Articles by " Andrew Davies"

Graph of the week: learning about learning

An important concept in understanding production efficiency of complex items is the notion of a learning curve. The term has passed into common usage, with ‘steep learning curve’ being synonymous with ‘really hard to master’ (in all sorts of contexts). That badly misrepresents its actual technical meaning; a steep learning curve actually means that something is easy to master. In the case of the production of things like warships, it means that the workforce concerned is getting on top of technical difficulties quickly.

A learning curve can be drawn in a number of complementary ways, but for the purposes of analysing defence projects, the most useful form plots the number of person-hours required to produce each item as production rolls along. Here’s an illustrative example. If the first item takes 1,000 labour-hours to produce, and the learning (in its technical meaning) is 90%, then every time the production numbers double the labour required for each item reduces by 10%. I.e. the second one takes 900 hours, the fourth takes 810 hours, the eighth 729 hours etc. By the time the 25th is produced, it’s taking a little over 600 hours. (See the blue curve in Figure 1, click graph to enlarge) As production times come down, unit labour costs fall as well, though the more productive workforce often shares some of the gains in the form of higher wages.

Graph showing example learning curves (cumulative production vs hours of labour).

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Now look at the other two curves, labelled 85% and 80%. These are the result of steeper learning curves, and they show the labour hours (and thus costs) coming down more quickly as production continues.

Those numbers weren’t chosen at random. It turns out that numbers around the 80–90% figure are typical for industrial applications. In the defence sector, shipbuilding has a steeper learning curve than aerospace production. The simple reason is that building ships is much more hands-on than building modern aircraft—people do a lot more of the actual producing of the finished item than machines. People benefit more from practice than machines do.

In fact, we can break down the production of an aircraft or ship into several sub-stages, each of which has its own learning factor. For example, in aircraft production (PDF, slide 11), the largely automated fabrication stage has a learning around 90%, while the more human-intensive assembly phase is closer to 75%. The overall learning curve will depend on the relative time taken in each of those stages.

To show this isn’t just theory, let me finish with a real world example, but with a warning that real life doesn’t produce nice smooth curves like the examples above. Any changes in design or materials used, for example, will tend to kick the curve upward again, until the new design and techniques are mastered.

Here’s a graph (click to enlarge) from a study of the production of ‘liberty ships’ in American shipyards in WWII (PDF). The various yards showed different levels of learning, but all of them managed to reduce the number of labour-hours per ship from 1.2 million or more to less than half the starting point. In this case, making efficient use of a limited labour force and producing ships quickly to replace those being lost at ferocious rates in the Battle of the Atlantic were both strategic necessities. The contracts put in place with shipbuilders provided incentives to do both.

Study of the production of 'liberty ships' in American shipyards in WWII.

As a final comment, learning curves show why it’s often desirable to avoid producing items like ships in small numbers: you get all of the disadvantages of the early unpractised workforce, but not the long-term advantages of the mature learning curve. Building ten Anzac frigates was almost guaranteed to give a better overall result in terms of production efficiency than a run of three AWDs. Eight future frigates, on the other hand, would again allow for the benefits of learning to help amortise the early costs (not to mention one-off costs associated with design, engineering and infrastructure) across a larger fleet.

Andrew Davies is senior analyst for defence capability and director of research at ASPI.

Note for the mathematically inclined:

For 90% learning, the ‘learning parameter’ λ = 0.9. It’s related to a power law for the number of hours $T(n)$ for the nth production item relative to the first: if $T(n)=T(1)n^{\mu}$, then $\lambda=2^{\mu}$, or  $\mu = \frac{ln\lambda}{ln2}$. For $\lambda$ = 0.9, $\mu$ = -0.152.

The British are coming

The British are coming!

Last week, The Australian broke the story of BAE Systems potentially being brought in to fix the troubled Air Warfare Destroyer project. The three-ship build is already well underway in Adelaide, and the project is currently managed through an industrial alliance contract involving government-owned ASC Pty Ltd, Raytheon Australia and Defence.

Approved at a cost of $8.5 billion dollars in 2007, the project has accumulated nearly two years of delays and $300 million in additional costs. A government-initiated review of the project by ex-US Secretary of the Navy Don Winter and former Transfield boss John White recommended a range of measures, including ‘the urgent insertion of an experienced shipbuilding management team into ASC’.

But while the summary of the Winter/White report was announced by government just two months ago, the AWD Alliance had taken steps before that to remedy some of the project’s shortcomings. One of us (Andrew) visited the site at Osborne last week, and it was clear that some good work has been done. Read more

When the Australian National Audit Office reported on the project in March, many of the identified problems related to the transfer of the design from Spain to Australia, and the inexperience of the Australian workforce after more than a decade without a build project. Those factors contributed to a poor start to the project. Low productivity was the inevitable result, due to reworking of both the design and often the hardware. As a result, the first-of-class HMAS Hobart took shape fitfully and inefficiently.

A critical question is whether the existing project management and workforce can retrieve the situation. The answer seems to be a ‘qualified yes’. The Alliance has recruited some experience in production engineering and is seeing positive results. Visits to the yard at about the same stage of progress on ships 1 and 2 revealed a huge difference between the two. The blocks for ship 2 in the yard are more complete (with internal piping, painting, insulation etc) and are constructed to tighter tolerances than the first. For example, when the upper blocks were first lowered into position on ship 1, a substantial gap resulted. On ship 2, the parts fitted neatly together. The already in situ features in the modules mean there’s less need for work in tight and cramped spaces (in particular, the need for difficult overhead work is greatly reduced). The reduction in labour hours required from the first to second of class will be well over 20%, with further improvements expected for ship 3.

The ‘yes’ has to be qualified because there’s still substantial work to be done before a functional warship is delivered. In particular, the capability of the vessels will depend critically on how the Aegis combat system and other sensors and weapons function together. The job of building integrated systems into the hulls is yet to come, although land-based integration is well advanced.

Perhaps because of those improvements, news of BAE’s putative role has taken many by surprise, even though the government showed its cards by appointing a team of corporate lawyers and investment bankers as strategic advisors back in June. By seeking out mergers and acquisition specialists (rather than shipbuilders), the government revealed its inclinations.

So what might we expect if BAE is brought in? At a minimum, BAE could provide individuals with shipbuilding expertise to assist ASC. More likely, BAE would be asked effectively to take charge of the project. It’s even possible that BAE would take an equity stake in ASC’s shipbuilding arm—perhaps contingent on completing the AWD project. (There are good reasons to retain ASC’s submarine maintenance role in government hands, at least for the time being.)

BAE taking charge of the AWD project—if that’s indeed what’s to happen—would bring benefits and risks. On the positive side, BAE could reach back to the UK for help. Of course, BAE’s own problems with module construction for the AWD, and their trials and tribulations with the LHD project, show that they’re capable of overestimating their own abilities. If nothing else, however, BAE would bring the commercial focus that the government-owned ASC lacked. And they’d have every incentive to do so; not only will their reputation be on the line, but success with the AWD would likely secure them the massive eight-vessel Future Frigate Anzac replacement next decade.

On the other hand, the disruption that’s an inevitable result of a change of management would have to be carefully handled. While BAE has experience as a subcontractor, there’d still be a lot for them to learn about the project. The challenge would be to ensure continuity of effort concurrent with the introduction of new blood. As we’ve seen, ASC hasn’t been sitting on its hands. A lot would depend on the attitudes taken by the parties involved and cooperation will be critical. If it happens, let’s hope that the intervention adds more than it subtracts from the project’s likelihood of success.

As ever, the devil’s in the details, and another post will discuss the intricacies of third-party intervention and what the alternatives might look like.

Andrew Davies is senior analyst for defence capability and director of research at ASPI. Mark Thomson is senior analyst for defence economics at ASPI. Image courtesy of Flickr user Kayla Casey.

A realistic future submarine—at last

The Royal Australian Navy Collins Class Submarine HMAS Sheean at sunset during a routine transit and training exercise off Christmas Island.

At the Defence and Industry conference this week, we got an official update on the status of the Future Submarine project (SEA1000) from the project head, RADM Greg Sammut and DMO’s General Manager of Submarines, David Gould. That’s welcome, as multi-billion dollar government projects should be exposed to public scrutiny to the extent possible consistent with commercial and security sensitivities. (I won’t comment on other rumours doing the rounds.)

In a recent ASPI paper, Mark and I summarised the thinking that was on display at ASPI’s conference in April. What we got this week showed encouraging progress in the three months since. I’ve been writing about the project for years now (like the F-35, it’s a gift that keeps giving) and have lamented the apparent lack of coherence in planning. So credit where it’s due; with a couple of exceptions which I’ll come back to later, I think we’ve arrived at a sensible approach. Read more

Firstly, RADM Sammut explained that the Integrated Project Team (IPT) in Adelaide is largely composed of industry representatives working in support of DMO’s project office. This ‘above the line’ industry participation is vitally important if the Commonwealth is to be a smart buyer. Having relevant industry experience in-house will allow Navy/DMO to refine their requirements cognisant of their impact on project costs and risks.

A dramatic illustration of that—and a pretty newsworthy one in my books—is that there’s been a significant stepping back from the 2009 Defence White Paper’s wildly ambitious aims. There’s no conventional submarine in the world with the range and endurance of the Collins class, but the 2009 aim was a ‘significantly greater’ performance. That led me (and others) to describe the projected submarine as a ‘conventionally-powered nuclear submarine’ and to question the feasibility of the project.

This week we learned that the revised capability aims aren’t very different from Collins in terms of range, speed and endurance. Capability enhancements will instead focus on sensor capabilities and stealthiness, both of which will make the subs more effective and survivable in the decades to come.

Another sensible step is to take the existing Collins combat system (a highly modified derivative of the USN’s Virginia class system) and weapons into the new class, at least in the first instance. That will allow for a spiral development path, in which the new hulls, sensors and propulsion systems can be worked out without the concomitant risks of developing a new combat system. We tried that with Collins and it caused more grief than it was worth, so full marks there.

Of course, putting new sensors into the future boats will require them to be integrated into the combat system. Planning for that eventuality, we were told that Australian software developers were being contracted for ‘out of cycle’ software-development work (ie not in the USN development cycle). Getting Australian industry into the high value-add end of systems integration, where competing in global markets is entirely possible, is also a welcome development.

David Gould described the next step of finding an industry design partner that’ll take the design brief provided by the IPT and produce a detailed design. It wasn’t 100% clear if the design partner would automatically become the build partner, but that would make sense, allowing for the transition from design to production engineering to flow with lower risk of things being ‘lost in translation’. Mark and I had a fair bit to say about how this might work in the recent paper, so I won’t labour the point here, other than to note that such an approach might have avoided some of the problems the AWD project had.

Lest I seem uncharacteristically charitable, let me point out a couple of things that didn’t sound quite right. As Manager of Submarines, David Gould has to worry about the existing fleet as well as the future one, and he noted that both types would be in service together for a considerable time. He explained that his preference was to have a single support contract to cover both. Presumably the thinking is that having in-house understanding of both designs would allow for a single support arrangement. I’m not totally convinced; unless the same design house is behind both (in practice meaning a Swedish choice), it seems to add complication in managing intellectual property—a significant problem in the past.

Finally, there were hints in the presentation about the possibility of offshore builds, but no discussion of how (or where) that might happen. It’s fair enough to be looking at foreign builds, as the costs and benefits of all options should be diligently explored. But then we were told that a local build (including the first of class) was important for knowledge transfer needed for future support. The mixed signals had some of the industry reps scratching their heads.

All in all, there were more steps forwards than backwards. It might be several years later than would’ve been optimal, but real progress is being made.

Andrew Davies is senior analyst for defence capability and director of research at ASPI. Image courtesy of Department of Defence.

Correction: an earlier version of this post described the Collins combat system as a derivative of the Virginia class system. In fact, the control system fits that description, but the interfaces with sensors and other systems are quite different. The author thanks a keen-eyed reader for pointing this out.

Civilian aviation remains a target

New surface-to-air missile 9M317 of 9K317 Buk-M2E at 2007 MAKS Airshow

The downing of MH17 is another reminder of the vulnerability of civilian aircraft to military weapons. When fired upon by a sophisticated missile system, airliners don’t stand much chance. Weather and collision-avoidance radars won’t give much, if any, warning of an incoming missile (and aren’t designed to) and there aren’t any onboard systems that would allow the aircraft to respond in any case. If the aircraft is in the missile’s engagement envelope—the ‘box’ of airspace the missile’s fuel and manoeuvrability allows it to reach—the outcome isn’t likely to be a happy one.

In short, the only way to keep airliners safe from missiles is to keep them away. For larger surface-to-air missiles (SAMs) of the type likely to have been involved in the recent atrocity, that means keeping a wide berth. A Russian SA-11 (likely last week’s culprit) can reach almost 46,000 ft, which is well above the cruising height of airliners around 30,000 ft. Read more

As the week’s events demonstrated, airliners and tense environments populated by military systems aren’t a good mix. During Cold War tensions, the Soviet air force shot down a Korean airliner in 1983 (and damaged another in 1978) and in 1988 a United States Navy warship shot down an Iranian civilian Airbus on a routine flightpath following a skirmish between surface vessels. If nothing else, the MH17 event might lead to a tightening of the protocols for civilian air traffic over conflict zones—though working against that will be the economics of fuel consumption and ticket prices.

Keeping the aircraft away from the threat by avoiding war zones (or even military exercise areas) is one thing, but a look through the list of historical airliner shoot-down events reveals there’s a risk that the threat comes to the aircraft instead. A number of civilian aircraft have been shot down, and others damaged, by man-portable air defence systems (MANPADS) fired near airfields by irregular groups of militants. Those shoulder-launched missile systems are designed for battlefield use against helicopters and low-flying aircraft and are smaller and more easily concealed than the large SAM systems involved in the incidents described above.

Because their size limits their range and altitude to about 5 km and 10,000 ft respectively, MANPADS don’t pose a threat to commercial aircraft at their cruising altitude. But they represent a real threat to aircraft operating at lower levels, especially at take-off or landing and, in principle, pretty much any airport in the world is vulnerable to attack from these systems. The footprint from which one can be fired against an airliner operating into or out of an airport covers about 800 square kilometers—an impossibly large area to secure. While civilian aircraft have survived hits from MANPADS (such as in this near disaster (video)), a hit on vital systems close to the ground gives the crew little time to respond.

For a terrorist group, those weapons represent an opportunity to prosecute an attack against one of their most preferred targets. The list of attacks shows that they have been used most often by insurgent groups in the Middle East and Africa, and on at least one occasion as part of a coordinated terrorist attack against Israeli civilians in Africa.

The threat to civil aviation from those systems has long been recognised. International efforts to limit their proliferation gained momentum last decade, with the development of the Wassenaar Arrangement for export controls on MANPADS in 2003 and increased regulation and reporting of MANPADS deals. These controls have helped restrict the spread of these weapons, though not before some found their way into the hands of groups such as al-Qaeda (PDF). (It’s not clear that the weapons in the hands of such groups are functional). The Wassenaar Arrangement was designed to keep the weapons safely in state inventories.

But, as Peter Jennings points out, we’re entering a period of history where some states are breaking down and groups of non-state actors such as militant Islamists in Syria and Iraq are perilously close to getting their hands onto the military and industrial inventories of nation states. With MANPADS being in the armouries of over 100 countries around the world, including many of the shakier ones (such as Libya), the possibility of them getting into the hands of extremist groups suddenly looks much more likely.

It’s entirely understandable that Western countries don’t want to get involved in the recent events in places like Syria and Iraq after the experiences of the past decade. But that mightn’t be the right call—the combination of returning fighters and looser control of weapons technologies with the potential to cause significant harm to Western interests and populations requires much greater vigilance. As far as MANPADS go, Australia has the advantage of having no land borders, which takes away the easiest way of smuggling such weapons, but it’s no time for complacency.

Andrew Davies is senior analyst for defence capability and director of research at ASPI. Image courtesy of Wikipedia.

14,000 sounds like a lot—down to the docks again

All four blocks have been lifted onto the LHD01 hull at the BAE Systems Williamstown Dockyard.

Earlier this week, The Australian ran a story about delays in the construction of the Navy’s new amphibious ships. At first blush, it looked like a familiar story of poor shipyard performance, with 14,000 defects found in the HMAS Canberra, the first of the two new LHDs, resulting in a delivery delay of seven months. As the newspaper pointed out, the problems come at a bad time for the Australian shipbuilding industry, after a critical report on the air warfare destroyer project and a government decision to outsource the construction of two new replenishment ships to overseas companies:

They come at a time when the Abbott government appears to be paralysed with indecision about how to proceed with the country’s largest def­ence project, the $36bn construction of up to 12 submarines in ­Adelaide.

The delay in the completion of HMAS Canberra at Melbourne’s Williamstown shipyards has disappointed Defence, which says low productivity, poor skills and a shortage of trained supervisors has combined to delay the delivery of the ship until later this year.

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To be sure, the government is running hard on shipyard productivity. As the Defence Minister recently told the ABC in the context of the AWD program:

If we can’t get the program back on the rails then it will be very, very difficult for me or anyone else to advocate a long-term naval shipbuilding enterprise in Australia.

That’s the context for the Oz piece—another poorly performing naval shipbuilding program imperilling the future of the local industry.  But I think a closer look at the (limited) data in the story tells another tale—or at least allows another interpretation. It’s routine for large industrial projects to have a long list of defects identified for remediation. Collectively those defects form what’s called a ‘punch list‘, a list of items to be completed before delivery can be accepted. Some of the defects can be substantial—the article mentions electrical failures, leaking seals, unaligned pods and corrosion in propellers—or nothing more than a rivet that needs replacing or minor repainting.

For a project delivering multiple items, one measure of contractor performance is how many of the punch list entries are avoided in subsequent builds. To assess that, at the bottom of the story we find:

The second LHD ship, HMAS Adelaide, which arrived in Melbourne in February, has far fewer problems and Defence says it is ahead of schedule to be delivered to the navy in 2016.

The fact that the first ship is late while the second ahead of schedule suggests that the shipyard workers are actually working on a pretty steep learning curve, which—despite common usage to the contrary—is a good thing because it means that mistakes are learnt from efficiently. If there were systemic problems we’d expect both ships to be running behind schedule.

That suggests the initial estimates of how long it should take to do the first of class weren’t accurate. In other words, the preliminary project work and due diligence on the behalf of the Commonwealth and/or the estimates from the contractors involved (in this case Navantia in Spain as suppliers of the hulls and the drawings for the fit out and BAE as the local shipyard) were overly optimistic.

That wouldn’t be a new story either. In the AWD project, the difficulties of bringing together a first-time exporter of a warship design and a start-up shipyard were significantly underestimated. In that case, the problem was probably exacerbated by shipyard productivity falling short as well—but perhaps not as far short as a cursory glance at the outcomes might suggest.

In the case of a two-ship build, as is the case here, it’s almost academic where the fault lies, because the outcome is the same—delayed delivery of capability. (In this case the problems don’t result in a direct cost to the Commonwealth because of a fixed price contract.) But it matters much more if the government is going to commission further builds of larger numbers of ships (such as eight future frigates or 12 submarines). There’s a big difference between an underestimation of the start-up difficulties and costs (which get amortised over the whole fleet and add proportionally less in unit cost the larger the production run) and a systemically poorly performing yard, which potentially adds costs and delays to all of the hulls. It’s important to be able to tell the difference—not least because it also tells you where effort has to be applied to get better results the next time.

Andrew Davies is senior analyst for defence capability and director of research at ASPI. Image courtesy of Defence Materiel Organisation.

Allies, airpower and history

An RAAF P-40 Kittyhawk in PNG in WW2. By the time the strip at Nadzab was available in 1943 the USAAF was making use of more advanced aircraft.

In discussions about the future of ANZUS last week, I introduced a discussion of Australia–US cooperation in air combat and strike. Because of recent force structuring decisions, I think Australia’s well set up to make substantial contributions to coalition air-power operations in the future, but it’s worth thinking through how we might best do that.

History provides some valuable lessons. Australia’s first air operations with the United States were during WWII’s Pacific campaign. Australia started the war with equipment that wasn’t up to speed, and relied heavily on imports from the US and UK. Both of those nations had their own priorities and it took the RAAF some time to catch up. Read more

As a result, the Australian contribution to the allied air campaign wasn’t always especially helpful. As aviation historian Michael Claringbould observes, turning up for coalition operations and bringing along outmoded equipment can be counterproductive:

The formation of 10 Operational Group in late 1943 hindered the [US] 5th Air Force… [T]he limited contribution the RAAF would make at Nadzab [PNG] was at the expense of valuable apron space, badly needed by advanced US types. The fact that No. 10 showed up with obsolete or superfluous types frustrated the Americans, [who] were forced to allow the RAAF to operate from Nadzab for reasons of political compromise, rather than contribution to the war effort.

Flightpath, February–April 2012

So it’s possible for an ally—especially the junior one—to be a nuisance rather than an asset if its forces aren’t what the local commander needs. Balanced against that is the political payoff in having allied support, and it can be a net positive if mere presence is sufficiently valuable. That wasn’t the case in WWII because it was a war of survival, but in operations of a more discretionary nature the calculus can be different. Many of the smaller contributions to coalition operations in Iraq and Afghanistan can be filed under ‘little or no operational benefit but politically valuable’.

Of course, it’s better to make a valuable contribution to the politics and the operation, as Australia managed to do in subsequent wars. By 1945 the RAAF was the world’s fourth largest air force (admittedly after some of the former high-rung position holders were displaced with extreme prejudice), with an inventory of capable aircraft and experienced personnel. The Navy was assembling a capable air arm, and the RAAF and RAN were significant front-line contributors over Korea. The RAAF later took its Canberra strike bombers to Vietnam and worked successfully with American tactical air units, flying over 11,000 missions.

But those successful exercises in alliance air power haven’t been repeated. Australian defence spending fell dramatically after announcement of the Guam doctrine and the end of the Vietnam War, and by the 1990s, Australia’s defence forces were suffering from a scarcity of resources and the inevitable ‘hollowing out’ of capabilities. The ADF played no direct combat role in the 1991 Gulf War and when an American request for Australian F-111s was made for Operation Desert Fox in 1998, the aircraft weren’t fit for purpose, lacking critical electronic warfare equipment. Similarly, the Australian contribution to the air campaign in the 2003 Iraq War came only after Iraq’s air defence system had been effectively eliminated by US forces.

Together, those examples show that Australia has been a valuable contributor to air operations when it had capable and well-maintained equipment which allowed the RAAF to operate effectively alongside American forces. At other times we’ve been an ineffective but tolerated flag flyer (and in Desert Fox not even that).

Today, after a decade of investment into its air-combat capability and with more to come, the ADF is well-placed to be a real contributor to allied air operations, should the government of the day choose. Super Hornets put it on a par with the USN air combat and strike capability, and early next decade the F-35 will move Australia further up the American capability curve.

But tactical strike fighters mightn’t be the most valuable contribution we could make. The US won’t lack those—it will have 600+ Super Hornets and more F-35s by early next decade. Turning up with ‘more of the same’ could be useful, as it was in the widespread wars in Korea and Vietnam, but in a more focused campaign it could complicate American command and control while adding little extra combat capability. To avoid that we could instead contribute capabilities that are almost always oversubscribed in modern air warfare: electronic-warfare support, airborne early warning and control and air-to-air refueling. Again the RAAF is well placed, with small but capable fleets of all those types.

It remains to be seen whether the government will opt for further investment in alliance-specific capabilities. But if it does, the less glamorous but always valuable air-combat support assets would be a good place to start.

Andrew Davies is senior analyst for defence capability and director of research at ASPI. Image courtesy of Wikipedia.

NZ defence capability: running to stand still

HMNZS Te Mana of the Royal New Zealand Navy receives a Royal Australian Navy boarding party fast roping onto the flight deck of HMNZS Te Mana from an Seahawk helicopter from 816 Squadron.I’ve just got back from Wellington, where ASPI was involved in Australia-New Zealand defence cooperation and policy discussions. As usual, we were hosted admirably by our Kiwi colleagues and the cultural and historical affinities between the two countries made for easy discussions.

But despite abundant good will, I think it’d be a mistake to conclude that we’ll always be able to work smoothly together. Future interoperability between the two countries will require effort on both sides. Simply put, Australia’s building a force structure capable at the top end of modern combat that’s suited for operations with American forces, and NZ is struggling to keep up.

Let’s start with naval forces. Australia’s new amphibious ships and Aegis-equipped destroyers will be delivered soon and both will represent a quantum leap in capability. The Australian Anzac frigates are being upgraded with state of the art phased-array radars and combat systems, making them highly capable combatants. NZ is already wrestling with the cost of the replacement of its own Anzacs, even though that won’t be until next decade. Read more

Australia’s Air Force has been extraordinarily successful in making the case for recapitalisation. By 2022 essentially every major platform in its inventory will have been replaced. Australia will be the only country outside the US operating both the F-35 and the Growler electronic-warfare aircraft, while the RNZAF’s air-combat capability is a distant memory. Our maritime surveillance fleet will soon be a mix of manned P-8 Poseidons and Triton drones—the same mix as the US Navy’s—while the RNZAF ponders what it can do to replace its P-3s when the time comes.

The Australian Army is in the process of updating its helicopter fleets and has ambitious plans for doing the same with its protected mobility vehicles. While not as far along as the other two services in terms of winning approvals, it’s likely that at least some of Army’s goals for protected mobility will the realised—at a cost of several billion dollars. The scale of investment required is well beyond New Zealand’s modest means.

The NZ defence budget shows why. As well as drawing on a smaller resource base (a population of 4.4 million compared to 24 million), defence in NZ hasn’t had the same government (or public) priority as it has in Australia. Australia’s defence spending bottomed out at 1.6% of GDP and is now closer to 1.8%, heading to 2% if the government delivers on its funding promises (so far so good). This year’s NZ defence budget is still a little under 1.6% of GDP, even after a substantial increase for the first time in years, and had been as low as 1.1% a few years ago.

And it’s a smaller fraction of a smaller economy. Australia’s defence budget this FY is A$29.3 billion compared to New Zealand’s A$2.8 billion. Buying power is more important than GDP share when we’re talking force structure and clearly the NZDF has little chance of keeping up.

One option is to opt out of topshelf military capability for the most part, and to accept a role for the defence forces in peacekeeping and constabulary operations, perhaps with niche capabilities suited for more challenging environments. But, like all governments, New Zealand’s wants to have alternatives available to it in times of crisis, and wants to generate as many capability options as possible. The recent NZ Defence Capability Plan makes that clear:

The importance of the combat capabilities of the NZDF cannot be understated. It is these capabilities which underpin the overall utility, depth, and effectiveness of the NZDF, and thus its value to the Government and our partners. The NZDF must have the combination of personnel, equipment, training, and experience of working with other forces to allow the Government to make a credible valued contribution when it needs or wishes to do so, including in higher intensity environments.

The trouble is that military capabilities for high-intensity environments are progressively more expensive with each generation. And Australia might not be able to help as it has in the past. For example, Australia’s future frigates are likely to be substantially larger and more sophisticated than the current ones—and too expensive for NZ even to contemplate. There’ll be no more Anzac frigate programs.

But at least as a stopgap measure, Australia might be able to assist. If the government goes through with the proposal to replace our Anzac frigates early, we’ll have eight world-class warships looking for a home. What could be more appropriate than for our NZ allies to take charge of some of those recently upgraded vessels to replace their ‘fitted-for-but-not-with’ variants?

New Zealand’s additional $500 million over the forward estimates won’t go far towards providing extra top-end capability. But it could do a lot for interoperability of command and control and communications systems, or towards making the NZDF’s planned amphibious task group interoperable for regional contingencies with Australia’s soon-to-be greatly increased capability. The NZDF has already made some tough decisions based on resources. It’s in both our interests for our armed services to work well together and we need to be talking about how to make that happen.

Andrew Davies is senior analyst for defence capability and director of research at ASPI. Image courtesy of Department of Defence.

The curious case of the MRH90

An Australian Multi-Role Helicopter (MRH 90) flies over Brisbane.Last week saw the release of the latest Australian National Audit Office report into defence acquisitions. In the firing line this time is the multi-role helicopter program. Like most audit reports, the ANAO has carefully unpacked the process behind this troubled acquisition—now over four years late and, like many other audited projects, well ensconced on the projects of concern list.

But unlike most audit reports, there’s a big gap in this one. The ANAO reports that the Howard government’s decision to acquire the European-sourced MRH90 rather than the American S-70M Black Hawk was taken against the advice provided from Defence. Because those deliberations are covered by Cabinet confidentiality, we can’t be sure why that was the case. My suspicion is that the deciding factor was the prospect of greater Australian industry involvement in the European bid. Read more

But even without the missing data there’s plenty of meat in this report. As I’ve written previously, the background is the early 2000s Defence helicopter rationalisation plan. The idea behind the plan was to reduce the number of types of helicopters in the ADF’s inventory in order to reduce the overall cost of ownership. Each new type brings with it a new set of fixed costs and a new supply chain, so rationalisation made good sense. If the Army and Navy could have helicopters with a high degree of commonality and shared supply chains, it’d cut down the overall cost. So far, so good.

Now fast forward to the present day, and we find the Navy is in the process of taking delivery of 24 new Romeo model Seahawk combat helicopters from the United States, while the Army continues to operate its Black Hawks as DMO and the contractor (Australian Aerospace, a subsidiary of Airbus Helicopters) try to get the MRH90s up to speed. Moreover, Army has a strong preference for retaining the Black Hawk for the counter-terrorism role. (That’s long been the case and the audit report notes the same preference as early as 2004.) In other words, despite considerable investment of time and money, little rationalisation has been achieved. Rather than a Seahawk/Black Hawk fleet, or one based on a combination of Airbus land and marine helicopters, we’ll have variants of each for the foreseeable future.

The root cause of the problem seems to have been a combination of government’s willingness to weigh industry involvement highly in its selection criteria and Defence’s inability to provide an accurate picture of the maturity and costs of the respective bids. Defence’s preference for the Black Hawk was based on its assessment that it offered superior battlefield protection and robustness, although the MRH90 was judged to be ahead for amphibious work. But it didn’t manage to put forward a case robust enough to convince the government that the capability differential outweighed other factors. As the ANAO notes:

Defence was not positioned to readily identify areas in need of developmental work for the respective aircraft, and to confidently inform ministers on the respective strengths and weaknesses of the proposals.

That wasn’t the only problem with the submission that went forward to government—the costing data was shaky as well. The proffered costs showed the Black Hawks to be $275 million less expensive to acquire, but with an estimated $10 million per year greater operating cost:

The submission also included estimated support costs, but with low confidence. An additional squadron of MRH90 aircraft was estimated to cost $60 million per annum and a squadron of S-70M aircraft $70 million per annum.

That should’ve been a red flag—the acquisition and support costs for major platforms both tend to be driven by system complexity, and manufacturer claims that through-life costs will be lower for a more expensive machine should be regarded with great suspicion. In this case, the ‘low confidence’ figures weren’t robust enough for sensible decision making (and were almost certainly wrong). Of course, responsibility needs to be shared here; the government took the decision despite the admitted poor quality of the cost data.

In an unusual step, the ANAO doesn’t make any recommendations in this report. Instead it notes (Exec Summary paragraph 51) that Defence has the right management processes in place to do what’s necessary to inform government decision making—it just failed to implement them properly in this instance. Of course, there’s a lot more to this story, and interested readers should read at least the summary of the ANAO report. I’ll let them have the last word:

If there was just one lesson to learn from the history of Defence acquisition projects, it would be the need to be respectful of the inherent risks in these complex transactions and not over-confident that they are under control. … Defence was on the back foot from the start in its ability to confidently offer advice, in not having a sound understanding of the requirements or the estimated costs, and has been endeavouring to recover ever since, with mixed success.

Andrew Davies is senior analyst for defence capability and director of research at ASPI. Image courtesy of Department of Defence.

How to buy a submarine – part 2

The building of a replacement for Australia’s Collins class submarines will be the country’s most expensive and complex defence project to date. There are a myriad of capability, commercial and industrial issues to be managed: the expertise for the design and construction of conventional submarines resides in Europe and Asia while Navy’s preference is for American combat and weapon systems. Pulling those elements together while managing the technical risks is no easy task.

Local construction of the future submarine has been a bipartisan position for several years, and it has the support of industry and the bureaucracy. But there’s no simple or fast way to produce a unique Australian submarine. If the government decides to go down that path, it will have to do so in the knowledge that it’s a high-stakes venture.

In April 2014, ASPI held a two-day conference called ‘The Submarine Choice’. At the conclusion, we were left with three disquieting impressions. Read more

First, pursuing an entirely new design will be risky. Conference presenters drove home the message that Australia currently lacks two key prerequisites for success: ongoing collective experience and a highly-trained design, engineering and submarine-specific building workforce.

Second, there’s a worrying disconnect between Defence’s plans and the government’s thinking (to the extent that either are public knowledge).

Third, it was clear that Defence’s thinking on the submarine acquisition strategy was simultaneously prescriptive and vague— prescriptive about the sort of commercial entity it wanted to undertake the submarine project but vague about how to create it.

With those impressions in mind, we decided that it was time to revisit ASPI’s 2009 paper ‘How to buy a submarine’, written when the enterprise was formally instigated. Our paper released today is our attempt to do so.

Sorting out fact from folklore wasn’t easy. Once we thought we had a consistent picture we sent a draft out to most of the stakeholders and interested commercial entities. We received a wealth of feedback and were struck (though not entirely surprised) by the diverse views expressed. It proved impossible to include, let alone reconcile, all of the disparate and sometimes diametrically-opposed opinions.

For example, several respondents told us that a European firm wouldn’t get the permissions required to integrate sensitive US subsystems and submarine technologies onto vessels they designed, while others told us that the issue was entirely manageable. One possible explanation for the apparent disconnect is commercial interest—for a number of players circling the submarine program, it’s a convenient story. We’re not sure which version is true, but there’s little doubt that the merger of a European design and American combat system is possible under some circumstances—after all, that’s what the Collins is. Our recommendation as a sensible early step in the process would be for Australia to have government-to-government discussions with the potential players—especially in Washington—to determine what the actual constraints are, and what’s merely unsubstantiated folklore.

Conventional submarine design capability with the experience required is found in France, Germany, Japan and Sweden. The UK hasn’t designed or built a conventional submarine for decades, but the trusted nature of the ‘five eyes’ intelligence relationship and its ongoing nuclear submarine programs means that it’s also a potential partner if access to American technology is the issue some claim it to be.

Of the Europeans, France and Germany have established export markets, and have exported designs for construction elsewhere. The Swedish submarine industrial base is currently undergoing significant changes, but the close relationship between the Swedish and US Navy submarine arms makes them a credible contender. Japan’s an established builder of large conventional submarines and there’s high-level political support on both sides for a collaborative effort—and this is rapidly developing into one of the more likely options.

Then there’s the Australian end of the arrangement. The most recent public statements from officials suggest that their preferred approach is similar to the Collins project: the creation of a commercial entity specifically to execute the design and build. The advantage would be that a purposely-created Australian-based entity could manage the interplay of participating European and American firms and their intellectual property. However, having gone in this direction, the government would carry the majority of risk associated with the project from the start.

Other approaches are possible. Most simply, the government could test the market and contract an existing international submarine designer/builder to undertake the project. Not only would this result in a cleaner commercial relationship, it would also give the Commonwealth a commercial counterpart with sufficient financial depth to shoulder a share of the risk in the project.

Finally, there’s always the possibility that the government will weigh up the issues we describe in this paper and decide that it’s all too difficult. In that case it’d need to decide whether offshore procurement options are able to deliver the required capability—or find an acceptable compromise between capability and risk.

Andrew Davies is senior analyst for defence capability and director of research at ASPI. Mark Thomson is senior analyst for defence economics at ASPI. Strategic Insight ‘How to buy a submarine: part 2′ is available free to download hereImage courtesy of Flickr user n1ct4yl0r

Future frigates: hasten slowly

HMAS Perth transits through the Southern Indian Ocean as an Orion P-3K from the Royal New Zealand Air Force searches for debris as part of Operation SOUTHERN INDIAN OCEAN.My colleague Mark Thomson despairs over the prospect of the early replacement of Navy’s Anzac frigates on cost-effectiveness grounds. He’s probably right, but I worry instead about the possibility that the capability implications and project complexity have been underestimated.

Let’s start with the positives of the proposal to develop the Navy’s future frigates around the basic hull and mechanical components of the air-warfare destroyers (their naval designation is DDG) currently under construction. The first—and, in my opinion, the best—reason was well articulated by the Chief of Navy in his ASPI White Ensign Dinner speech, when he pointed out the virtues of commonality of systems across the fleet. For a 52-ship Navy, there’s a surprisingly large number of designers and suppliers in the support network.

Second is the potential for naval shipbuilding to become an ongoing program, rather than a stop/start process. Every new program comes with its own start-up costs, both the direct costs of the people and infrastructure required and the indirect costs of an inexperienced workforce. The AWD/DDG program shows only too clearly how much grief that can cause. By the time a number of ships have been rolled off the line, most of the initial bugs are sorted out and efficient production ensues. By the time the tenth Anzac was launched, production was humming along nicely. Read more

Both of those arguments will stand or fall on the numbers; commonality and continuity aren’t ends in themselves, but ways to achieve economies. For now I’ll leave that to Mark, but I’ll make the point that any economic argument for local shipbuilding should consider through-life costs. The maintenance of Navy’s vessels is almost by definition a local activity, and there’s the possibility of synergies with local construction.

Balanced against those potential advantages is the potential disadvantage of a large scale, long term investment in local naval shipbuilding industry, in which the political stakes lock in a substantial part of the force structure, reducing the discretion future governments have. (Mark and I made this observation in the context of proposed rolling production of submarines.) No doubt Navy and the shipbuilders would love that development, but it’d amount to a long-term bet on the enduring demand for particular platform types.

Turning now to the capability and project management aspects of the recently announced future frigate work:

… preliminary design work … will focus on continued production of the current AWD hull, suitably adapted and utilising capabilities from the cutting-edge Australian companies CEA Technologies Australia and SAAB Combat Systems.

Let’s start with some basics. The seakeeping and stability of the 5,000+ tonne DDGs depends on a number of design factors, not least the distribution of weight in the superstructure and masts. Swapping out many of those systems for new ones isn’t as simple as it sounds. Additionally, the new frigates are intended to be ASW specialists, and will presumably need two helicopters and their associated hangars and support facilities. I’d guess that some of the real estate required will come at the expense of existing DDG systems—maybe the frigates won’t have the full 48-cell vertical launch system? (Though more firepower is always useful.) So a fair proportion of the ship above the waterline will be new.

Those aren’t insurmountable problems, and it’s not beyond the wit of man to modify the existing designs to meet the new requirements. But they won’t be small changes; they’ll exceed the modifications to Navantia’s original design required to produce the Hobart class. If we want continuity at the conclusion of the AWD program, it’d be a challenge to achieve a stable design and the required production engineering in time.

Turning to the systems, the air-defence solution developed for the Anzacs is rightly being proclaimed a success by Navy and the contractors involved. The Saab 9LV combat management system/CEAFAR radar combination is a terrific local innovation. But it doesn’t have some of the features that might otherwise be identified as requirements for the future frigates. For example, the Aegis system on the DDGs is integrated with the Cooperative Engagement Capability which allows the vessel to participate in third-party targeting with other vessels and the Wedgetail AEW&C. While the Anzac air defence solution will provide some capability against ballistic missiles in their terminal phase, if the full range of ballistic missile defence capability is required, the frigates would need sensors with an exo-atmospheric capability and SM3 missiles for the engagement.

Again, those probably aren’t insurmountable problems. But they’d present significant development and systems integration challenges—hence cost and schedule risks. The alternative is to do without those capabilities, which is a reasonable option, but any such trade-offs must be well understood by decision makers. It’s possible that pursuing a ‘quick and easy’ future frigate will prove to be anything but, and it might come with larger than expected capability compromises. One potential approach is a staged development, with two or three early ships being essentially larger Anzacs, and adding more capability into the larger hulls later—that’d certainly be less risky than shooting high from the start.

Andrew Davies is senior analyst for defence capability and director of research at ASPI. Image courtesy of Department of Defence.

ASPI opines: the real best five fighter aircraft of all time

McDonnell Douglas F-15 EagleThe National Interest magazine has been running a series of ‘top five’ articles on military hardware recently. Like all such lists, they’re contentious and largely a matter of opinion. But that’s half the fun, and it hasn’t stopped me taking a swipe at them on Twitter. This week it was suggested to me that I put my keyboard where my mouth is, so here’s my own ‘Top five fighter aircraft of all time’ in response to Robert Farley’s list.

First, the criteria. The aircraft have to have been game-changers, either by altering the course of important campaigns or by affecting the strategic calculus. And they have to have been produced in quantity. Performance isn’t a criterion, although it can certainly help an aircraft meet the other criteria. That’s why the modestly-performed but ‘in the right place at the right time’ Hawker Hurricane—by far the RAF’s numerically most important fighter during the Battle of Britain—is a contender. Read more

WWI: Fokker D.VII
‘Best on field’ awards usually go to players on the winning side (for good reason), so there’s a temptation to apply a winner’s bias when looking for a WWI nominee. The Sopwith Triplane would probably be my allied choice on the grounds that it turned the air war on the western front when it was introduced. But it didn’t last long in service, partly because things were moving fast and partly because it was difficult to maintain. On balance I’m giving the nod to the Fokker D.VII, a well-performed aircraft built in very large numbers late in the war and impressive enough to be specifically mentioned in the armistice conditions, which required ‘surrender in good condition by the German Armies of … all D.7′s’.

Honorable WWI mentions: Bristol F.2B Fighter, Fokker Eindecker series

WWII: Lockheed P-38 Lightning
I don’t mind the National Interest nomination of the Grumman Hellcat from WWII, and I like their description of it as the ‘Honda Accord of the sky’. But the Hellcat did most of its work after the darkest days of 1942, and had little impact in the European theatre. The P-38 Lightning, on the other hand, was a heavy long-range fighter that played an important role in establishing allied air superiority in the Pacific (as well as the sigint-enabled interception of General Yamamoto’s aircraft over Bougainville). The same qualities also allowed it to accompany allied bombers over Germany in 1943, allowing the strategically successful allied bomber offensive to ramp up before the more famous P-51 Mustang (also in the running for this award) came along. This will be the most disputed nomination.

Honorable WWII mentions: Almost too many to mention, as aviation became a core warfighting capability for the first time: Hurricane, Spitfire (in that order), Yak-3 and -9, Messerschmitt 109, Focke-Wulf 190, Mitsubishi Zero, P-47 Thunderbolt.

The 1950s: MiG-15
While in some ways a hybrid of a British jet engine and German WWII jet research, the appearance in the skies over Korea of the fast and heavily-armed swept-wing MiG-15 came as a nasty surprise to allied forces that entered the war with early straight-wing jets and WWII vintage piston-engined fighters. The USAF had to scramble to match it through the rapid deployment of the F-86 Sabre. The Sabre allowed the allies to take the fight to the MiG-15 and superior training and experience told in the end, but in one fell swoop it was clear that the Cold War wasn’t going to be a technological one-way street. (The aircraft equivalent of Sputnik 1.)

Honourable mention: F-86 Sabre

The 1960s: McDonnell Douglas F-4 Phantom II
Inexplicably in the National Interest’s ‘dishonourable mention’ appendix to its Worst five fighter aircraft of all time list, this nomination alone makes my list better than theirs. The Phantom was a true joint strike fighter of its day, serving in large numbers with the US Air Force (which was initially reluctant), Navy and Marine Corps, as well as many other countries around the world. More than 5,000 were built, and although it was never going to win prizes for looks, the Phantom saw combat service in two major American wars (Vietnam and Gulf War I). It was a major factor in establishing Israeli air superiority in the 1960s and 70s and in maintaining Western air power well into the 1980s.

Honourable mention: Mig-21. An aircraft with few intrinsic virtues, it was nonetheless built and exported in huge numbers and gave US forces some headaches in Vietnam.

1980s and beyond: McDonnell Douglas F-15 Eagle
Taking over where the Phantom left off, the F-15 has been the vanguard of Western air power from the 1980s onwards. Most air-to-air combat ‘kills’ by American forces during that time have been by F-15s. Israeli F-15s also have a formidable air combat record. And when air-to-air combat isn’t required, the Strike-Eagle is an accomplished strike platform.

Honourable mentions: the F-16, which was the ‘low’ part of the high-low mix with the F-15. But at half the price of an F-15 it delivered well over half the capability.

Andrew Davies is senior analyst for defence capability and director of research at ASPI. Image courtesy of AereiMilitari.org.

Strategic deal or no deal?

Suitcase of moneyI listened last week as my colleague Mark Thomson launched this year’s budget brief. One of Mark’s points was that spending on any defence related proposal should be weighed against the gains in security that’ll accrue as a result. He worries that a surfeit of funds for defence might see proposals of ‘progressively diminishing merit’ brought forward. He’d also agree that it’s possible to underfund defence, in the sense of having unretired security risks that, if realised, would cost more than the steps required to mitigate them.

A good principle for any expenditure of any public funds is to spend whenever net benefits exceed the costs, but not otherwise. But I started wondering whether the application of cost-benefit analysis in a ‘pure’ dollar-based form to defence spending is (a) possible and (b) likely. I think the answer is ‘only sometimes’ on the first count and ‘probably not’ on the second. Read more

Let’s start with ‘possible’. Sometimes a dollar cost is calculable, at least approximately. Examples might include the forced shutting down or destruction of Australian mines or resource extraction plants, or a disruption to shipping trade lines. The estimated cost of mitigating those risks through defence investment (again necessarily inexact) can then be balanced against the potential loss. Even the lives of Australians can be valued for this sort of calculation. That might sound distasteful, but it’s the basis of decisions about road engineering for safety upgrades, and for how courts set compensation.

Defence spending isn’t like buying an insurance policy, although that’s one of the benefits. In many cases, defence spending also provides an ability to shape the strategic environment, either through deterrence or military engagement, which has the net effect of reducing the likelihood of bad events occurring. It’s the sum total of benefits that have to be weighed against the costs.

And examples of strategic risks for which the costs or the benefits are readily quantifiable are relatively rare. Thucydides famously identified three major motivations for entering a conflict: fear, honour and interest (or ‘treasure’). Where either gaining or protecting treasure is the aim, bean counters have some chance of being able to work out whether it’s worth doing. But for honour or fear, forget it. A couple of contemporary examples make the point. After 9/11, the US launched two major regional wars, motivated in no small way by fear of further attacks rather than a cold actuarial calculation. We can argue about the ratio of benefits to costs in Afghanistan, but I don’t think that anyone seriously argues that the Iraq War was worthwhile—which tells us that cost-benefit can be applied in a wider sense.

For an honour based example, look at the Senkaku/Diaoyu Islands dispute. Japan and China are locked in an intense battle of wills over some entirely unremarkable rocks. Even on the most favourable resources assessments, the potential dollar value is completely overmatched by the costs of a conflict between the two claimants. In this case honour is the balancing factor to financial cost. (See also ‘Falklands War’.)

Even when treasure is the major motivator and likelihoods can be estimated with reasonable accuracy, there’s still no guarantee that sound decisions will be made. Most people aren’t natural actuaries, and make poor choices when the stakes are high and emotions are engaged. As an illustration, let’s turn to that epitome of educational television, Deal or No Deal. Watching it makes me despair; at every step there’s enough information available for contestants to pursue an optimal strategy. And at almost every step they don’t (and when they do, it’s usually by accident). It drives me nuts.

Let me explain how to play Deal or No Deal optimally. (You can read the rules and play an online version here.) Whenever a ‘bank offer’ is made, add up the remaining sums available and divide by the number of suitcases left. If the number is bigger than the bank offer, play on. If it’s smaller, take the offer and leave. That’s it. As with many games shows, a mathematician could take a ruthlessly logical approach and optimise their outcome but there’d be no drama, no excitement and no tears. That’s why mathematicians don’t often appear on games shows. (There are probably other reasons too, but let’s not go there.)  Mathematicians also aren’t generally invited to meetings to discuss national security.

Finally, there are political, commercial and professional interests at play in strategic decision making. I’ve written before about the professional motivations of the Services, and the potentially distorting effects of commercial interests are obvious. But politically, governments must be seen to be capable of protecting the nation and its people, not just physically but also in the sense of national honour (Thucydides again). For the starkest example of how that translates into strategy on a grand scale, consider French General Ferdinand Foch’s response to a British query regarding the smallest useful force that could be provided to support France in the event of a war with Germany. His answer was: ‘one single private soldier and we would take good care that he was killed’.

Andrew Davies is senior analyst for defence capability and director of research at ASPI. He doesn’t buy lottery tickets.