Land Warfare: The Land of the Long White Paper | ADM Nov 2010
New Zealand’s 2010 Defence White Paper was originally due out in March this year; by the time of the NZ defence Industry Association (NZDIA) Forum in Wellington it still hadn’t appeared and was expected this month.
Still, senior defence officials dropped some helpful hints about the future defence business environment in NZ.
Gregor Ferguson | Wellington
The NZDIA scheduled its 13th Defence Industry Forum for October, expecting it would coincide with the publication of the NZ government’s 2010 Defence White Paper and Value For Money (VFM) companion review.
It was the NZDIA’s misfortune that the White Paper was delayed, but this didn’t prevent a cadre of senior defence officials dropping some broad hints on the direction that Defence and the Defence Force will take in coming years.
This includes a potentially fundamental change in NZ’s capability development and acquisition processes, along with a new cycle of defence equipment acquisitions and upgrades.
Minister of Defence Wayne Mapp, who told the audience the White Paper process was a collaborative, joined-up process, delivered the keynote speech.
“Ownership matters in projects of this nature,” he said, a point echoed in his introductory speech by the Chief of Defence Force, LTGEN Jerry Mateparae, who said the NZDF had made a full contribution to the White Paper process, and was happy with what it will get from it – which in turn bodes well for successful implementation.
This will be the first White Paper since 1997 and will offer significant opportunities, believes Mapp.
Its context is the far-reaching changes in world, and especially regional, affairs over the past 13 years.
The recent Global Financial Crisis, and burgeoning public and private sector debt have undermined defence budgets against the background of a ‘massive surge’ in regional economic growth over the past decade, he told his audience: regional powers are playing an increasing role on the global stage, and this has implications for NZ.
Furthermore, while geography dictates that NZ forces typically deploy far from their native shore, NZ defence policy has been largely predicated on the threat of state-on-state conflict. But more likely threats today are terrorism, piracy and organised crime.
The NZDF must be designed and equipped to meet these.
It must also be equipped and trained for war fighting, pointed out BRIG Tim Gall, the NZDF’s Assistant Chief for Development, who pointed out the force’s key tasks remain maritime surveillance and response, operations in the South pacific, and environmental monitoring – in that order.
However, the rise of security threats such as cyber attack, various types of border violation, terrorism and illegal external resource exploitation has some fundamental implications: the White Paper looks 25 years into the future, beyond the replacement of the majority of the NZDF’s major equipment.
Use it or lose it
“You can’t afford to have things you don’t use,” Mapp said bluntly, and the clear implication was that redundant capabilities won’t be replaced or extended.
What these might be only the White Paper can say; Mapp, Mateparae and Secretary of Defence John McKinnon were more inclined to talk about capturing savings through streamlining administration and some non-core processes and reinvesting resources in essential, core capabilities.
From the NZDF’s point of view, the self-mandated Defence Transformation Plan (DTP) has focussed on three key programs, according to Mateparae: firstly, a streamlined and more efficient HQ NZDF to provide a “more joined up and cohesive organisation” better able to support the individual service chiefs as well as the NZDF force elements and their commanders.
This includes a NZ$20 million Innovation Fund designed to encourage and implement equipment and organisational innovations which can deliver better capability and value for money.
Secondly, a consolidated Defence Personnel Executive (DPE), along with a single Training and Education Directorate (TED), will focus attention on the NZDF’s people – “our most important asset,” according to Mateparae.
And thirdly, an overhaul of defence force logistics saw in July this year the establishment of Joint Logistics Command, to streamline the delivery of support to the NZDF at home and when deployed overseas.
Both Mapp and MacKinnon trailed their coats on structural reform; The Value For Money companion study has shown that the NZDF is very efficient in its core operational role, but highlighted that military professionals aren’t best suited, by either training or inclination, to back office administrative functions, said Mapp.
The two to three year posting cycle doesn’t help them become productive in these functions either, he added.
This hint might presage functional or structural changes within the defence community.
In similar vein, MacKinnon used the opportunity to examine arguments for changing NZ’s defence capability development and procurement processes; at present, the NZDF is responsible for the former, and the Ministry of Defence for the latter under a very clear and deliberate separation of powers.
Rejecting the hard-nosed corporate approach which would bring the two functions together under a single roof, and that being the NZDF’s, MacKinnon noted the constitutional responsibilities of government and flagged a likely re-jigging of these functions to draw the NZDF and HQ MoD together in a more integrated way.
Exactly what form this might take isn’t clear – but he left no doubt about his intent.
The publication of the White Paper will be the trigger for new programs which will be run under this emerging regime, including air force training, increases in maritime patrol and airlift, and the Anzac frigate self-protection upgrade.
The financial background to all this was spelt out by Dr Graeme Benny, the NZDF’s general manager for Organisational Support.
For the foreseeable future the defence budget will probably ‘flat line’ he said; indeed, it may not even be adjusted fully for inflation.
At the same time the NZDF will be under pressure to continue delivering current capabilities to current levels while simultaneously trying to increase its capabilities.
NZ SRP
Something’s got to give and in an echo of Australia’s Strategic Reform Program Benny said bluntly the NZDF needs to reduce its costs to sustain its core military capabilities.
In hard cash terms that amounts to savings in Operational Expenditure (OPEX) of around NZ$120 million a year, to be achieved by greater commercial outsourcing and other savings identified in Defence’s own Sustainment Review.
The DTP outlined earlier by Mateparae includes a high level review of the NZDF’s business model and cost structures.
It has identified changes and quantified net savings to be captured over a five-year implementation plan.
Echoing Minister Wayne Mapp, Dr Benny highlighted a number of opportunities for capturing efficiencies and savings: only doing what the NZDF is paid for, and getting paid for what it does – which means understanding its cost base properly and in detail; removing waste, inefficiency and duplication; removing unnecessary red tape and ensuring processes and systems are logical and efficient; improving the quality of management information; a greater commercial focus; pursuit of Public-Private Partnerships (PPP, or PFI); and identifying and retaining core business functions while outsourcing the rest.
The cost re-direction set out in the White Paper will be significant, he told his industry audience, but the DTP will not deliver sufficient savings, he warned.
Industry needs to help the NZDF on this journey, and it will be a journey of many steps: “There is no magic bullet,” he said.
One of the portals for that industry engagement will be the newly created Joint Logistics Command, whose Chief of Staff, CAPT Wayne Burroughs RNZN, pointed out logistics accounts for about 44 per cent of defence expenditure, and about 4,100 personnel across the NZDF.
Predictably, he pointed to increased future industry engagement right through the equipment and capability life cycle, including greater potential for PPPs.
But sensibly the Joint Logistics Command won’t rush headlong into civilianisation and outsourcing of key NZDF functions: there is an irreducible core of in-house capability required and this needs to be identified correctly and nurtured, Burroughs pointed out – it takes a long time to grow a good uniformed capability and this shouldn’t be eliminated or pruned lightly.
Industry opportunities
Nevertheless, the increased focus on through life costs may create significant opportunities for industry, according to Des Ashton, the Deputy Secretary for Acquisition.
Many of these will become apparent in the new 10-year Long Term Development Plan (LTDP) to be published after the White Paper.
This will replace the current one which dates back to 2006.
One of the issues facing his organisation, and one which Secretary MacKinnon had addressed earlier in the Forum, was the linking of acquisition and sustainment.
At present, the Defence Acquisition Organisation is responsible for all capital equipment purchases over NZ$7 million, with the NZDF responsible for smaller ones.
The NZDF remains responsible for through life support, however – hence the need for a more closely integrated capability development, acquisition and sustainment construct to enable whole of life costs and appropriate outsourcing arrangements to be taken into account.
Interestingly, the DAO has a permanent staff of just 15 people, with its project teams augmented by secondees from the NZDF, to a rough maximum of around 50 or 60 at any one time.
How the current arrangement will change post-White Paper remains to be seen, but estimating accurately the whole of life cost of a new proposed capability will require a much more integrated approach, if only to reduce the transactional costs involved in dealing across organisational silos.
As for the future projects which will give expression to the policy aims of the forthcoming White Paper, officials declined to disclose too much prior to publication.
The RNZN is working through an Anzac frigate platform upgrade and scoping a Self Defence upgrade whose scope will be refined in the White Paper’s companion defence review.
One of the biggest land-based programs in the works is the Joint Command and Control System which HQ NZDF’s Chief Information Officer Peter Thomas said had been on the books for 10 years and is about to get under way as a multi-agency network later this year.
Army also seeks a Command & Control Battlelab capability for which further detail will likely become available post-White Paper.
Air issues
The RNZAF’s air projects are a mixed bag at present.
The C-130H Hercules Life Extension Program is 34 months behind schedule, partly due to the collapse of the Canadian contractor carrying out the first modification program, L-3 SPAR Aerospace.
The project was subsequently transferred to L-3 Communications Integrated Systems in Waco, Texas.
The first aircraft was accepted by the RNZAF just after the Forum closed; the final three aircraft will be upgraded by Safe Air in Blenheim – this will enable the company to maintain essential skills and jobs and then to bid to carry out similar work in the future for overseas customers, according to Minister Mapp.
Similarly, the P-3K Mission System Modification (MSM) program is running 36 months late with the first two aircraft due for acceptance at Auckland next month, followed soon after by the flight deck trainer.
The aircraft upgrade, conducted by L-3 Communications at Greenville, Texas, has been delayed by some structural and serviceability issues; the remaining three aircraft will also be upgraded by Safe Air with the first already delivered to Blenheim for conversion.
The detail of future NZDF capital equipment programs remain obscured behind the forthcoming White Paper, but early 2011 should see the detail, and the industry opportunities become clearer – including, most importantly, how the NZDF and Ministry of defence will tackle them.