US-Australian cooperation grows

The level of defence cooperation between Australia and the United States has grown significantly over the past few years - the two countries have been staunch partners in coalition operations, and the need to achieve interoperability is driving their defence industry sectors closer together. ADM discussed this with Bruce Bade, Director, Pacific Armaments Cooperation, in the Office of the US secretary of Defense. The views he puts forward in this interview are entirely his own and not necessarily those of the US Dept of defense.
ADM: How would you describe the current state of cooperation between the United States and Australia?

Bade: Cooperation in the acquisition field is strong and growing but there is room to improve. Long standing cooperation in technology collaboration through The Technical Cooperation Program, many years of experience with the Foreign Military Sales process and with licensed production of such systems as FFGs and F/A-18s, some successful collaborations in cooperative development, and recent experience in submarines and the Joint Strike Fighter all contributed to a working relationship that can be further developed.

On the government side, the dialog on acquisition matters is more organized and robust than ever before. In the late 1990s we recognized a need to address the acquisition relationship in a more organized way and a new senior-level bilateral committee was established to guide the relationship and to resolve issues. Under authority of the Australia-US Ministerial talks (AUSMIN), the AUSMIN Defense Acquisition Committee (ADAC) now provides a forum for addressing current issues, coordinating policies, and exploring opportunities for collaboration. Co-chaired by the Australian Under Secretary (Defence Materiel) and the US Principal Deputy Under Secretary (Acquisition, Technology and Logistics), ADAC addresses the entire spectrum of defense acquisition matters from concept development through technology development, systems development, production and procurement, and logistic support and modernization. In conjunction with ADAC, there are now also regular consultations between the military services of each side. If we don't achieve more collaboration in the future, it will not be for lack of trying.

ADM: What are the major areas of cooperation, or specific projects, you would single out to illustrate the strength of the relationship?

Bade: I would single out those that illustrate the growth and increasing depth in the relationship. In submarine technology, a unique relationship has been established and great strides are being made toward seamless interoperability. In the Australian Wedgetail AEW&C program, both defense departments have worked to enable Boeing to provide highly sensitive technology that will greatly facilitate interoperability. Several US DoD programs are experimenting with Australian-designed ships from Incat and Austal. Of course, the partnership in Joint Strike Fighter development that was joined this year is very significant and is a model for future major cooperative programs.

ADM: What is the current state of the ITAR exemption process as it affects Australia? Is this connected with the JSF program, or are these separate issues?

Bade: These are separate issues from my point of view, though certainly they are related in the larger
The ITAR exemption is the subject of a draft bilateral agreement between the governments that would exempt from State Department munitions licenses the export of ITAR-controlled items to the Australian government or to specially cleared Australian firms. The DoD hopes that such an agreement will facilitate cooperation between US and Australian firms to the benefit of both the firms and the defense departments. The agreement is pending the resolution of issues raised by the US Congress which question the general direction of US policy and law related to ITAR exemptions and are not specifically related to the Australia-US relationship.

ADM: It's been the experience of many Australian companies that it is easier for an American firm to sell into Australia than for Australian firms to sell into the US. Is this true in your experience and if so, are the US and Australian governments trying to change this?

Bade: I can't say I have experience in selling to either, but I have observed the markets for a long time and can say that there is more domestic competition in the US that clearly makes it a challenging market for foreign suppliers. No competitive marketplace is easy. Nevertheless, there are Australian firms that will attest to the fact that the size of the US market makes any success a tremendous benefit for the Australian firm that can commit to the investment.

The same cannot be said about the Australian market, of course, nor is it probable that US suppliers would agree with the assertion that it is easier for US firms to sell into Australia. While there are fewer legislative restrictions in Australia, there are always requirements for Australian industry involvement. US firms have also noted that Australian processes for major systems acquisition are frustrating and sometimes so lengthy that, when compared with the potential business, the incentives to compete are few. The Australian defense department is addressing this, as you well know, and we hope that the efforts will be successful.

The US and Australian defense departments have a long standing formal agreement to "level the playing field" for their industries so that Australian firms can compete for DoD business on the same terms as US firms, and vice versa. The 1995 Memorandum of Agreement concerning Reciprocal Defense Procurement provides only a policy framework; the firms themselves have to seek and compete for contracts. Each government is committed to establishing pertinent internal regulations, educating its procurement workforce, and publicizing sufficient information with respect to prospective procurements.

In the end there are practical obstacles, however. Programs that involve classified information sometimes make transmittal of bid packages problematic. In all transactions for other than the most basic commodities, firms with an established presence close to the customer have a natural advantage. That explains the substantial US investment in the Australian defense sector. The only solution I can suggest is that firms wishing to do business in the other country should plan to invest in activities that bring them closer to the customer. For your Australian readers, I would once again point out that the size of the American market makes it well worth that investment.

The US DoD is working to ensure that Australian firms are treated in accordance with the 1995 MoA and that when issues arise they are addressed quickly. Our security depends upon strong defense industrial bases in both countries and the two defense departments aim to facilitate market access that will operate to strengthen both industrial bases. A ministerial-level bilateral Statement of Principles is moving us in that direction.

ADM: How important is it to the US to have a close, cooperative relationship with Australia?

Bade: The defense equipment relationship is a major factor in the alliance. If we are to have the level of interoperability that both governments want, a close, cooperative relationship in this domain is very important to both countries. It is also important because cooperation can contribute positively to greater connectivity between the two countries and to the overall fabric of the alliance, and the lack of it can result in unhelpful disputes.

ADM: Why is this? What's in it for the US? And what's in it for Australia?

Bade: Defense acquisition is sensitive to political and pocketbook issues in both countries. It involves security matters of the utmost importance, and it involves taxpayer money and jobs. Consequently, whenever there is potential for international business in this domain, there is also potential for controversy. Inasmuch as there is increasing need, as well as potential, for international business, governments will do well to manage it in as cooperative a way as possible.

What's in it for us if we succeed? US and Australian defense officials believe there are several benefits from more cooperative acquisition efforts:
Military operations depend to some extent on compatible and interoperable equipment. This is becoming critical in network centric operations. While all equipment does not have to be identical, we must design our systems to be interoperable and that requires cooperation.

The best technologies must be employed. No nation has a monopoly on the best technologies. Cooperation can help ensure that the best technologies are put into the hands of our forces. There are also great technology synergies that can be attained through cooperation.

Economies must be sought because defense budgets are always constrained. Reduction in the duplication of research and development efforts through cooperative programs can free up funds for other defense needs.

Finally, there are intangible benefits of armaments cooperation. Cooperation builds military and industrial relationships that underpin the political dimensions of the alliance. The act of cooperating also sends a signal to potential adversaries, telling them that we are determined to work and fight together.

ADM: Have the campaigns in Afghanistan and Iraq over the past two years had a significant impact on the depth or breadth of this relation ship?

Bade: Yes. These campaigns have demonstrated the value of military operational interoperability and, at the political and public policy level, they have demonstrated the value of a close and cooperative alliance. Those factors have improved the climate for sharing sensitive information and technology and that has led to substantial and specific changes in policy and practice related to armaments cooperation.

ADM: What directions do you see the relationship taking in the future?

Bade: The publicly-announced national security strategies of Australia and the US continue to value and rely upon a very close security relationship. Business realities in the defense sector are leading to more, not less, international collaboration. Taken together, these factors suggest that the armaments cooperation relationship will grow broadly and deeply. I believe that will lead to more systems development cooperation as well as to deeper cooperation in materiel maintenance and logistic support.

ADM: If you were forced to prioritise, in what areas do you think the two countries should invest most effort in terms of defense/arms cooperation, and why?

Bade: Technology cooperation - that is, cooperation between the defense establishments in the development of generic technologies and pre-competitive development of applied technologies - seems to be progressing well. We have work to do in other areas.

We are not doing as well in systems development cooperation and we have to find new and better ways to collaborate there. The governments must work together to address at least two needs: to harmonize future capabilities development needs so that industry has one target instead of two; and to remove obstacles to industrial collaboration, so that industry has the incentives and capability to collaborate in pursuit of that target.

Logistic support is also an area in which we can develop further collaboration. Geographic separation is usually an obstacle to cooperation, but in the case of logistic support it might be an incentive. On the operational side, we can continue to improve our ability to support each other's forces in the field. On the maintenance side, we can establish complementary facilities and policies that will provide us more effective and more affordable maintenance.

ADM: What do you see as the areas where Australian R&D and Australian industrial 'smarts' can contribute most to US arms and C4ISREW development programs?

Bade: There is a long-standing and very productive cooperation in radar research and development that should be further exploited and expanded. Australia has superb capabilities in a number of other high technology areas, both in government and in industry, and relations with US counterparts are expanding.

The question relating to industrial "smarts" remains to be determined by market factors and this is really a question for our industry colleagues. On the government side we are looking for compatibilities that will form win-win situations for both governments and industries on both sides. Defense equipment acquisition relies on public funds and the political and economic interest surrounding expenditure of public funds will always have to be satisfied. Business relationships that satisfy the military needs of both Australia and the US, and also satisfy the political and economic needs for expenditure of public funds, will yield some very good collaboration opportunities. The role of the governments is to create a climate in which such industrial arrangements can be easily worked out.

ADM: Australia is putting a "whole of nation" effort into supporting the JSF and LCS programs; do you see other programs coming down the pike that Australia could participate in, or that might benefit from Australian participation?

Bade: We look forward to robust cooperation in JSF and the Littoral Combat Ship programs, as well as in the Australian Air Warfare Destroyer program. There already appears to be good collaboration developing on soldier systems and I believe there is potential for cooperation in the US Navy's program to develop systems that will perform the mission currently performed by the P-3C maritime patrol aircraft - the Multimission Maritime Aircraft/Broad Area Maritime Surveillance (MMA/BAMS) program. Inasmuch as Australia and the US have similar needs in that mission area, this program seems to be a natural for collaboration.

We are actively searching for other areas of common interest and would welcome suggestions from your readers. Recently the two defense departments have begun an effort to exchange information on emerging needs on a regular basis. That is, we are exchanging information and ideas about future capability development needs very early in their formulation so that steps can be taken to get the details and the budgetary, political and industrial stars to line up for potential collaboration in satisfying the needs. As you might imagine, this is not an easy thing to do, but we are determined to improve the potential for cooperative programs. If we are successful, the citizens of Australia and the US will get more effective military forces for less expenditure of public funds and we will have superbly equipped forces that can operate more effectively together. Those are goals worthy of our best efforts.

ADM gratefully acknowledges the assistance of David Whiteree of IDEEA Inc, Mclean, Va, in facilitating this interview.