DSTO renewal opens opportunities for industry

The ADF's high operational tempo has demanded much of DSTO in recent years; the organisation is renewing itself to both deal with today's challenges and anticipate and prepare for the future.
Five years after the 9/11 attacks in New York and Washington the Defence Science & Technology Organisation (DSTO) has had a close look at what it will take to remain relevant and valuable in the 21st century.

And it hasn't been distracted by the emerging terrorist threat from its traditional and enduring focus on the needs of the Australian Defence Force (ADF) and its warfighters, who are operating at their highest tempo since Vietnam. DSTO's current internal change and renewal process has been driven by the need to balance today's short-term client needs with the need to anticipate and prepare to meet the ADF's long-term needs.

Homeland Security - or National Security, as it's more commonly referred to in Australian government circles - has become an important part of what DSTO does, according to Neil Bryans, Deputy Chief Defence Scientist (Information and Weapon Systems). But it's still a minor part of DSTO's total Science & Technology (S&T) output.

Bryans, who was appointed earlier this year, heads DSTO's Edinburgh site. His opposite number at Fishermens Bend in Melbourne, Dr Ian Sare, is now Deputy CDS (Platform and Human Systems), while former Director of the Edinburgh-based Systems Sciences laboratory, Dr Nanda Nandagopal, is now based in Canberra as Deputy CDS (Corporate).

He told ADM last month that DSTO's internal change process was driven by several factors. One of the most important has been the emergence of Defence's Capability Development Group (CDG) and the Defence Materiel Organisation (DMO) as major 'clients' following the Kinnaird Review.

"There are several aspects to that. First of course the two pass processes and the role of DSTO in certifying technical risk, which the CDS signs off on. That has a lot of implications for the way DSTO delivers into Defence; the way in which we were previously structured there was no specific DSTO deliverable either to CDG directly, or to DMO. There was a review carried out, and it was agreed that we should shift to a new style of program. So we've reorganised ourselves to address this broader client structure. To do that we've moved from a previous model where the DCDSs were corporate leaders - essentially account managers - dealing in particular areas (in my case it was intelligence, the strategy areas and joint areas)."

Specific responsibility for particular areas such as intelligence or land forces has been devolved down to the Divisional Chiefs, with one DCDS - Dr Nandagopal - responsible for coordinating and harmonising the total output of DSTO to all the clients. Bryans and Ian Sare are responsible for the "Raise, Train and Sustain" functions at their laboratories, which includes preparing DSTO for future challenges.

A key factor in DSTO's current reorganisation is the need to nurture and develop S&T research and analytical capabilities for the future. DSTO has had to focus in recent years on the ADF's urgent near-term requirements, Bryans said; this had consumed some of the resources it would normally devote to internal renewal - essential for a leading-edge science organisation.

"In our endeavours to be highly client focused we in a sense had no proper corporate level program to manage our S&T capabilities and to some extent some of our S&T capabilities have become very fragile," Bryans told ADM. "What we've decided to do is look at the way in which we actually manage our S&T capability in a more explicit way."

DSTO is studying the capabilities it needs now, and will need in the future, and defining them as Major Science & Technology Capabilities (MSTC): "holistic, reasonably self-contained capabilities which [enable] you to deliver S&T," Bryans explains. "You can think of them in very loose terms as looking like branches of a division. That's not always the case, but it's the most common case."

"Within those we identified a proportion of MSTCs which are explicitly designed for Capability Development. What we're putting a lot of effort into now is trying to come up with all the rules of how we define an MSTC and explicitly identify the resources which are designed to develop their long range research capabilities, which look at the infrastructure and workforce they need, and generally look at what's needed to sustain them."

In this way, Bryans told ADM, DSTO can maintain and grow its capabilities for the long term while still delivering to the client program in the shorter term.

These changes are reflected in small but subtle changes to DSTO's mission statement and vision. The former now talks explicitly of applying S&T to the business of providing expert, impartial advice and innovative solutions for defence and other elements of national security. DSTO's vision is to become indispensable in transforming the ADF and Australia's national security.

The problem, as described by the Chief Defence Scientist, Dr Roger Lough, is that in today's uncertain strategic environment demand for DSTO's S&T expertise is growing very fast, and stakeholder expectations are very high. Furthermore, National Security challenges require an instant response: this is a very reactive, short-term threat environment, directly in conflict with DSTO's mandate to think about and plan for the long term.

The MSTCs described earlier by Neil Bryans embrace all of the key skillsets required by DSTO: Applied research, which is its very core skill; Analysis; Engineering Support; Systems Engineering; and of course Basic Research.

These support DSTO's program priorities: ADF Operations, still the first priority; the Defence Capability Plan - supporting CDG and DMO in their needs and requirements definition and acquisition processes; other defence and National Security challenges; and -"at all costs!", comments Lough - Long Range Research, which accounts for about 10-12 per cent of DSTO's total program.

In technical terms DSTO's priorities are shaped by some obvious realities. The ADF can get much of what it needs off the shelf from allies. DSTO will focus on niche capabilities - things the ADF can't buy something from elsewhere; systems integration; and fast-moving technologies where the normal procurement process doesn't deliver an imported capability fast enough, or in a properly useable way.

That said, its principal DSTO-wide S&T initiatives are no surprise; Network Centric Warfare; Experimentation; Automation of the Battle Space (ABSI); Reducing Cost of Ownership; Data Fusion; Smart materials; Signature Management; and other more specific areas such as Hypersonics. And there are also area where DSTO, by its very nature, is and will remain a national leader: Explosives and energetic materials research; Electronic Warfare; Information Security; Underwater Acoustics; Chemical and Biological Warfare; Structural Integrity of air and sea platforms; and one of Australia's crown jewels, High Frequency (HF) Radar.

The National Security imperative hasn't distorted DSTO's priorities, according to Neil Bryans. There is no S&T (or R&D) culture in Australia's non-defence agencies, so DSTO provides an essential service to the wider National Security community, but this isn't forcing a major change of direction on DSTO.

"We're not starting up something we haven't been in before," Bryans told ADM: "Defence is our first customer." However, he estimates DSTO's support for National Security amounts now to the rough equivalent of "a Division [of DSTO], in terms of the total effort. Now we don't intend to create a new Division to do it. What we do intend is to have a model where we reach out to the MSTCs and bring them together to deliver."

The two-pass Capability Development and Acquisition process introduced as a result of the Kinnaird Review has also had a significant effect on DSTO. The organisation is charged with identifying and mitigating technology risks in upcoming projects, and with advising CDG on both Needs and Requirements definition. Kinnaird recommended spending as much as 10-15 per cent of a project's budget up-front identifying and eliminating risk and this has become a real focus for DSTO, as well as potential driver of new growth, according to Bryans.

The process of getting from first to second pass is something which CDG will now fund - but DSTO will have to deliver against clear project timelines.

Understanding what the problems are early on can save you a lot of heartache and save you a lot of money in the future, Bryans told ADM. "What we're doing is trying to get the senior defence people to articulate their high level requirements, and simplifying the way in which we actually address those."

During the current transition phase DSTO is still funding some of this work itself, "But in the long term, for each project there will be an S&T plan. When we've got new Project X coming through, which is complicated, DSTO will at the outset say, "We think the risks in that need this much S&T," and if that's agreed then it's built into the plan and it goes through all the departmental processes, and at the end there's a line item in there which allocates Y dollars for DSTO to do this; we want to make these deliverables, and then we go and do it."

So where does industry fit into this new construct? Much of DSTO's engagement with industry won't change, says Bryans: the objective of DSTO's interaction with industry is to enhance Australia's defence and national security capabilities and contribute to national wealth creation through discovery of new knowledge and generation of intellectual property, including through the support of exports - without compromising national security requirements.

"We're quite strongly engaged with industry," he told ADM. "We're doing it in a number of ways: we've got a whole stack of industry alliances, particularly with the big prime systems integrators. And we certainly try to identify areas where we can work productively with them."

Most industry players with an interest in defence R&D are familiar with DSTO's industry engagement mechanisms: Alliances; Collaborative Agreements; Contract R&D (by one party or the other); MoUs, Licence Agreements; Non-Disclosure and Confidentiality Agreements; and Technical Support Services contracts. Bryans points out that some 28 per cent of all DSTO's external engagements are with SMEs, primarily through collaborative agreements, TSS contracts and consultancy services undertaken by DSTO.

In 2005-06 DSTO spent nearly $40 million on just over 600 TSS contracts alone, up from $422 million the previous year.

While some of these agreements generate subcontract-style work for Australian companies much of the benefit to Australian industry comes from licensing DSTO's IP.

Defence's IP licensing regime has traditionally attracted mixed reviews from Industry. Bryans sets out DSTO's thinking quite simply: IP licensing transfers technology to industry for commercialisation on defence and civilian markets; it seeks to maximise the benefit to Australian industry and the economy more broadly from government-funded R&D; DSTO's desire is increasingly to involve industry at an early stage in the technology development; and its preferred licensee is a company with an established track record and infrastructure in the relevant market(s).

However, Dr Roger Lough has reminded industry audiences recently that DSTO is not in business to make money: it's primary focus is on its responsibilities to the ADF and national security community.

So when both licensing its own IP to Industry and dealing with IP developed during collaborative R&D programs with industry and other research partners, DSTO will always seek so-called Defence Purpose Rights to the use of any foreground and background IP. And that includes the right to share IP, where necessary, with third party defence contractors.

This article doesn't set out to discuss Defence's IP licensing regime. For all the criticism it sometimes attracts, Bryans points out that it has resulted in a number of highly successful technology commercialisation programs: Nulka, laser Airborne Depth Sounder, the Interactive Link (based on DSTO's Starlight information security technology), HF skywave and surface wave radar, slimline towed sonar arrays and boron composite airframe structural repair technology, to name just a few.

DSTO remains defence's principal source of new IP, both in its own right and through programs it enables or manages for others: "We also manage things on behalf of defence like the CTD program, which is worth $26 million. DSTO manages that on behalf of the Capability Development Group," said Bryans. "We also manage work on behalf of some of the other ADF clients, particularly in the research environment where they depend on our understanding of the research environment to get best value from it. They sub-contract the research work they want through DSTO."

Initiatives such as the Defence Science Access Network (DSAN) are designed to improve communications between DSTO and industry and make its easier for industry to identify and access appropriate IP generated within DSTO. But industry has to exercise some "pull" in this process, and needs to adopt a longer-term approach.

Industry can sometimes focus too much on the here and now, believes Bryans, and this is reflected in the way they interact with DSTO: "Some of it tends to be fairly tactical because they win a defence project and want to interact and it's today's project. We're trying to lift their thinking to be a bit more strategic about some of the work. That's happening, but it's not happening fast.

"We've encouraged them in the CTD space and we help seed CTD ideas. We give visibility to what we're doing and that often creates synergies where they can see how they can go forward with CTDs.

"As part of our MSTC activity, as it matures, we'll be looking for explicit linkages," Bryans said. Some of those linkages already exist, particularly with universities where DSTO has fostered emerging capabilities and new centres of excellence. For the future, he says, "Part of the total capability can be a linkage with universities or a linkage with industry, or an SME or something. As we get more sophisticated and as our MSTCs go to higher levels there'll be some interdependence with these other organisations."

By Gregor Ferguson, Adelaide