Australian + New Zealand Defence Directory 20/21

AUSTRALIAN + NEW ZEALAND DEFENCE DIRECTORY 2020/21 THE NATION BUILD www. d e f e n c e . d i r e c t o r y 18 SOVEREIGN INDUSTRY – LET’S CHANGE THE EMPHASIS TO OPERATIONALISE AUSTRALIAN INDUSTRY TO SUPPORT OPERATIONAL CAPABILITY OUTPUTS T he Sovereign Industry Capability Priorities (SICP) Management System is intended to develop and secure the strategic capability and resources of Australia’s industrial base as a foundation of the Nation’s Military Capability. The initial priorities were based upon an assessment of industrial capabilities: operationally critical to the Defence Mission; priorities in the Integrated Investment Plan (IIP); and those in need of monitoring, management and support due to the complexity of the industry. The framework is to deliver a repeatable methodology to identify future SICP. The intent is defined around the aim to access to or control over essential skills, technology, intellectual property, financial resources and infrastructure required for development and sustainment of a Sovereign industrial base. All but two current priorities are expressed in terms of the Major Systems; they are not strictly a capability output. They are invariably to be delivered through an offshore or locally estab- lished subsidiary of a major international Defence Prime. Unsurprisingly, there is emphasis in the SICP encouraging Australian SME’s to become part of the integrated team that delivers these capabilities; the added incentive that in becoming part of the Prime’s supply chain there is offshore commercial opportunities. This is positive news for Australian SMEs; as long as they can fit into the Prime’s supply chain. Is this the only means for Australian Industry, specifically SMEs, to be considered part of the national sovereign industry base? Alternative funding lines are available to develop technology and innovation such as the Defence Innovation Hub, the Next Generation Technologies fund and other Commonwealth Grants programs to stimulate SMEs. But there seems to be a dissonance here in terms of what these programs are trying to achieve in terms of harnessing Australian industry innovation and build its capacity to deliver a foundation of sovereign capability. In this context, it is offered that there are other lens that can be applied to broaden the SICP, realise the full gamut of its aims and enable Australian owned companies to be considered outside of a Prime’s major system supply chain. It is based upon the premise that sovereign operational capability outputs are more than just major systems procurements in the IIP. If Australia adopted a broader definition, similar to that used in the UK previously, Defence industry could be defined ‘in terms of where the technology is created, where the skills and the intel- lectual property reside, where jobs are created and sustained, and where the investment is made.’ Capability outputs are the congruence of Fundamental Inputs to Capability delivering to Government a wide range of options to apply military power. This military power derived from force elements is maintained at defined level of preparedness. It is in this context that the consideration of SICP should be broadened. For example, consider that force elements conduct training to become deemed proficient to meet operational preparedness levels. Training immerses the combatant into the realism and complexity of contemporary combat environments. The Users demand increased realism in training. It is the means to ensure that preparation of the combatant can close the gap in reality between training and combat. Unsurpris- ingly, Users training area needs, whether on land ranges, at sea, in the air, live or simulated are becoming increasingly complex. Advanced systems, technologies and training methods are employed to deliver integrated training capabilities which replicate the Australian operational environmental context. Defence has and continues to invest significantly in developing a training capability. There are Australian companies, such as ATS, that are leading the way in delivering training capability innovation to the User community, both in Australia and abroad; as Prime Systems developers and integrators. It makes sense to extend the construct of sovereign industry status to Australian companies that deliver training capability, both in Australia and export their capabilities. And yet, what does Sovereign Industry Capability recognition really represent to those imbued with this status? Is there some advantage of preference when in consideration for Australian Defence contracts? This is unclear. It is contended that SICP should have traction in this regard. After all, Industry is the 9th FIC; Industry and Defence need engage in a close and mutually beneficial relationship. It is offered that under the premise of the qualifying under the SICP, the paradigm of above and below the line is no longer appropriate; you are ‘in’ as a trusted agent of Defence to support the delivery of operational capability outputs. This construct aligns to the MSP arrangements used for acquiring professional services; the difference is that the SICP is about capability. The SICP is an opportunity for sustained commitment by Government to develop and foster Australian Industry Capabilities. However, to meet the SICP aims for Defence the context needs to be expanded beyond the Major Systems of the IIP and re-defined in terms of Australian Industry Support to Operational Capability Outputs. Kane Mangin CEO Australian Target Systems