• Attendees at The Defence Innovation Hub annual industry update.
    Attendees at The Defence Innovation Hub annual industry update. Defence

A report by KPMG has highlighted the issues surrounding lengthy procurement processes in an era of rapidly-iterating technologies.

The report’s authors – Mike Stone, Suzanne Nickerson, Andrew Spong, and Jonathon Gill – argue that “Information technologies such as networking hardware and software are likely to last less than a decade, meaning that in a lengthy procurement process they can be out of date before the 'heavy metal' even goes into service.”

According to Stone, “some advanced agencies tackle this by postponing the choice of such hardware and software until the “last responsible moment,” by budgeting for it early on, defining its size, weight and power but agreeing its technical specifications as late as possible.”

There are efforts to address the issue. The report points to the DICP’s efforts to explore collaborative contracting, a model used in sustainment efforts for the Adelaide-class frigates. The authors cite positive results including a 44 per cent decrease in hourly labour costs, a 38 per cent decrease in defects and the on-time delivery of all work.

Other options for agile procurement methods include cloud-based systems. The report notes that “some US states have moved to digital cloud-based procurement systems, which allow them to track and analyse spending, helping them to consolidate contracts - one state found 96 contracts for the same service - and negotiate volume discounts.”

Additionally, the rise of 3D printing allows for the sale of digital files rather than physical items, with particular implications for military remote or at-sea sustainment.

The report highlights a number of initiatives brought in globally to attract small, agile suppliers in procurement processes. “These include the Other Transaction Authority (OTA) process and the Defense Innovation Unit Experimental organization (DIUx), both in the US; Australia's Defence Innovation Hub and Next Generation Technologies Fund; and Canada's recently-launched Innovation for Defence Excellence and Security (Ideas) program.”

However, according to Mike Stone, military agencies still prefer to deal with big organizations, finding ways around the targets. “It often just means that a larger provider teams up with a bunch of smaller ones, and then subsequently acquires them,” Stone said. “They want the stability of the larger provider and some of the innovation that comes from the smaller ones.”

The report concludes by calling for a change in thought processes in Defence procurement.

“The most important is to shift defence procurement officials from trying to predict the future to making use of agile methods of buying that allow them to take advantage of what the future brings.”

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