retirement of the F-111 fleet and consequentially
unnecessary procurement of combat-ineffective F/A-18F aircraft is an
excellent case study
of dysfunction across the Defence portfolio management system (Image ©
2011
Carlo
Kopp).
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Executive Summary
There have been many inquiries into the Department of Defence, the
Services and the Defence Materiel Organisation (DMO), over the past two
decades and more - none of which has resulted in any significant
improvement. Most, if not all, have merely called for more inquiries
and reviews, added more administrative process, increased the number
and level of executive oversight bodies, and facilitated further
civilian intrusion into matters critical to military efficiency and
effectiveness. No root and branch functional review has ever been
permitted.
The civilian management model that has evolved within the Defence
bureaucracy has now become more of a Service Industry one, structured
along common user lines, and reliant upon widespread outsourcing - a
solution that has failed in Australia as well as in the US and UK,
nations used as benchmarks by Defence and the DMO.
Furthermore, the DMO, which also functions within this overarching
model, has departed from accepted project and technology management
systems and adopted a contract-centric, process-driven, 'business'
model administered by generalists, and often legal professionals, which
has resulted in the
organisation making the same costly mistakes in capability acquisition
project after project. The deficiencies seen in the DMO's ability to
provide critical through life support of weapon systems, where the bulk
of Defence funds is spent, may also be traced to the same factors.
The management models that have evolved within Defence, the Services
and the DMO are wholly inappropriate for the functions they perform,
and represent the root cause behind the major problems being seen
increasingly in all three areas.
Under these models, accountability and objective measures of
performance are largely avoided in Defence and the DMO, while the
Service Chiefs, who carry primary responsibility for the force
capabilities required by Government, are made unable to exercise their
accountability.
Until these models are redesigned and rationalised to align authority
and resources with accountability, structural and performance
weaknesses and failures will continue and increase.
While this situation is able to be reversed, a pre-condition must be an
open and honest acceptance of the fact that the fundamental models used
in the management and governance of Defence, DMO and the Services do
not work and
can not be made to work.
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Index
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Introduction
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Over the past decade or more, there has been an
increasing flow of Press reports of major Defence acquisition and
sustainment problems
and failures that have affected all three Services as well as
Australia's national security.
In March of 2003, the Foreign Affairs, Defence and Trade Reference
Committee noted that there was relatively poor visibility on the
progress of Defence major projects as far as Parliament and the
Australian public were concerned, and as a result it called for the
Attorney - General to produce an annual report on the progress of
major Defence projects.
The Defence Materiel Organisation (DMO) has now raised three Major
Project Reports (MPRs). However, detailed analysis of these reports
indicates that nothing of substance has been achieved that will
improve Defence/DMO major projects transparency and public
accountability, or project management performance.
Both Defence and the DMO are locked into a process - driven,
contract - centric, 'business' approach to acquisition and
sustainment that, under contract and 'generalist' managers, has not
been successful. Serious project problems and failures have
continued to arise within the two organisations.
The root cause for this situation may be traced to the abandonment,
over the period 1998 to 2001, of the successful project and
engineering based management systems, skills and competencies that
had been built up within the three Service Departments over decades
of experience, coupled with the introduction of 'commercial'
approaches controlled by generalist managers and often legal
professionals. At the same time,
Project Management Boards were replaced by Project Governance Boards
- bodies that also lacked critical project and engineering skills and
competencies - resulting in internal governance systems that have
not only proven to be ineffective, but are compounding problems and
failures.
Similar problems have been encountered increasingly in the higher
management of Australia's Military Services following the structural
changes introduced by Sir Arthur Tange during the early 1970s. Under
these changes, and those imposed later under the DRP and CSP, the
Military have come increasingly under civilian (principally Public
Service) control rather than civil (Parliamentary) control, blurring
the historical, constitutional boundary that existed between Military
and civil (Parliamentary) roles and responsibilities.
The impacts of these changes on the management of Defence, the DMO
and the Services have been corrosive and are increasingly being shown
to be quite unsuited to the management of Australia's military during
both peace and hostilities.
In identifying why and how the fundamental management models that
have evolved both within Defence, DMO and the Services have failed, and
will
continue to fail, this paper will:
Firstly, analyse the causal factors that the
Minister maintains led
to the decayed state of Australia's Naval capabilities as a good,
topical example, while noting that these factors are also common to
RAAF and Army.
Secondly, analyse, from the top down, how the management
methodologies that have evolved within Defence and the DMO have led
to the problems and failures being seen in the management of the
Military and the acquisition and sustainment of Australia's military
capabilities, and hence Australia's national security.
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A Case
Study - The Decay of Australia's Naval
Capabilities
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When the RAN had to advise that none of its
three supply ships could
be made available to assist with the clean-up following Queensland's
Cyclone Yasi in February of this year, the Minister for Defence
immediately and publicly accused Navy of not keeping the fleet
seaworthy and available for action, and of needing to change its
culture.
The following analysis of what really happened will show that
accountability for the unseaworthy state of the supply fleet did not
lie with Navy, and that the Minister was simply shifting the blame -
a tactic common in Defence when faced with embarrassment.
From
'The Australian', 16th
February 2011:
"Smith
slams Navy over seaworthiness issues".
"Mr
Smith said a report by defence chief Angus Houston and department
Secretary Ian Watt into reasons for the maintenance failure made grim
reading. Their advice which I am releasing today, was a frank
appraisal which identifies systemic and cultural problems in the
maintenance of our ship fleet for a decade or more. It outlines the
side-effects of a 'can-do and make-do' culture and a lack of
sufficient adherence to verification, certification and assurance
processes". In short, the Minister felt that the Navy had
"effectively failed to keep the fleet seaworthy and ready for
action."
Some newspapers, without further thought, even called for the head
of the Chief of Navy.
It
is important to note here that the "frank
appraisal"
provided to the Minister by the CDF and Secretary (the Diarchy) found
Navy responsible for the failure to keep the fleet seaworthy and
ready for action, and that this finding was accepted by the Minister,
seemingly without question. There was no suggestion that the
Department or the DMO were in any way accountable, and only a
carefully tailored mention was made of the findings of the November
2009 Strategic Review of Naval Engineering, conducted by Chief of
Navy, who seemed to be focussed more upon identifying the root cause
than attributing blame.
'The
Weekend Australian',
19-20 February 2011 went on to report on the Navy's engineering
review, which was 'leaked' to The
Australian,
highlighting:
- A critical shortage of engineers.
- 'Cancerous' morale problems, including a negative
attitude.
- A massive shortfall in Navy numbers.
- A broken management system.
- A poor state of engineering policy.
- Two decades of multiple 'reforms' and efficiency and
cost-savings initiatives that have diluted and fragmented Navy
engineering resources.
Most importantly, the Navy review emphasised that:
"Navy
is fundamentally a technological Service. Its war-fighting ability
is critically dependent upon the engineering design of its platforms
and systems, and the state of serviceability in which they are
maintained."
One reporter, quite correctly, described Navy as being
"technologically bankrupt".
HMAS Manoora (LPA-52) in 2006 (US
DoD).
As with so many Defence media releases, the Diarchy's assessment of
the causal factors behind the Landing Platform Amphibious (LPA)
debacle (1) would seem to have two major objectives:
- To redefine and so limit the circumstances surrounding
Navy's problems with the LPA Fleet, so as to
- focus accountability on Navy, and away from the Department
and the DMO.
This conclusion is supported by the analysis of the Diarchy's
statement of the 'causal factors' that follows:
| Para Ref |
Causal Factor Seen
by the Diarchy (1) |
Primary Accountability |
| 2 |
-
No logistics support
provided when vessel purchased.
- Inadequate or no configuration baseline or maintenance requirements
established when vessel purchased.
- Vessels in poor state when purchased.
- Inadequate time to enable required engineering and maintenance to be
undertaken due to operational demands. |
DMO
DMO
DMO
- DMO responsible for deeper maintenance support.
- Defence responsible for over tasking the Fleet. |
| 3 |
*Downsizing of uniformed personnel resulted in excessive outsourcing of
deeper maintenance, leading to the loss of knowledge based skills and
competencies within Navy and greater outsourcing cost. |
-
DMO
responsible
for
deeper maintenance support.
- Defence policies directly responsible for downsizing
and
de-skilling
Navy
and disbanding Naval Technical Services.
*(In fact, the reverse was the case. It was Defence's policy to
outsource deeper level maintenance that resulted directly in the
downsizing and de-skilling of the Services - and resulted in the higher
maintenance costs involved) |
4.
5. |
Seaworthiness
Board
(See separate comments on this aspect) |
Defence
Neither Defence nor DMO understand the nexus between Service-unique
engineering and maintenance management and Airworthiness, Seaworthiness
and Battleworthiness standards. |
| 6 |
-
Situation due to
systemic and cultural problems.
- A 'can do' and 'make do' culture.
- A lack of conformance to assurance processes.
-A lack of proper LPA priority.
-Insufficient resources to "address shortcomings". |
Defence
(See also 7 below.)
All of these 'symptoms' have resulted inevitably and directly from
Defence policies. In particular, the Sanderson Report of (1989) laid
the groundwork for the destruction of the Services' engineering and
maintenance management skills and competencies.
Australia is not alone in these symptoms.
(See Note 1) |
| 7 |
The
2009
Strategic Review
of Navy Engineering "highlighted a number of organisational
shortcomings and recommended reform of the Naval Engineering Sector".
|
Defence
This section carefully ignores the critical findings arising from the
Navy Review. The problems identified by Navy go far beyond "a number
of organisational shortcomings". They extend over every aspect of
Navy Technical Services (Engineering and Maintenance) management, where
the problems were imposed and hammered home by conscious Defence
policies.
The central problems that have resulted in the LPA debacle relate to:
- The change in Navy Office role from a functional orientation to a
'business unit' one.
- The disbandment of the Chief of Naval Technical Services, his
management organisation, his functions and his policies, systems and
procedures.
- The downsizing and de-skilling of Navy engineering and the
miss-employment of engineers.
- The imposition of a civilian culture to replace Navy's traditional
military culture. |
| 8 |
Lack
of
competence in the
DMO System Program Office (SPO) leading to its loss of certification,
its recertification, and subsequent loss of certification again by the
Naval Technical Regulating Authority.
"Action is now underway to rebuild business processes
and review organisational structures". |
Defence
and
DMO
This problem has arisen as a result of inadequate technical
organisation, management, expertise and effort.
The solution sought by
Defence through "business processes" indicates that the core problem and its
solution are not understood. |
| 9 |
Constant
change
in Defence
masked the situation with the LPA Class
"The recent Seaworthiness Board provided a focus on the situation
that was not previously evident through the complex Naval operating and
regulatory systems".
|
Defence
and
DMO
This statement is false and designed to deflect blame.
The situation evolved in full view of the CDF and the Secretary,
Department of Defence (the Diarchy), and the DMO, for a decade. That it
was left 'unidentified' and unmanaged over that time is an indictment
of Diarchy, Defence and DMO management. |
| 10 |
-
The LPA story was
protracted, not always a happy one, with seeds sown long ago.
- Appeal to the Sea King disaster for emphasis. 'Navy has learnt
from that accident, and understands the enormous challenge of cultural
reform'.
- Defence has a number of initiatives underway to remediate current
shortcomings. |
Defence
and
DMO
This blatantly 'spun' section may be summarised as follows:
'Navy is responsible
for the LPA disaster. Navy is capable of learning, but needs to change
its culture. Defence will fix current shortcomings (presumably through
business processes).'
In fact:
- Navy was not primarily responsible.
- It is in part a cultural problem (but not in the way seen by the
Diarchy or Defence) - it is primarily a hard function, organisation and
technology management problem.
- Defence has proven incapable of even comprehending the problem and
has demonstrated little willingness to identify problems, let alone fix
them.
- The problems seen with the LPA fleet have and will continue to spread
to infect other Navy capabilities, and erode Australia's security
markedly.
Nobody learnt from the Sea King disaster.
(See Note 2)
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Note
1: The
symptoms identified by the LPA Fleet debacle, and their widespread
impacts upon Australia's security, mirror those that led to the loss
of RAF Nimrod MR2 Aircraft XV230 and its 14 crew members in
Afghanistan in 2006. This accident was investigated in great detail
by Charles Haddon-Cave QC (2) His report was appropriately
sub-titled "A Failure of Leadership, Culture
and Priorities."
The causes he found behind the accident included:
- A 'can do' attitude.
- A torrent of changes and organisational turmoil.
- The imposition of 'business' principles.
- Cuts in resources and manpower - deskilling.
- The dangers of outsourcing to contractors.
- The dilution of risk management practices/processes.
- The abolition of the 'Chief Engineer RAF'.
- The dilution of Air Technical Support Services.
- The dilution of aircraft engineering skills.
The Haddon-Cave Review is a fine example of an inquiry that strives
openly and in detail to get to the facts and identify the
accountabilities, rather than simply avoiding or containing the
fallout to protect the guilty and avoid accountability, as is
characteristic of Australia's Defence Department inquiries. Rather
than being ignored, it should be held up as a model for all future
inquiries.
Note
2: There
is a direct link between the root cause behind the LPA Fleet debacle
and the Sea King disaster that needs to be recognised. The lengthy
and very expensive Board of Inquiry Report into the Sea King accident
that occurred on 2nd April 2005 was submitted to the Fleet Commander
on 18th December 2006, some 21 months after the accident. The Media
Release that followed announced, somewhat proudly, that:
- The Board considered 44 Terms of Reference.
- Took evidence from over 160 witnesses.
- Reviewed 560 exhibits.
- Conducted hearings over 111 days.
- Produced about 10,000 pages of transcript.
- Made 759 findings.
- Made 256 recommendations (to be implemented by 27
Implementing Authorities).
The
Media Release went on to assure all that "By
improving aviation safety, Navy and Defence demonstrate that it has
learnt from this tragedy."
Finally, the Chief of Defence assured all that every recommendation
would be implemented in full, so all would be well in the future.
The Report was subjected to lengthy and costly
legal review, but
there was no technical review - the findings were just accepted
without question. Most importantly, nobody questioned the
effectiveness of a Naval Airworthiness Organisation that required 27
different agencies to act upon 256 recommendations to correct a
single maintenance error.
In the end, Navy accepted full responsibility for the tragedy. No
breath of accountability was allowed to reach the Department of
Defence, the Diarchy, the Minister or government. The Sea King
disaster was not primarily Navy's fault - its root cause was the
disbandment of Navy's Technical Services Branch, followed by the
downsizing and de-skilling of Navy's Technical personnel - precisely
the same circumstances that caused the LPA debacle.
In the end, also, all that was achieved by the Sea King Inquiry was the
application of 256 very expensive band aids to a Navy management
system that is not organised, manned or skilled to discharge its
responsibilities for the airworthiness of its aircraft, or the
seaworthiness of its vessels.
The history leading up to the Sea King disaster, an analysis of the
Sea King Board of Inquiry findings, and identification of the root
cause for that accident are contained at Reference (3).
The Navy's
Seaworthiness Board
The formation of a Naval Seaworthiness Board has been heralded as a
great advance in ensuring Navy's seaworthiness standards are
established and maintained, but this will not be achieved because
Navy, since the disbandment of its Technical Services Branch, is no
longer a technological Service able to ensure that high seaworthiness
(or airworthiness) standards are in place and functioning at all
times and places. In short, there is nothing of substance for the
Board to audit.
A similar misconception arose during the Sea King Inquiry (3), when
the Director General Technical Airworthiness - ADF (DGTA-ADF) was
called upon to provide Navy with such services as engineering and
maintenance advice to Navy Units, become involved with the amendment
of technical publications, conduct maintenance performance audits,
become involved in maintenance management and also with training and
maintenance regulations - all of which are technical services
management functions that must reside within the operating Service
(in this case, Navy). This
situation arose from the Inquiry's incorrect assumption, or
interpretation, of the proper and limited nature and scope of the
responsibilities of DGTA-ADF. He can not and must not be saddled with
tasks of the type recommended. To do so would place him in a
position of gross conflict of interest, as well as charge him with
responsibility for managing Navy functions over which he has,
rightly, absolutely no authority. DGTA-ADF is a regulatory body and
is thus responsible for the regulation (audit) of ADF Technical
Airworthiness. He is part of a management feed-back loop that
ensures that aircraft operating Units can demonstrate that they have
in place the policies, systems and procedures, as well as the skills
and competencies base, that are required to maintain airworthiness
standards.
That is,
the operating Service has to have the organisation, policies, systems
and procedures, as well as the skills and competencies base, to
ensure that airworthiness standards are maintained within its units
at all times - DGTA-ADF can only check that this is the case.
The Navy's
Seaworthiness Board will thus not be effective in assuring
seaworthiness standards are established and maintained when there is
no Naval Technical Services organisation that ensures that its
operating and support units possess the necessary numbers, skills and
competencies, and function within an organisation that establishes
the policies, systems and procedures designed to ensure that
seaworthiness standards are established and maintained at all times,
in all places, and under all circumstances.
On The
Critical Role of Management Control Loops
Of the four
primary sub-functions of sound management, the Control function is
the most important. The first three - Planning, Organising, and
Directing are functions that are focussed upon ensuring that the
objectives of the organisation are stated clearly and planned
soundly, are managed in response to changes in circumstances, that
all functions are well defined and resourced, and that all functions
are directed effectively and efficiently in line with the
organisation's plan. The Control function is a feed-back loop that
checks continually that what is happening in the functional areas is
in accordance with the organisation's plans and objectives. This is
achieved mainly through routine reports and returns from functional
areas. In this way, task status and problems are reported, and
assistance provided, before problems impact the organisation
adversely. In addition, visits by specialist staff are made to
ensure that conditions are as represented, to provide on-the-spot
assistance, arrange external assistance as necessary, and discuss any
planned changes in organisational objectives. The key objective of
the control loop is to maintain visibility and control and so avoid
expensive 'surprises'.
It is quite
clear from Navy's LPA Fleet debacle that neither Defence nor the
DMO's management (or rather bureaucratic administrative) systems
contain any Control Loop - otherwise the debacle that was allowed to
develop for over a decade would have been identified and redressed
promptly.
The problem
with Control Loops, as seen by Defence and the DMO, seems to be that
they pin point functional accountability - which they do, but their
primary function is a positive one - to keep the organisation headed
in the right direction, gain awareness of problems before they become
serious, provide help as necessary, and so correct problems promptly.
A reliable
litmus test for the soundness of an organisation is the extent to
which it relies upon external consultants and reviews to tell it what
its ills are and how they might be cured. Such a need immediately
identifies an organisation with an inadequate or missing management
feed-back loop, often accompanied by one or more instances of poor
planning, an inappropriate organisation, a lack of management
direction, and/or the intrusion and impact of bureaucratic/political
imperatives. A soundly-managed, manned and skilled organisation will
know when, where, and what remedies are required, and be able to
implement them before symptoms become problems. Defence has failed
this simple litmus test consistently since the Tange reorganisation
of 1972.
The Scope
of the Navy's Capability Problem
While the
LPA debacle is serious, Navy's operational capabilities have also
been badly degraded by the failure of Defence and the DMO to keep the
Collins Class Submarine Fleet operational. Two failed DMO major
projects come together to make this fleet largely useless - again, a
situation that has been allowed to develop over many years:
- SEA 1439 Phase 4A - Collins Replacement Combat System. This
project is now 6 years late and will not provide the capability
required (DMO MPR 2009-10).
- SEA 1439 Phase 3 - Collins Class Reliability and
Sustainability. This project resembles the LPA debacle in many ways.
Completion dates for the 24 planned capabilities covered by this
project, under current estimates, ranges from 16 to 102 months late. It
also calls into question the effectiveness of DMO's Through Life
Support Agreement (DMO MPR 2009-10).
Other major
Navy projects facing problems include:
- SEA 1390 - FFG Update - the operational capability for
which is currently delayed by more than 5 years.
- SEA 1448, Phases 2A and 2B - ANZAC Anti-Missile Defence -
currently over 4 years late.
- JP 2070 - Problems with the provision of the Lightweight
Torpedo, and impending problems with the supply of the Heavyweight
Torpedo.
- SEA 4000 Phase 3 - Air Warfare Destroyer Build
To these
might be added continuing problems with the Armadales' outstanding
rectifications. These vessels were criticised soundly by their crews
from the time of their introduction into service, while senior Navy
officers, supporting the Defence/DMO line, insisted that they were
safe to operate. Such actions serve only to break down the chain of
morale and trust within Navy.
In short,
Defence and the DMO have been able to keep Navy tied up in port to an
extent not achieved by any enemy force.
The
Question of Accountability
The
question of accountability within Defence has been raised many times
over the past decade or more in various reviews, including those
conducted by Mortimer, Pappas, McKinsey, and Proust, but never in any
fundamental way. The approach taken has been to look at
accountability from within the constraints of the current
organisational and functional structures and the authorities embedded
by the Tange, DRP and CSP changes imposed by Defence, under
government authority (4 and 5).
No
fundamental study has ever been made of the proper allocation of
accountability, and resources between the Services and the Defence
bureaucracy where major problems have arisen and been left to fester,
some for over three decades. Similarly, no study has been made into
whether any cost, schedule or capability improvements have been made
as a result of the Tange/DRP/CSP changes.
There are
important differences between the way accountability is embedded
within Service organisations and within civilian bureaucracies such
as Defence and the DMO. These differences and the fault lines that
have resulted are analysed in detail at (4 and 5).
Very
briefly, Military organisations, to be effective, depend upon a set
of characteristics that are unique to them - firstly, a military
ethos, grounded in ethics, that stresses the trust and loyalty that
must exist between peers and their subordinates, and the mutual
respect that must exist between peers. Discipline and tradition then
provide the environment within which newcomers can not only develop
their trust, but also gain the respect of the organisation that they
seek. Secondly, Military organisations depend upon short and direct
lines of command and control (communication and management), sharply
defined functions with clear accountabilities, real measures of
performance, and sound management of the resources needed to achieve
functions. Management feed back loops are ever present to monitor
and correct status and performance, and to ensure unity of direction.
In the absence of such structures, battles and lives will be lost.
In
describing what civilians will bring to his department, one Defence
Secretary explained: "Civilians are generally more readily
able to tolerate, and even be comfortable with, unclear lines of
command, divided authority, and open ended guidance or ambiguous
instructions." (5) In
reality, the civilian bureaucracy is concerned primarily with
exercising and expanding its authority (normally through financial
control), by means of administrative process, clouding functions and
accountability with the inevitable side-effect that no hint of blame
for failures is allowed to penetrate the organisation.
The
fundamental conflict between these two approaches to management, and
the inevitable consequences that will arise when civilian
administrative processes are allowed to penetrate the Military, were
of great concern to Sun Tzu, who warned rulers (5): "By
attempting to govern his army in the same way as he administers a
kingdom, being ignorant of the conditions which obtain in an army. This
causes restlessness in the soldiers' minds."
- the very thing that is happening today.
Sun Tzu
also emphasised the need for a fighting capability grounded in strict
discipline, operating within an organisation arranged such that
strict functions fall to all involved, including all supporting
specialists. Channels of communication must also function so that
all parts act as a whole to face ever-changing challenges. Today,
such military imperatives are simply ignored.
Historically, and for good reason, accountability for military
capabilities and their management rested wholly with the Service
Chiefs who reported directly to their ministers. Under this system,
the Air Force Service Chief, for example, was accountable for
managing his Service so that he was capable of:
- Maintaining his Force at a high state of readiness.
(Availability)
- Ensuring his Force can be launched quickly in response to a
wide range of tasks. (Preparedness)
- Ensuring that his Force, once launched, can be sustained.
(Sustainability)
- Providing a high degree of choice in the application of his
Force in time, space and role. (Flexibility)
That the
Chief of Air Force was able to discharge his responsibilities was due
to his having command and control of his force, as well as control of
the resources required to sustain and develop it.
Today, the
Service Chiefs no longer manage their Services, they merely
administer them to meet bureaucratic imperatives (objectives and
priorities) dictated by Defence. The Chiefs do not have command and
control of their Services, are not organised to manage their
Services, and do not have the resources needed to discharge their
accountabilities.
The Service
Chiefs cannot thus be held accountable for the responsibilities that
they have been given.
The
Minister and the Diarchy
Today, the
head of the Defence Force is the Minister. Nothing seems to be done
until the Minister senses public criticism. He may then visit
Afghanistan (with the CDF) to determine what, if any, further support
Army needs, or take up Navy's "failure to manage the LPA
Fleet". His excuse for not identifying and fixing the
Navy's problem well before it became public was the usual "I
was not advised", while the CDF could only muster "I
was not told".
That Navy's
LPA capabilities were allowed to waste away for over a decade without
the two key players involved, the Secretary (accountable for
supporting Navy and oversight of the DMO) and the CDF (accountable
for monitoring ADF capability) is inexcusable and points to the
ineffectiveness of the Diarchy in other than shielding the Department
from criticism. The push by the Diarchy for greater 'strategic
control' requires very suspicious attention, as the primary
objective will more likely be aimed at extending bureaucratic control
rather than improving the management of the military and its
capabilities, and in turn Australia's security.
The Clash
of Cultures
The
Charters of the Service Chiefs, which now read more like public
service job statements, are remarkable documents. Several sections
stand out:
- "You are accountable to us (the Diarchy) for your
performance .....Your priorities will be reviewed and set annually by
us, in the form of an Organisational Performance Agreement (OPA). We
will measure your performance and provide feedback against these
priorities."
- "You are to command the (Service) Force ....Deliver
force capability for the defence of Australia and its interests,
including the delivery of (Service ) capability , enhancing the Force's
reputation and positioning the Force for the future."
The first
point places the Service Chiefs directly under Defence bureaucratic
control and so wholly responsive to bureaucratic imperatives. Military
imperatives are simply overridden. The second gives the
Service Chiefs an accountability that, as discussed above, they are
unable to discharge.
The Charter
goes on to list an odd mix of functional responsibilities and
concludes with a number of guidelines - altogether a very
non-military document. A very important directive, however, relates
to the Chief's responsibility for "Developing leadership and
behaviours that advance and embed the Results Through People
Leadership Philosophy." It is
here that we find a direct conflict between the cultures and
accountabilities that are critical to military organisations and
those that have evolved within public service bureaucracies.
One
of the factors that caused the Navy's LPA debacle was identified by
the Diarchy as "systemic and cultural problems." However, one of Defence's major
objectives over the past two or more decades has been the replacement
of Australia's traditional military culture by a liberal, civilian
culture. This move parallels similar changes in other government
departments, changes introduced to inject a bureaucratic culture
within the organisations that they administer, one with which they
will feel comfortable, and one that can be used to impose their
policies and processes more readily than having to interface directly
with functional experts.
Defence has pursued its policy of 'cultural cleansing' at two
levels:
- Through the Charters of the Service Chiefs, as discussed
above, and
- though the Services' senior officer corps, as discussed
below.
As Service officers (above Group Captain/Captain/Colonel) vie for
higher rank, they are selected by Defence not upon their military
professionalism, but rather on their ability to become military
bureaucrats. Under this system, senior officers are required to
transfer their primary allegiance from their Service to the Defence
bureaucracy, becoming 'affably compliant' members of the Minister's
staff. This trend was analysed at reference (6).
The
affect of this upon Australia's Services has been threefold:
- Senior officers are put into a position of conflict of
interest, and must follow the Department's line ( whether or not it be
in the best interests of their Service), or suffer the career
consequences.
- Their change in loyalty does not go unnoticed within their
Service, as ambitious officers moving up the ranks seek advantage by
adopting and demonstrating civilian rather than military behaviours and
values.
- Such changes in approach are also noted down the ranks,
giving rise to a general feeling that members can no longer rely upon
their officers, the chain of command, or the Service generally to
protect them or their interests.
The result of Defence's two-pronged efforts to replace Australia's
traditional military culture with a civilian culture has been to
weaken the ethics, ethos, morale and trust central to military
professionalism, and so erode the system of command and control
within the Services. This may well be the major cause behind the
attitudes and behaviours seen with the LPA debacle, as well as other
Navy, RAAF and Army personnel management problems.
Certainly,
the statement made by the CO Cerberus following the recent fatal
motor accident involving Navy trainees strengthens the perception
that command and control of Navy has been eroded severely. As CO, he
would be expected to fix any problem with alcohol abuse summarily.
Instead, like a true bureaucrat, he advises:
"We continually look at ways to improve our business and
we'll look at this incident like any other in the context of how we
might learn lessons from it. But we have a review process and that
will be looked at, and a review will be undertaken." (7)
This
failure to take prompt corrective action mirrors the approach adopted
throughout the DMO, under which generic acquisition problems that
arise are allowed to accumulate on a Lessons Learned Database and
later given a generic Category of Systemic Lessons. Attempts are
then made to avoid the mistakes 'identified' through amendments to
administrative process. However, the core problems, which in the
main relate to the use of 'generalist managers / legal professionals'
and the absence of
Project and Engineering Management Systems, skills and competencies,
are avoided studiously.
This type of culture is being is being driven home at all levels of
the Services, under Defence policies being implemented by the Diarchy
(8).
It is bizarre that in the centennial year of the Anzac Spirit,
Australia's Department of Defence, with government approval, is well
along the way to destroying the very culture that gave rise to the
Anzac Spirit.
Summary of Navy's Problem
The LPA debacle was not primarily or wholly a problem of Navy's
making, as charged by the Minister for Defence, as well as the
Secretary and the CDF (the Diarchy).
The seeds of the debacle were sown by the DMO which failed to
exercise due diligence in the selection and procurement of the two
vessels, and in not providing the configuration and documentation
baselines critical to the engineering and maintenance management and
the modification of the vessels over their lives. Throughout the
relatively short lives of these vessels, the DMO also failed to
discharge its responsibilities for the deeper level maintenance
requirements that arose.
The problems sown by the DMO were not able to be corrected by Navy
due to the impacts of the structural and functional changes imposed
by Defence over the previous three or so decades, principally:
- The reorganisation of the Navy Office following the
Sanderson Report.
- The disbandment of the Chief of Naval Technical Services,
and the resulting breakdown of his policies, management systems and
procedures.
- The downsizing and de-skilling of Navy's technical
capabilities, compounded by inadequate manning levels.
- The outsourcing of maintenance tasks that traditionally
provided the skills and competencies needed to support the operation
and sustainment of the Fleets.
- The dispersion of scarce technical resources into small,
isolated, inefficient and ineffective groups within force elements
which lacked any engineering management focus.
- The insidious effects of cultural change.
In
summary, the Diarchy's assessment of the causal factors behind the
debacle merely focussed upon "systemic and cultural
problems",
that require Navy to 'change
its culture',
while assuring all that "Action
is underway to rebuild business processes and review organisational
structures."
Clearly,
there has been no attempt by Defence, the Diarchy or the DMO to
identify and correct the real causes. That the LPA Fleet problems
were not identified and corrected much earlier by the Minister, his
Secretary, the CDF and the DMO is an indictment of current Defence,
Diarchy and DMO organisation and management.
The root cause(s) behind the LPA capability debacle still lie
embedded within Defence, the DMO, Industry and the three Services and,
until remedied, their cumulative effects will continue to erode not
only the command and control, and the ethics, ethos and morale of the
Services, but also Australia's defence capabilities.
|
Management
Methodologies Within Defence and the DMO
|
|
The analysis above concentrated upon the
actual causes behind the
LPA debacle. This section will now analyse the way in which the
management methodologies adopted by Defence and the DMO have
increasingly eroded the capabilities of all three Services as well as
Australia's national security.
Department
of Defence Management Trends
Pre-Tange, the Services were organised strictly along functional
lines. Each Service Chief was supported by a Board, the members of
which managed the critical dependencies of the Service - such as
Operations, Technical Services, Supply, Personnel, and so on. Civil
oversight was provided directly by a Service Minister, with his
Secretary being a member of the Service Board. This organisational
structure was direct and responsive, with short lines of
communication and control, and the Service Chief had control of the
resources he needed to discharge his responsibilities. Civil
oversight and governance were both direct, visible and effective.
Post-Tange, the new Defence organisation changed to a highly
centralised bureaucracy administrating all aspects of the Services
through a 'common user' concept, notwithstanding the many major
differences between the Services in function, operational environment
and support needs, technologies, skills and competencies, and Service
ethos and morale. Under the new organisation, the critical
dependencies of the Services were centralised along common user
lines, and managed largely as cost centres accessed only through a
maze of public service administrative processes that materialised as
organisational, functional, cultural, and financial interfaces that
had to be negotiated by the Services. As each of these interfaces
acts as a separate element in the reliability chain of functional
management, the overall management system reliability and
effectiveness must inevitably degrade rapidly to an unacceptable
level.
The management methodology that has evolved within Defence has thus
departed from the traditional Australian Public Service
administrative model to become more of a Service Industry model, much
along the lines of that adopted for the management of other
government departments. Under this approach:
- The three Services were centralised to become the
Australian Defence Force, and the management structures within the
Service Offices were standardised to facilitate central administration
and control by the Department.
- The Services' materiel acquisition and sustainment
functions, including their Support Commands, were centralised and moved
under Defence.
- Cultural change was then imposed upon the Services,
particularly at senior ranks, so that this level of management would
better identify with and support the culture and processes within the
Defence bureaucracy.
- The Services' integrated operational capabilities were
broken down to become small Force Element Groups reporting to the Chief
Defence Staff (CDF) - so becoming the 'supported capabilities'.
- Support was 'simplified' along 'common user' lines without
regard for the unique needs of the Services..
- The provision of capability and sustainment 'services'
were centralised and then largely outsourced to major foreign prime
contractors in an attempt to avoid risk.
Whether in Defence, Education, Health or any other department, this
model, in the hands of unskilled generalists, has proven to be a
failure, as attested by the string of representative critical reports
issued by the Australian National Audit Office.(9) However, in
Defence, management failures at any level will translate directly
into weaknesses in Australia's national security, and an unacceptably
high risk to military capabilities as well as the safety of those who
have to take them into combat.
Civil
Versus Civilian Control of the Military
The major restructuring of Australia's higher defence machinery
implemented by Sir Arthur Tange during the early 1970s was
contentious then and has remained contentious since. Rather than
evolve the structure that had proven fundamentally sound during and
since WWII:
"Tange
used the opportunity of the impatient Whitlam Government, and the
anti - military atmosphere of the Vietnam War, to force through
without due process the abolition of the statutory Service (and
Supply) Boards - and the direct Minister to Service Chief (and vice
versa) strategic, financial and moral accountability (and mutual
knowledge) that existed". (10) In
effect, the tight and effective civil (Parliamentary) control of the
Services that existed was lost and not adequately replaced.
Dr
T.B. Miller, a well-respected defence analyst at the time, warned
that the Tange changes would result in "A
giant step along the road to Public Service (as opposed to
Parliamentary) control of the armed forces." An so
it has come to pass.
Having absorbed the Service Departments, Defence, via the DRP and
CSP, then proceeded to downsize and de-skill the Services and take
over their capability acquisition and sustainment functions as well
as their Support Commands. Throughout this process, the
constitutional separation between civil (Parliamentary) control of
the Military and Military command of the Services has become blurred
and eroded. The result has seen civilian (principally Public
Service) intrusion into Military affairs, and even Ministerial
abrogation of Military authority. The importance of preventing this
happening seems to have gone either unnoticed or ignored by both
Defence and Parliament.
"Civil control
of the military is a constitutional function limited to Ministers
(representing parliament) alone, not one that can or should somehow
be shared with public servants or civilians generally. Our tried and
tested Westminster constitutional model deliberately separates
control and command. This has long removed the gun from politics and
the party politics from the institutional culture and operations of
our military."
(10)
The
Spread of Generalist Managers
Traditionally, technology-dependent organisations were characterised
by having a strong technological backbone, with technical tasks being
managed by technologically skilled engineering professionals. This
management model was followed by Australia's Military Services, where
it was underpinned by technical policies, systems and procedures for
all phases of the equipment life cycle, developed and honed through
experience over time to meet the changing needs of each Service.
However, from the mid-1970s, the Department of Defence, with the
consent of the Whitlam Government, and all successive governments,
swept this management structure aside, replacing its technology
skilled engineering professionals with technologically unskilled
generalists, both civilian and military. The evolution of this
change and its consequences may be traced in the analysis at
reference (4 and 5).
Under the traditional management model, technology managers (in
conjunction with operational staffs) were wholly focussed upon
achieving required outcomes - essentially the specification of
functional and engineering requirements, and the subsequent
management of evaluation and selection, and acquisition and
sustainment activities, to meet those requirements. Equipment
manufacturers, in turn, interfaced with their Service customers
primarily through their operational and engineering organisations,
manufacturers' marketing arms playing only a minor role in the
evaluation, selection and sustainment phases.
The introduction of the generalist manager, however, led to marked
changes in the relationship between the customer and the
manufacturer:
- The generalist, being technologically illiterate, and
consequently having an inadequate grasp of the functional and technical
requirement or the technologies involved, is unable to communicate
coherently with the manufacturer's engineering organisation. Hence, the
generalist is unable to understand and evaluate what he is being told
(and sold), and can not identify the appropriate questions to ask - an
ideal customer to any commercial enterprise.
- In addition, the generalist is forced by his technological
illiteracy to rely upon the detailed documentation and formalised
processes for which he is nominally responsible, as well as the
accreditation of those processes by supposedly competent third parties.
As a result, the generalist is alienated from the detail of his
responsibilities.
- As a result, the point of contact between the generalist
customer and the manufacturer is shifted to the marketing division,
where seemingly 'complex' technology aspects are pushed into the
background and replaced by comforting, simplistic statements of
promised capabilities. These now form the basis for any subsequent
discussion and contract negotiation and management. The era of the
PowerPoint Presentation had arrived.
- The marketing organisation also noted that, in most
Western nations, the decision process had moved up to government level,
so marketing effort is now increasingly directed not at the operational
customer with his technical requirements, but directly to government.
In Australia, the Super Hornet and JSF procurement decisions, for
example, reflect this clearly.
- Not surprisingly, manufacturers' system performance claims
often become ambiguous at best and highly inflated at worst, but the
generalist has little, if any, ability to identify, qualify and
quantify any false and misleading claims. Again, the Super Hornet and
JSF are excellent examples.
- However, having accepted a manufacturer's proposal, the
generalist also takes ownership of it, as well as any ambiguous, absent
or inflated capabilities embedded within it. Should any operational or
technical aspects of the system being procured be subsequently
questioned, the generalist then feels constrained to defend his
decision, calling upon the manufacturer to provide any refuting
'evidence'. The generalist and the manufacturer thus begin to function
as one, avoiding governance or due diligence mechanisms.
- Where criticism is valid, but the generalist and the
manufacturer as well as government refuse to admit it, all become
progressively divorced from reality, and so major risk to the project
soon matures.
Under these circumstances, the generalist, the contractor, and
government too frequently display a hypersensitivity to criticism,
which in turn prompts inappropriate defensive behaviours, ranging
from ignoring soundly-based criticism, denigrating the critic
(playing the man, not the facts), making threats and 'blackballing',
to shifting blame, usually to 'complexity' or contractor
shortcomings.
Indeed,
'complexity' has now become one of DMO's principal pleas for its
problems, reinforcing its earlier plea of 'immaturity
of its systems'. Complexity is now embedded in a DMO
Complex Risk Management
Standard, as well as the recently - commissioned Helmsman Report,
both of which attempt to formalise 'complexity', now appearing in
many new guises, as the key factor behind the many problems that it
keeps encountering. In fact, both the Standard and the Report merely
identify an organisation lacking appropriate project and engineering
management systems and disciplines.
One
measure of the extent to which inappropriate responses have been
allowed to become characteristic of Defence and the DMO is the size
of the Public Relations arsenal formed "to
shape journalists' perceptions of issues and manage the story."
- not to identify and correct the problem. In this way, ambiguity,
misleading information and disconnects from reality are triggered and
spread widely. In mid-2009, there were 98 civilians, four
contractors, and 64 military personnel employed in Defence PR, with
more added since. (11)
It should be noted that the replacement of technologist managers by
generalists has also occurred in both government and private
enterprises, especially throughout Western nations, but the adverse
effects have been more entrenched and costly in government
organisations because they are not measured against any commercial
yardstick of solvency, or open to proper public scrutiny.(12)
Generalists manifest themselves as comfortable people in air
conditioned offices who are indifferent to the effects of their
actions and who avoid accountability.
Management
in the Defence Materiel Organisation (DMO)
In March 2003, the Senate Foreign Affairs, Defence and Trade
Reference Committee reported on materiel acquisition and management
within Defence, finding that there was relatively poor visibility on
the progress of major projects as far as Parliament and the public
are concerned. The Committee then called for the Auditor-General to
produce an annual report on the progress of major Defence projects. The
first of these reports (a trial) was issued on 20th November
2008.
Since
then, two further reports have been issued, the last covering 22
major projects for the period 2009-10. All three reports have been
qualified by the Auditor-General. The problems encountered by the
DMO have been attributed consistently to 'the
immaturity of DMO's management systems',
now reinforced by 'terrible
complexity',
giving rise to the proposal that the organisation, after a decade,
has yet to learn more lessons to populate its Systemic Lessons
Learned data base, which in turn will indicate where systemic changes
in process need to be made. The DMO suggests that it may take
another five years or so before the problems that it is encountering
will be identified sufficiently before any improvement in performance
becomes apparent.
All three Major Projects Reports, as well as the evidence given
before the JCPAA hearings that followed them, have been analysed (13
to 17), and provide a detailed history of the problems that have been
encountered by the DMO and Defence in major projects and their
causes.
Examples of the problems being encountered by the DMO may be seen in
extracts from an Analysis of DMO MPR 2009-10, which is at Annex A. This
identifies the reasons behind DMO's failure to demonstrate any
improvement in its capability acquisition and sustainment functions
over the past decade. DMO's repeated problems stem directly from its
entrenched, process-driven, contract-centric approach to acquisition
management, in preference to traditional Project, and Engineering
Systems Management methodologies which were developed specifically
for managing technology - dependent projects.
The problems that have been encountered by the DMO have been
institutionalised firstly by the fundamental models used in the
management and governance of the acquisition and sustainment
bureaucracy, both within Defence and the DMO, and secondly by the
practice of replacing technologically-skilled engineering
professionals with technologically unskilled generalists, and more than
often, no less technologically unskilled legal professionals. That is,
the imposition of bureaucratic administrative processes over
professional project and systems engineering management.
The decline seen in the management of Defence and Defence
capability development, acquisition, preparedness, and sustainment
(both in Australia and overseas) may also be traced in an analysis
conducted by a group of three senior (retired) RAAF officers in 2009
(18).
Some
Realities of DMO's 'Business' Approach
When
delivering services, businesses adopt business processes designed to
maximise return on investment, normally measured as profit. However,
within Defence and the DMO, a vacuum is seen in regard to the motives
of its generalist management for adopting business processes in
service delivery, as maximising profit is surely not the aim. As a
result, the reason for Defence and the DMO adopting business
processes is, prima facie, incomprehensible. Indeed, there may well
be a basic incompatibility between the aims of business and those of
the DMO, assuming that the DMO will ever be able to enunciate any
credible, identifiable and measurable aims.
This
incompatibility flows from the observation that profit is maximised
when business processes have been standardised, made repeatable, and
have all variability, as well as redundant and surplus resources,
stripped from them. Although the DMO has an ostensible need to
eliminate surplus or redundant resources for efficiency of its
operations, particularly in its sustainment services, this need
conflicts with the critical requirement for operational readiness,
sustainment and flexibility and for reliable surge capabilities. In
short, an organisation cannot be at maximum efficiency and at the
same time have any flexibility or surge capability.
There
are many instances where the DMO, in its various requests, seeks an
ever more efficient service from Industry, one that can be provided
only by excluding flexibility and surge requirements. Industry, for
its part, unless contracted otherwise, will always adopt a minimum
resource approach. In high technology projects, effective
reconciliation of these two conflicting business models raises
complex technical compromises that that are well beyond the
competence of generalist managers or legal professionals to resolve.
This
is but one example of how the imposition of unskilled bureaucratic
process over military imperatives impacts force capability and
sustainment.
In summary, the DMO has focussed upon an
inappropriate commercial,
contract/purchasing, process-driven, 'business methodology', rather
than adopting technology-focussed project and systems management
methodologies that focus upon outcomes in both equipment acquisition
and sustainment, and the adverse results on military capabilities of
this approach are now becoming increasingly evident.
|
Conclusions
|
In conclusion, the problems
that have arisen increasingly at the
operational 'sharp end' of the Services, such as in Navy, are
symptomatic of systemic failures in the management and governance
models used within both Defence and the DMO.
The root cause may be traced to the policies that led to the
restructuring of the Defence Departments under Tange, followed by the
DRP and CSP changes that resulted in the widespread restructuring,
downsizing and de-skilling of the Services, particularly:
- The reorganisation of the Service Offices.
- The disbandment of the Service Technical Services
Branches.
- The loss of Service Support Commands.
- The replacement of technical professionals by generalists
or more recently, legal professionals.
- The imposition of a civilian bureaucratic culture to
replace traditional military values, which carries the potential to
destroy Australia's capability to counter future military challenges.
Within the DMO, failures in capability procurement and sustainment
may be traced primarily to:
- The move from Australia's traditional capability and
evidence-based, technology-focussed, project management driven
methodology to a commercial, 'business' - orientated, contract-centric
methodology.
- A lack of relevant project, systems and engineering
management skills and competencies.
- The use of 'generalist' managers following largely rigid
process, and the adoption of project review boards, both lacking in
required technology and management skills and competencies.
- The resulting inability to manage projects having any hint
of complexity, especially those carrying system integration challenges.
- An inability to manage sustainment (engineering,
maintenance and supply) requirements.
- The adoption of through-life support policies that dictate
against Australia ever becoming self-reliant, and will result in the
Services and Industry being further de-skilled and downsized.
Both Government and the DMO have failed to recognise:
- The importance of technological and project management
skills and competencies, and that these are bred, not bought.
- The fundamental models being used in the management and
governance of Defence and the DMO, with their premise that
technologically skilled engineering professionals may be replaced with
technologically unskilled generalists or legal professionals, and that
process takes
precedence over management, have been shown not to work and indeed
cannot be made to work.
While able to be reversed, Parliament, Government, and Defence need
firstly to understand and accept that the fundamental models used in
the management and governance of Defence need to be changed, and
generalists or legal professionals replaced by personnel having the
technological and project
management skills and competencies critical to the management of
military capabilities.
|
References
|
- Media Release by the Secretary of Defence and the
Chief of Defence, 9th February 2011.
'Causal
Factors Contributing to the Unavailability of the Navy's Two LPAs'.
- Charles
Haddon-Cave QC, 'An Independent Review Into the Broader
Issues Surrounding the Loss of the RAF Nimrod MR2 Aircraft XV230 in
Afghanistan in 2006', 28th
October 2009, London:The Stationery Office, HC 1025.
- Bushell E.J., 'The
Never
Ending
Story
of Airworthiness Versus Murphy's Law', Air Power Australia Analysis 2007-04,
12th November 2007.
- Bushell, E.J.,
"An
Analysis
of
Defence Materiel Organisation Major Projects Management
and What Needs to be Fixed", Air
Power Australia Analysis 2011-02, 23rd February 2011.
- Bushell E.J.,
'Rebuilding the Warrior Ethos',
Air Power Australia Analysis 2008-10, 27th December 2008.
- Bushell E.J., "Evolution
in
Management
Approaches
- The Product Versus the Process",
Air Power Australia Analysis 2011-02,
Annex B, 23rd February 2011.
- Deery, Shannon, "Sailors Graduate and Crash Grief",
Herald Sun, 2nd April 2011.
- Australian
Government, Department of Defence, 'People in Defence -
Generating Capability for the Future Force'. Issued by the Secretary for Defence and
CDF, November 2009.
- Representative Examples of ANAO Reports:
No 38 (2005-060 - Management of the Tiger
Armed
Reconnaissance
Helicopter Project.
No 27 (2006-07) - Management of Air Combat Fleet
In-Service Support.
No 11 (2007-08) - Management of the FFG Capability
Update.
No 41 (2008-09) - The Super Seasprite.
No 37 (2008-09) - Lightweight Torpedo Replacement
Project.
No 24 (2009-10) - (Procurement of Explosive Ordnance for
the ADF.
No 11 (2010) - (Direct Source Procurement).
No 09 (2010-11) - Green Loans Program.
No 12 (2010-11) - Home Insulation Program.
- James, Neil, Executive Director,
Australian Defence Association, "Arthur Tange: Last of the Mandarins" ,
reviewed in ADA Journal "Defence", Autumn 2006. James notes that
Tange's biography gives useful background to one viewpoint on why the
Department of Defence is now the way it is. However, he adds that a
more complete understanding is available from Professor David Horner's
biographies of Sir Frederick Shedden and Sir John Wilton, and Associate
Professor Eric Andrews' superbly balanced volume, "The Department of Defence", part
of the 2000 Centenary History of Defence Series (which senior officials
in Defence attempted to censor). More recent observations of the
confusion between 'civil' and 'civilian' control were included in the
ADA's "Defence
Brief" No 144, June 2011.
- Oakes, Dan, Defence Correspondence, 'Military Reinforces its PR Arsenal', Age,
22-23 April 2011. The figures were given in response to a question put
by the shadow Minister for Defence. Oakes should, however, have
attributed the PR arsenal to Defence, not the Military.
- Bushell, E.J., "The Widespread Consequences of
Outsourcing", Air Power Australia Analysis 2010-03,
31st December 2010.
- An Analysis of DMO MPR 23007-08, dated 18th March
2009.
- Comments on JCPAA Hearing of 19th March 2009, dated
15th April 2009.
- An Analysis of DMO MPR 2008-09, dated 10th March
2010.
- Comments on JCPAA Hearing of 15th March 2009, dated
22nd September 2009.
- An Analysis of DMO MPR 2009-10, dated
14th March 2011.
- Bushell, E.J., Green, R.G., Graf, B.J., "The Decline in the Management of Defence
and Defence Capability Development, Acquisition, Preparedness and
Sustainment.", Air Power Australia Analysis 2009-05,
5th September 2009.
|
Annex A
- EXTRACTS FROM REVIEW OF DEFENCE MATERIEL ORGANISATION MAJOR PROJECTS
REPORT 2009-10
|
EXECUTIVE
SUMMARY
Analysis of the Defence Materiel Organisation (DMO) Major Projects
Report (MPR) for 2009-10 indicates that nothing of substance has
happened that will improve the performance of the organisation in
acquiring and supporting Australia's military capabilities. As with
previous reports, there has been only the addition of more process to
an already process-bound organisation. The core problems have not
been identified and no management initiatives have been taken.
The DMO continues to demonstrate a systemic inability to manage
projects which are in any way 'complex', particularly those that
include any degree of system development or integration. It also
demonstrates difficulties in providing in-service support on time.
These congenital problems stem directly from an entrenched,
process-driven, contract-centric approach to project management,
rather than employing sound Project, Systems and Equipment
Engineering management systems and procedures developed especially
for controlling technology projects. The situation that has
persisted for more than a decade is an inevitable consequence of the
'not thought through' de-skilling and downsizing of the Services and
the structural changes imposed by the Defence Reform Program (DRP)
and Commercial Support Program (CSP).
The problems being encountered have been institutionalised firstly
by the fundamental models used in the management and governance of
the acquisition bureaucracy, and secondly by the practice of
replacing technologically skilled engineering professionals with
technologically unskilled generalists. That is, the imposition of
administrative process over project and systems engineering
management. For more than a decade, the approaches adopted have been
shown not to work, and can not be made to work.
The slightly modified project status metrics now used continue to
lack substance, and so will not provide the objective and auditable
status of projects required by ANAO. Furthermore, Major Challenges,
Measures of Effectiveness, Major Risks and Major Issues are, and will
remain, outside the scope of Australian National Audit Office (ANAO)
reviews. Hence, given the ANAO's qualification of the DMO's costing
base and the role contingencies play, the status of DMO major
projects is, for all practical purposes, not auditable, and as a
result, the ANAO has been unable to provide the assurance of good
governance sought by government through the Senate Foreign Affairs,
Defence and Trade Reference Committee in March of 2003.
The Defence Industry policies being pursued by Defence and the DMO,
in the absence of any coherent and informed government policy,
continue to undermine the skills, competencies and facilities bases
in both the Services and Defence Industry, leaving Australia
dangerously dependent upon overseas facilities for the engineering,
maintenance and supply support of its military capabilities.
Finally, over the more than a decade that Defence and the DMO have
faced major, but avoidable, capability acquisition problems, the
higher governance mechanisms upon which Australia depends to identify
and correct deficiencies in Departmental performance have been either
unable or unwilling to pursue the rigorous governance disciplines
required to reform Defence and its capability acquisition
organisation. This analysis emphasises the need to start real reform
of the Defence/DMO organisations before Australia's military
capabilities deteriorate beyond repair.
EXTRACTS
FROM ANALYSIS
OF DMO MPR 2009-10
Background
This review builds upon an analysis of Defence Materiel Office (DMO)
Major Projects Report (MPR) for 2008-09 (1), and it is important that
this review be read in conjunction with its predecessor as that
analysis covered the changes that gave rise to the current Defence
capability acquisition organisation, as well as many of the broader
factors that have molded the organisation over the years.
Complexity
and Risk
Over the past decade, DMO has been increasingly generating the
impression that its acquisition functions face extreme complexity and
high risk, and that the problems that the organisation faces stem
from those factors. The 2009-10 MPR dwells very heavily upon
complexity and risk and their impacts upon DMO (Pages 83-87). Indeed,
DMO had the Helsman Institute undertake a study in 2009 into
the complexity faced by DMO in comparison with general industry. That
report merely confirmed what every serviceman employed in new
project or sustainment planning and management well knew before the
DRP/CSP programmes disbanded the Services' well established and
successful capability definition, acquisition and sustainment skills
and competencies base, that had been developed over 70 or more years
of experience. The Helsman Report has been mere window dressing, an
attempt to excuse failures, and a total waste of money.
Part
of DMO's solution to its problems with complexity and risk, which
supposedly make it difficult for the organisation to maintain project
schedule, is reflected in the recent Defence/DMO policy requiring the
benchmarking of Military Off-The-Shelf (MOTS) and Commercial
Off-The-Shelf (COTS) equipment “against
which a rigorous cost-effective analysis of the military effects and
schedule aspects of all proposals (ie, military capability
requirements) will be undertaken.” Two important potential dangers stem
from this decision:
- Firstly, the policy
reverses the traditional onus upon MOTS/COTS equipment (in common with
all other equipment offered) having to demonstrate that it meets
specified operational and technical requirements. Under this
benchmarking policy, the potential for mainly US-sourced MOTS/COTS
equipment to be purchased by DMO over equipment that will better meet
Australian - unique Service requirements is acute. In this sense, 'unique' means
equipment that will perform, as specified in Australia's likely
operating environments and suits Australian modus operandi, special
military skills and capabilities. These factors are too easily
dispensed with or denigrated where an apparently 'cheap and easy'
procurement, seemingly without commercial risk, presents itself, and
the imperative of 'interoperability' is invoked. DMO should have
learned from its unsuccessful Army and Navy purchases to understand the
factors involved and the nasty implications for those who have to use
such equipment in battle, a well worthwhile lesson that appears not to
have been learned. The path set by this policy will inevitably lead to
Australia's Services, over time, becoming captive to being equipped to
fight someone else's threats in someone else's threat environment and
geography, using someone else's strategies and tactics.
- Secondly, it sends a clear message that DMO is incapable
of managing successfully any projects that contain any measure of
technical complexity, especially those having any hint of systems
integration – a disturbing admission by an organisation that is charged
with the national security responsibility for equipping and sustaining
Australia's military services. For over a decade, Defence and its
acquisition organisations have struggled to meet their
responsibilities, but with declining success, and the DMO now warns
that it must continue to make generic mistakes before it can identify
any need for systemic reform. The DMO was formed as, and remains, a
simple purchasing organisation, centred upon complex contract
/procurement 'business' structures and processes, an organisation that
shows no understanding of the central role and importance of the
project and engineering management systems that are needed to drive the
contracting/procurement functions, not be a slave to them.
The
management of technology reliant systems demands firstly staff with
a sound technical knowledge of the equipment involved. Secondly,
they must work as System and Equipment engineers within a robust
Project Management organisation, otherwise the litany of generic
'lessons unlearned' by DMO will have to be repeated over and over, as
is the case now.
How Technology
Management Works
In
acquisition project management, management of technology-based
capabilities requires Project, Systems and Equipment Engineering
skills and competencies to be applied rigorously from the
Requirements Definition Phase, and throughout all subsequent phases
of a project. Project Management Plans are needed to state how the
project will be managed at the top level, while Systems and
Engineering Management Plans are needed to drive all systems and
engineering functions to meet the objectives of the Project
Management Plan.
System
Engineering Management Plans must have a range of Sub-plans to manage
and integrate tightly all supporting project functions, such as
Facility Plans, Manning and Training Plans, Maintenance Plans,
Support Equipment Plans, Test and Acceptance Plans, Equipment Support
Plans and so on. The objective of several of these sub-plans is to
ensure that all lines and levels of support will be in place by the
time that the system is delivered and accepted into service. With
this approach, DMO's problems with integration and complexity and
establishing capability support on time do not arise, and any risks
to the project are able to be qualified and quantified and redressed
promptly, at the lowest level, with least impact upon project
objectives. In particular, there needs to be only one project
completion date, not six as now introduced by DMO's new wave of
processes.
The
inevitable consequences of not doing things properly in Defence
acquisition are analysed at Annex A, which identifies the following
major causes behind the problems and failures being encountered by
Defence/DMO:
- The restructuring of Defence and the Services, coupled
with the wholesale downsizing and de-skilling of the Services under the
DRP and CSP, resulting in their inability to provide the skills and
competencies needed for the proper management of military capabilities.
This is especially evidenced by the inadequate statements of
requirements that have driven projects, and the difficulties in
managing design changes and other engineering challenges that have
arisen throughout almost all projects.
- The abandonment by Defence and the DMO of project and
engineering management systems over the period 1998 to 2001, and the
introduction of commercial, process-driven administration to capability
acquisition and sustainment, resulting in the risks and problems being
seen with DMO projects today.
- The absence of effective governance at all levels - where
Defence, Government and Parliament have been unable or unwilling to
understand what is happening and to insist upon corrective action.
No amount of process can redress these problems.
Reporting
Project
Performance
In
MPR 2008-09, DMO stated (page 55) that DMO's Project Maturity Score “quantifies the
maturity of a project by way of an objective score based on the
Project Manager's judgement ...The score is then compared against an
ideal benchmark score ..”.
As pointed out at (1), DMO's MOE score is, by definition, not
objective, but an unsupportable, subjective estimate open to a wide
range of influences and competencies.
In
the 2009-10 PR, DMO now states (at page 37): “Key
project performance information is important in monitoring whether
the required capability is expected to be delivered on schedule and
within budget. Such information has the potential to act as an alert
to under-performance and a focus for management action.” The
organisation then identifies four measures “to
provide a snapshot on project performance”,
paired to generate two scores:
- The percentage of budgeted cost expended in relation to
the percentage of the elapsed schedule time, (page 37 and Fig 2), and
- Project maturity progress as a percentage of the key
capabilities expected by DMO to be delivered, (Page 39 and Fig 3).
The first measure assumes that these factors combine to provide a
measure of progress in achieving the required capabilities, whereas
no nexus exists between project expenditure and time elapsed on the
one hand, and the extent to which required capabilities have been or
will be achieved on the other. Having spent, say, 80% of budget and
80% of the scheduled time does not mean that 80% of the required
capabilities have been achieved. Fig 2 is thus simply magical
thinking and baseless.
The
second measure is based upon DMO's assumption that assessment of the
likelihood of any project delivering all its key capability
requirements should “become
better informed as a project maturity score increases”.
However, Page 39, and Fig 3, which purports to show progress in
providing the capabilities required, lacks both substance and logic. It
merely proposes that all the projects listed (with the exception
of Wedgetail) will be delivered such that they will satisfy all their
key capabilities. In addition, Fig 3 does not indicate when the
optimistic forecast 100% of required capability will occur in
relation to when the White paper and Project Schedule requires it. In
short, it attempts to put the very best face on capability
achievement, but ignores schedule delays.
Furthermore,
DMO now cautions (para 2.5, page 38), that “While
the DMO's key capability measures should be interpreted with some
caution due to their lack of rigour as a data system and the high
level of uncertainty in forecasting outcomes overall, the DMO's
assessment is that 20 of the 21 projects with key capability data in
this year's MPR will deliver all their key capability requirements “. Footnote 40 further warns that “The
DMO's assessment involved high levels of uncertainty which may cause
actual outcomes to differ materially from that stated in the PDSSs”.
It
should be remembered that these measures drive not only project
status reports to ANAO and the Joint Committee Public Accounts and
Audit (JCPAA) , but also support the advice given and the proposals
made to Government, especially at Gate Review Assurance Boards,
which, as DMO states, "depend
upon an
expert assessment of project development and status, and the
prospects of a project achieving the agreed outcome”.
The presentation of Project Maturity Scores and Measures Of
Effectiveness as metrics of project status has now evolved into bar
charts, percentages, and 'traffic signals', but the measures upon
which these are based remain unchanged - they are simply subjective
opinions lacking in any hard metrics, and do not give any real
measure of project status.
The
Problem With Numbers
Numbers are mostly meaningless if the objects to which they are
attached cannot be measured with repeatable accuracy. It is
important therefore to look closely at what is being measured and
how. DMO makes use of numbers, and their cousins – such as bar
charts, percentages and traffic lights of various types - to measure
project and capability status, but in the main these measures are
useless, and inherently misleading. They are based on what are
called 'Potemkin Numbers' (2).
Potemkin
Numbers are the mathematical equivalents of Potemkin Villages. They
are merely numerical facades made to look like real data. Potemkin
Numbers aren't meaningful because either they are borne out of a
nonsensical measurement or they are not tied to a genuine measurement
at all, springing forth fully formed from a fabricator's head. As
Charles Siefe observed: “Creators
of Potemkin Numbers generally care little about whether their numbers
are grounded in any sort of reality. From afar, however, they seem
convincing”. When
used, they are often
a powerful tool to prop up an argument and even the flimsiest can do
tremendous damage. Fortunately, the power of Potemkin Numbers is
limited as they evaporate as soon as they are made subject to
examination.
Project Maturity Scores and their benchmarks and Measures of
Effectiveness, with their wide ranging affects, thus need to be seen
for what they are
The
Enterprise Risk Management Framework (ERMF)
The management of risk within the DMO was analysed in detail at (1),
but the steps now being taken (pages 86, 87) indicate that the
organisation continues to ignore, or not understand, how risk must be
managed in a technology intensive project. Risk is still seen only
in contract management terms, and the DMO still expects risks to
become visible and manageable following the retrospective
(longitudinal) analysis of long-accumulated, generic 'lessons
learned', which are now being allocated to another generic Category
of Systemic Lessons. This is merely distracting attention from the
core reason behind risk and its mismanagement within the DMO, while
trying to give an impression of progress.
Until the DMO accepts that risk arises primarily from the technology
(engineering) aspects of a project and must therefore be managed by
skilled technologists employing project and engineering management
methodologies, risk will continue to ravage all capability and
sustainment projects. Unskilled generalists using 'high-end' risk
management tools are doomed to failure.
Project
Milestones (Pages 88, 89)
This MPR details the third significant change to project milestones
introduced by the DMO, adding additional milestones to make a total
of six. Essentially, these limit the DMO's function to providing
equipment, not capability, which now rests with the Capability
Manager. This arrangement will be implemented through the Capability
Manager becoming a signatory to the Materiel Acquisition Agreement
(MAA) and, inevitably, a range of amended and additional paperwork
and processes must follow. The new milestones are:
- Initial Materiel Release (IMR).
- Initial Operational Capability (IOC).
- Initial Operational Release (IOR).
- In-Service-Date (ISD).
- Final Materiel Release (FMR).
- Final Operational Capability (FOC).
This can be described only as process gone mad, and cannot be shown
to contribute to improving project outcomes. This can be
demonstrated by simply drawing an activity diagram for all of these
processes so as to identify all organisational, functional, and
financial interfaces.
Under pre – DRP/CSP service organisations, the RAAF, for example,
had one operational milestone – the date when the system became not
only operational but fully supported at all lines and levels in both
the Service and Industry. The DMO's performance can hardly be said
to be an improvement on that.
The
Continued Growth of Process Over Outcomes
Reference A discussed the flight to process resulting from DMO MPR
2008-09, and identified an organisation focussed upon process rather
than management changes that would lead to the outcomes required
being achieved. MPR 2009-10 continues a flight to process that
impacts almost every area of the DMO's activity, instead of an
analysis of the organisation's management structure, policies,
systems and procedures. Changes resulting from MRP 2009-10 include,
examples only:
- Gate Review 'business improvements', which will distance
DMO from Capability Development responsibilities, but the soundness of
the guidance given government will still be based upon the unreliable
metrics of Measures of Effectiveness.
- Risk management 'improvements' centred
upon “The
identification of the lessons identified by internal and external
audits undertaken in the DMO over the past five years”, aimed
at understanding business level risks and their sources to become input
to DMO's lessons learned methodology. This included the inputs in Ernst
& Young's Internal Audit Report on the DMO's Enterprise Risk
Management Framework (ERMF), which led to the development of a Chief
Executive Officer Instruction on risk management, and the compilation
of risk management controls for acquisition and sustainment activities.
For the reasons given above, nothing should be expected from these
changes except more administrative complexity and greater inertia.
- In regard to project lessons learned, amended guidance
will be given on a range of Capability Definition documents, a
Requirements Management System will be developed, as well as a Defence
Materiel Instruction on requirements management, and a Requirements
Management Guide, and a tailored requirements management training
course has been developed.
- The introduction of additional capability delivery
milestones to a new total of six, which will essentially restrict the
DMO's activity to delivering procured equipment to the capability
managers for their provision of the actual capability, distancing the
DMO from direct accountability for providing required capabilities.
This will simply introduce more organisational, functional,
administrative and financial interfaces that will have to be
coordinated and administered.
- Contract changes that include a new Standing Order for
Off-The-Shelf components, new AUSDEFCON Performance Based Support
Contracting conditions, development of a new AUSDEFCON (Shortform
Support) statement of work template, and industry improvements to
reduce business costs.
- Schedule management changes that include
improving project performance measuring and monitoring systems to
mitigate project risks. As identified earlier, the DMO's methodology
and measures have no sound basis, so nothing of substance should be
expected from these changes. In addition, a Schedule Measurement
Capability Model has been developed, termed Schedule Compliance Risk
Assessment Method (SCRAM). Offered as a “model of Schedule Management best
practice”, it is unlikely to achieve anything as
the project/engineering/risk management systems and procedures
appropriate to the management of military technology are not in place.
It cannot function in the manner suggested within the DMO's current
contract/procurement-centric organisation.
- Internal and external performance reports will be
subjected to review and management reporting changes made.
This continuing flurry of changes to process are symptomatic of an
organisation trying to plug a myriad of holes to keep the ship
afloat, but the crew seem to have lost sight of where they should be
heading and how best to get there.
Project
Lessons Learned (Page 87)
Detailed analysis of DMO's Lessons Learned and Project Longitudinal
Analysis was included in (1). The Lessons Learned in the 2009-10 MPR
continue to be generic in type, but are now grouped under a 'Category
of Systemic Lessons', including:
- Schedule Management.
- Requirements Management.
- Contract Management.
- First of Type Equipment.
- Military Off-The-Shelf Equipment
However,
the DMO warns that “A
new
contract
approach
will have to be used on a number of projects
before all lessons will have been learned.”,
so the process is intended to be on-going. This is a strange
methodology for any organisation to adopt, in that it only 'learns'
retrospectively, through making mistakes, whereas standard project
management methodologies are based upon prospective risk management,
identifying risks and problems with a project as they arise or are
forecast, and correcting them so that they do not impact the project
adversely, or their effects are minimised on schedule, cost and
capability. Retrospective analysis has a retrospective role to play,
but it is of no use unless the project and engineering management
systems appropriate to the equipment involved are in place and are
managed by persons having a sound knowledge of the technologies
involved, and managing risks as and when they arise or are forecast.
So, DMO remains committed to making mistakes so that generic
'lessons', ones that should not have been made in the first place,
may be identified and then used to populate a data base from which
they are segregated into a broad category aligned with selected
management areas and sources of procurement. This is an expensive
way of mismanaging projects.
DMO's approach is much like trying to drive a car by looking only
through the rear vision mirror, with driving skills and competencies
being dependent upon making mistakes.
Governance
(Page 93)
Governance
improvements identified by the DMO include Gate Review Assurance
Boards that rely heavily upon the DMO's “expert
assessment of project development and status and the possibility of
achieving the agreed outcome”.
However, DMO's expert assessments remain challenged by the
weaknesses identified above in the project performance metrics
adopted. More importantly, the reluctance or inability of our
parliamentary governance mechanisms, despite clear warnings, to seek
out and rectify the root cause(s) behind the problems that have
persisted with capability acquisition and sustainment for well over a
decade, is the real governance weakness.
Defence
Industry Policy (Page 97-100)
This is the first time that an MPR has included the subject of
Defence Industry. Australia's Defence Industry Policy has undergone
many reviews, and statements come and go, leaving little, if any,
evidence of their passing. Unfortunately, this is characteristic of
all Defence and DMO reviews. Many of the problems we now have are a
function of Government/Defence indecision and waffle and the DMO's
'supply and support' policy – seemingly adopted from the recently
disgraced US Defense Acquisition's Total System Performance
Responsibility (TSPR) approach. Applied by the DMO as a perceived
project de-risking strategy, this has:
- Caused a flow of work from Australia's Services and
Defence Industry to overseas (principally US) facilities, and
- Resulted in the closing of long-established and very
efficient and effective weapon system and equipment support facilities
that existed within the Services and Defence Industry.
In particular, the identification and establishment of strategically
important industry capabilities was the subject of a recent Defence
Industry Review, from which nothing resulted, except the further loss
of critical Service and Industry capabilities. Defence Industry
policy and practice have been a total and expensive failure for some
two decades or more, and unless tackled seriously both Service and
Defence Industry capabilities will largely disappear.
The disconnect between the DMO's policies and Defence Industry
objectives is exemplified by the critical need for systems
engineering expertise within the DMO to manage systems integration
and other complex engineering tasks on the one hand, and the DMO's
decision (for example) to close down the highly successful Boeing
systems engineering and integration facility that had been built up
over the years to support the F-111 Fleet on the other. This strange
and short sighted decision seemed to be a matter of saving money at
any cost in the short term.
Management within Government Departments, including Defence and the
DMO, has been focussed upon outsourcing what are in fact core
competencies, a policy and practice that carries considerable
hazards, especially for Australia's military capabilities and
national security, because of Defence/DMO inabilities to manage the
risks involved.
Major
Project Challenges (Page 105)
After a decade, these continue to be as vague and unqualified and
unquantified as the Project Risks and the Project Lessons Learned. The
DMO still focusses upon Schedule, whereas Schedule, Capability
and Cost cannot be excised from one another – they must be managed
together under tight project management methodologies to ensure that
the impacts of one upon the others are identified and managed
properly while avoiding risk from all sources. To attempt to manage
one in isolation is to court risk and generally failure.
Project
Data Summary Sheets (PDSSs)
The
PDSSs forming part of MPR 2009-10 have been analysed, with no
significant variation in trends seen from the 2008-09 MPR. Comments
on the 2009-10 PDSSs are included at Annex C, with Attachment 1 to
Annex C providing a Risk Consequence Level for each project, based
upon Australian and DMO risk management standards. This
annex
and
its
attachment have not been included in this extract from
the submission made to the Joint Committee Public Accounts and Audit
(JCPAA). The full submission may be accessed through the JCPAA
website.(1)
Summary
Analysis of the Defence Materiel Organisation (DMO) Major Projects
Report (MPR) for 2009-10 indicates that nothing of substance has
happened that will improve the performance of the organisation in
acquiring and supporting Australia's military capabilities. As with
previous reports, there has been only the addition of more process to
an already process-bound organisation. The core problems have not
been identified and no management initiatives have been taken.
The DMO continues to demonstrate a systemic inability to manage
projects which are in any way 'complex', particularly those that
include any degree of system development or integration. It also
demonstrates difficulties in providing in-service support on time.
These congenital problems stem directly from an entrenched,
process-driven, contract-centric approach to project management,
rather than employing sound Project, Systems and Equipment
Engineering management systems and procedures developed especially
for controlling technology projects. The situation that has
persisted for more than a decade is an inevitable consequence of the
'not thought through' de-skilling and downsizing of the Services and
the structural changes imposed by the Defence Reform Program (DRP)
and Commercial Support Program (CSP).
The problems being encountered have been institutionalised firstly
by the fundamental models used in the management and governance of
the acquisition bureaucracy, and secondly by the practice of
replacing technologically skilled engineering professionals with
technologically unskilled generalists. That is, the imposition of
administrative process over project and systems engineering
management. For more than a decade, the approaches adopted have been
shown not to work, and can not be made to work.
The slightly modified project status metrics now used continue to
lack substance, and so will not provide the objective and auditable
status of projects required by parliament. Furthermore, Major
Challenges, Measures of Effectiveness, Major Risks and Major Issues
are, and will remain, outside the scope of Australian National Audit
Office (ANAO) reviews. Hence, given the ANAO's qualification of the
DMO's costing base and the role contingencies play, the status of DMO
major projects is, for all practical purposes, not auditable, and as
a result, the ANAO is unable to provide the assurance of good
governance sought by government through the Senate Foreign Affairs,
Defence and Trade Reference Committee in March of 2003.
The Defence Industry policies being pursued by Defence and the DMO,
in the absence of any coherent and informed government policy,
continue to undermine the skills, competencies and facilities bases
in both the Services and Defence Industry, leaving Australia
dangerously dependent upon overseas facilities for the engineering,
maintenance and supply support of its military capabilities.
Finally, over the more than a decade that Defence and the DMO have
faced major, but avoidable, capability acquisition problems, the
higher governance mechanisms upon which Australia depends to identify
and correct deficiencies in Departmental performance have been either
unable or unwilling to pursue the rigorous governance disciplines
required to reform Defence and its capability acquisition
organisation. This analysis emphasises the need to start real reform
of the Defence/DMO organisations before Australia's military
capabilities deteriorate beyond repair.
References
1. E.J.
Bushell, 'Review
of 2008-09 DMO Major Projects Report (MPR),
an unsolicited submission to to the Australian National Audit Office,
10th March 2010. The author's Analysis of DMO MPR 2009-10, 24th March
2011 may also be found at:
(aph.gov.au/house/committee/jcpaa/defenceannual0310/index.htm)
2. Seife,
Charles, "Proofiness
- The
Dark Arts of Mathematical Deception",
2010, Penguin.
|
ATTACHMENT 1 TO
ANNEX A
|
THE INEVITABLE
CONSEQUENCES OF NOT MANAGING DEFENCE ACQUISITION AND SUSTAINMENT
PROPERLY
|
|
Many of the problems that have been
encountered by Defence/DMO over
more than a decade, without sign of substantial improvement, may be
traced to government, in 1998 to 2001, directing its acquisition
organisation to abandon the successful project and engineering
management systems and procedures that had been built up by the
Services over decades of experience, and to replace them with
standard contract management processes common to government
purchasing organisations. (1)
The project and engineering management
systems designed specifically to specify,evaluate, select, acquire,
operate and sustain technology-based systems were then downgraded to
become merely inputs to Contract/Procurement Managers and their
administrative processes. The adverse impacts of this change in
acquisition methodology have been increasingly evidenced in the Major
Projects Reports produced by DMO over the past three years in
response to Parliament's requirement for better visibility over major
Defence projects.
The following table, drawn from DMO MPR 2009-10, highlights the
consequences of not adhering to rigorous Project, Systems and
Equipment Management Systems throughout the acquisition and
sustainment phases of projects. The examples given are not
exhaustive, but only representative of the underlying causes behind
projects failing to achieve their objectives in capability, schedule
and cost.
| Problems Encountered |
Comments |
Project: Air
Warfare
Destroyer
Build:
- Sub-contractor quality deficiencies.
- Shortage of skills.
- Configuration management problems.
- Design changes.
- Change Management procedures.
- Shipyard capabilities and capacity.
- System integration.
- Project Office expertise.
- Drawing management and delivery.
- Tech assistance from US Navy.
- Alliance Contract risks.
- Contract escalation indexation.
- Support data availability.
- Unclear Certification requirements.
- Certification data not available.
|
All of these problems should have been identified, scoped, and included
in early project management planning. Several (such as configuration,
design changes, and change management) are covered by standard
engineering management systems.
Others require project planning effort to identify project requirements
and procedures, and negotiate how they will be managed, in consultation
with interfacing organisations (eg, US Navy and contractors). Project
planning should also have stated the maintenance policy to drive
support activities, and through inspection verify the capabilities and
quality at contractors.
All of these problems were largely avoidable. |
Project:
AEW&C:
- Project effort underestimated.
- Project time underestimated.
- Technical complexity underestimated.
- Contract complexity underestimated.
- Risk management underestimated.
- Inadequate Contractor resourcing.
- Inadequate support from 'stakeholders'.
- Inadequate resources and time to provide
in-service support
|
These problems also indicate an absence of proper, early project
management planning and subsequent management. As a result, the
problems encountered have resulted in capability, schedule and cost
penalties that were quite avoidable. |
Project: Multi-Role
Helicopter:
- Inability to meet capability requirements not
understood.
- Maturity of aircraft design not assessed or
understood.
- Limited intellectual property rights affected
impacted capability development, value for money, availability of
required data, and system integration.
- Maintenance documents inadequate.
- Inadequate in-service support.
- Delays due to manufacturing defects.
- Capability targets delayed by design and
reliability problems.
- Certification delayed by immaturity of
design.
- Training impacted by lack of rate of flying
effort available.
|
Each of these problems should have been identified, scoped and
management approaches determined as part of early project management
planning. In this way, many would have been avoided, while others would
have been identified early and appropriate management procedures
determined.
Government and DMO entered into this project with eyes wide shut. The
inevitable consequences have and will continue to haunt the Services so
long as it is in service.
|
Project: Amphibious Deployment:
- Wide impacts of regulatory requirements.
- Requirements creep.
- Combat and Communication Systems may not meet
requirements.
- Insufficient funds for logistics support,
training and spares.
- Unable to certify Air Space Management System.
- Lack of clarity surrounding ship acceptance
process.
- Integration complexity underestimated.
|
Again, this project has suffered from a lack of
early project management planning.
Each problem reflects a failure to identify, scope
and plan the activities that the project will have to manage before the
project was submitted by DMO for Government decision.
This project is fated to encounter more problems as
it proceeds.
|
Project: Bushmaster:
- In the early planning phase of the project,
the operational concept and functional performance were not clearly
defined, making it difficult to understand and undertake appropriate
cost-capability trade-offs.
- Lack of Contractor ability to provide adequate
cost estimates, and inability by Defence to evaluate the validity of
the cost data.
- Testing was not sufficiently planned.
|
These 'Lessons Learned' reflect wholly inadequate
project planning and was also a high risk project to put before
government.
|
Project:
FFG
Upgrade:
- Requirements and specifications must be well
defined.
- How the capability should be acquired should
be resolved at the time of capability and project definition.
- Verifying and validating software development
should be contractually covered.
- Upgrades should always follow the acceptance
of the first platform.
- The risk associated with complex software
changes and integration must be properly managed.
- The contract schedule should be realistic and
contain:
- milestones to assess contractor performance.
- payments should be should be subject to
achievement of clear project milestones.
- milestones should reflect delivery of contracted
requirements.
- ILS milestones should carry the same weight as
primary equipment milestones.
- Contractors should focus more upon ILS
requirements.
- The contract should be clear on Configuration
Management.
- Objective acceptance criteria are required.
- Progressive acceptance methodology
should be implemented for all project data, documentation, supplies and
requirements acceptance.
|
These "Lessons Learned" reflect a total absence of
any effective Project Management disciplines. They ensure that the
project will fall victim to costly, continual problems and frustrations
that are entirely unnecessary.
Every item on this list of lessons learned should
have been qualified and quantified and included in a Project Management
Plan (or Sub-Plan). They are not contract manageable - they require
technical management!
They are an indictment of the current acquisition
methodology being pursued by the DMO.
|
Other Projects:
Similar problems affecting other projects are
identified in the Project Data Summary Sheet analysis at Annex A.
|
The problems reported with other projects generally
follow those exampled above, varying only with the type and
'complexity' of the project.
|
Why
Project/Systems/Engineering Management? - Very Briefly.
Requirements
Definition.
Projects start with a stated capability requirement, normally
initiated by Government, often via a Defence White Paper, or a
Service to meet an already agreed capability, or to replace current
equipment that needs upgrading or replacing. Planning to meet the
requirement starts with an operational analysis which, must be done
by the Service that will operate the equipment, reflect accurately
the threat that will be faced over time, and be supported by a
Technical Specification which covers the technology aspects of the
requirement and how these will be managed to meet capability and
sustainment requirements. These form the input to all subsequent
Project Management Planning.
If these activities are not conducted thoroughly and coherently,
then all subsequent activities will be laden with high capability,
schedule and cost risks.
Project
Definition.
This phase defines capability and sustainment requirements in
sufficient detail so that potential suppliers and others involved are
fully aware of what is required, when, and how the elements of the
project will be managed. The core skills and competencies required
for this phase are essentially Project, Systems and Equipment
Engineers experienced in the technology being procured. If this
stage has been completed to a verifiable, high standard, the project
may then go forward to government for approval to proceed. While
some contract input will be needed, it is critical that contract
imperatives do not drive the project - otherwise deficiencies and
inadequacies will be embedded over the life of the project, as is the
case now. Contract management should be focussed upon how best the
project might be supported in accordance with project management
planning.
It is critical that projects having significant levels of
development or integration include Systems Engineering skills within
the Project Management organisation, for it is not until systems
engineering problems are managed and resolved that many other
engineering and project activities can proceed.
If project management planning is inadequate, then all subsequent
activities will carry high risk.
Source
Evaluation and Selection.
The evaluation of contenders also relies upon Project, Systems and
Equipment Engineering skills, with contract administration input. It
is here that the ability of contenders to meet defined capability and
technical requirements are identified, scoped and evaluated, and
potential risk areas identified. Project Management must ensure at
this stage that all project requirements are fully and accurately
identified and scoped, are reasonable, and made clear to all
contenders. If this is not done rigorously, then high risk will flow
from the evaluation and selection phases into all subsequent
acquisition phases.
At source selection, Project Management planning becomes far more
detailed, and a Project Management Plan with its fully-integrated
Sub-Plans (such as the Systems Engineering Plan, Manning and Training
Plan, Facilities Plan, Ground Support and Test Equipment Plan, and so
on) is developed . This Plan identifies and integrates all project
activity so that all involved know what has to done, by whom, and
when. When the Project Management Plan and its Sub-Plans are
finalised and Project Milestones established, final contractual
arrangements may proceed. At no stage should the contract get ahead
or drive the project, as this is a proven way for contract and
contractor imperatives to complicate and conflict with Project
Management Plans.
Acquisition
Phase.
If the project management activities above have been conducted
properly, the project will proceed as smoothly as possible and should
not encounter the protracted problems identified in the DMO MPR
Project Data Summary Sheets (PDSSs). Any problems that do arise will
generally be identified early and rectified at the lowest level, in
the minimum time and with least impact on the project.
Skills and
Competencies.
This analysis, and statements made in the MPR PDSSs, indicate
clearly that sound Project Management has been missing in DMO
projects since 1998 - 2001, and the consequences of this have been
widespread and unnecessarily expensive in capability, schedule and
cost outcomes.
Traditionally, the skills and competencies needed for specifying and
managing operational and technical requirements resided within the
Services, where total responsibility for capability definition,
acquisition, and sustainment resided. However, the Defence Reform
Program (DRP) and the Commercial Support Program (CSP) resulted in
the Services being de-skilled, downsized and relegated to undertaking
only the lowest level of engineering and logistic support which
required the lowest level of skills and competencies. In particular,
the Services' engineering branches were disbanded, the effects being
especially felt within the two high-technology Services - the Navy
and the RAAF. The damage done was further compounded by the
disbandment of the Services' Support Commands. Government and
Defence planning was for these skills to be replaced by Defence
Industry, but this did not occur, with Defence Industry now facing
much the same problems as the Services, and would never have been
able to provide the skills and competencies that reflect military
requirements.
The result has been that the skills and competencies required within
DMO are not available from the Services or industry, and cannot be
developed within the DMO, as the skills and competencies required
must have experience in the operation and technology of the
capability being acquired, and DMO has no means of achieving this. In
addition, the skills and competencies required to manage
technology vary over the equipment life cycle, and DMO has no means
of responding to such changing circumstances. Outsourcing any but
the simplest of tasks carries high risk, as Defence/DMO do not have
the technological skills and competencies required to manage
outsourced tasks (2). Finally, both Government and DMO fail to
recognise that technological skills and competencies are bred, not
bought.
In addition, the fundamental models used by Government/DMO in the
management and governance of the acquisition bureaucracy, and the
premise that technologically skilled engineering professionals may be
replaced with technologically unskilled generalists, and that process
takes precedence over management, have been shown not to work, and
indeed cannot be made to work.
Governance Problems.
This leaves parliament, government, and DMO with very uncomfortable
decisions to be taken. Unfortunately, all three have been reluctant
to even acknowledge that there is a problem, let alone that it goes
to the very core of Australia's sharply declining military
capabilities and national security, is urgent, and needs to be
rectified before even greater damage is done. This stark assessment
is based upon a total lack of response to a body of substantial
analyses and submissions made to DMO, Defence, and governance
agencies, especially the various inquiries and hearings conducted by
Foreign Affairs Defence and Trade (JSCFADT) and the Joint Committee
Public Accounts and Audit (JCPAA). Despite the substantial input to
these governance bodies, nothing has eventuated. Not a relevant
question has been put to Defence or to the DMO. From all
appearances, governance bodies have elected to become part of the
problem rather than the solution.
The presentations referred to may be accessed through the JCFADT and
JCPAA websites.
References
1. Bushell,
E. J., "An
Analysis of Defence Materiel Organisation Major Projects Management and
What Needs to be Fixed", Air Power Australia Analysis 2011 - 02,
23rd February 2011. 2.
Bushell,
E.J., "The
Widespread Consequences of Outsourcing",
Air Power Australia Analysis 2010 - 03, 31st December 2010.
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Air Power Australia
Analyses ISSN 1832-2433
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