In early July, Defence Minister David Johnston officially opened Saab Australia’s Advanced Maritime Systems Centre (AMSC) in Adelaide and, in doing so, spoke highly of Australian technology.
In particular, Senator Johnston praised the Saab 9LV combat management system (CMS) and CEA Technologies’ CEAFAR radar which, combined with Raytheon’s RIM-162 Evolved Seasparrow Missile (ESSM), demonstrated world-beating capability against supersonic targets during trials aboard HMAS Perth off Hawaii in 2012.
You can read more about the AMSC and Senator Johnston’s comments in coverage from ADM’s Adelaide-based correspondent, Philip Smart, on page 58, but the government has mandated the 9LV CMS and a development of the CEAFAR radar for the Navy’s Future Frigate (Sea 5000) program.
And once again this made me think about Australian industry capability and what is deemed a manageable amount of risk in a program or project.
There have been many words written by my colleagues, both in this publication and others, about the shortcomings of acquiring all our military equipment through processes such as the US Foreign Military Sales program – particularly in terms of the continued technological development of local industry. I don’t want to reprise what they have said over the past months and years, but I would like to consider the benefits of actually taking some risk when meeting a Defence requirement.
Projects that are over budget or behind schedule (or both) because of technical challenges with developing military equipment from a concept into an effective and reliable item or system that is fit for purpose are not hard to find. But it can be argued that, if Australian industry is actually involved in the development of such equipment, there are benefits to the industry itself, the ADF and also to the country as a whole.
To return to Senator Johnston’s comments at the AMSC opening, he noted that the Saab/CEA solution was selected for Sea 5000 to ‘de-risk’ the program.
This is an interesting comment, because had risk not been taken by government and industry in the Anzac Anti-Ship Missile Defence (ASMD) project, now being delivered under Sea 1448 Phase Two, it could be argued that we wouldn’t have that “world-beating” home-grown capability in the first place.
The 9LV CMS was not originally an Australian product of course, but Saab Australia is the lead for the developmental work for the RAN and has exported technology from Australia to Canada, India and Thailand as a result of the work done here.
CEA Technologies are working to further develop the CEAFAR concept, to which the government has contributed funding, into a scalable solution which will also have significant export potential beyond Future Frigate.
These benefits could never have been derived through an FMS acquisition and it is worth considering once again that, despite the risk, the ASMD project has won the ADM/DMO Essington Lewis trophy for the industry team of the year for two years running.
I’m not advocating that we take the highest-risk path to Defence acquisition projects in every case, but I think we need to look beyond the ‘Projects of Concern’ report card to the wider benefits to the country.
There are inevitable spin-offs, known as ‘spill-over’, to other sectors of industry if we can be innovative and at the forefront of technological development.
In an attention-grabbing address to ADM’s Defence Supply Chain Conference in Adelaide last December, chairman of the Advanced Manufacturing Council, South Australia, Professor Göran Roos argued that Defence acquisition should be looked upon in terms of this “spill-over” benefit to local industry, rather than just in pure cost terms.
But he noted that to take advantage of these ‘spill-over’ effects we must have a healthy industry, which includes the high-end systems integrators.
Professor Roos warned that buying off the shelf will kill local industry, because it cannot be innovative. To have the high-technology systems integrators, assuming we are serious about wanting them of course, we need developmental programs to nurture innovation.
Using Sweden’s Gripen fighter project as an example, he said it could either be looked upon as a cost to the taxpayer of SEK 77 billion ($12.06 billion) over its 26-year development (at 2007 prices), or a SEK 350 billion ($54.83 billion) windfall to Swedish industry in “spill-over” effects over the same period.
Finding the right level of risk is therefore very important to the future of Australian industry as a whole, not just the Defence sector.
