Efficiency, defence industry and strategic constraints
18 Apr 2013|

Stores and equipment are unloaded from an Air Force C-17 Globemaster at Bundaberg Airport. Image courtesy of Department of Defence.

In simple terms, defence budgets comprise funding for new equipment, for people or for operating costs, and can alternate between them. Since the early 1990s, a series of reform initiatives have been undertaken based on the logic that reducing the operating costs of current equipment can free up funding to spend on new equipment. This long-term focus on achieving greater efficiency continues with the recent Strategic Reform Program’s adoption of smart sustainment to further reduce the cost of ownership of defence equipment.

Future Defence White Papers can be expected to continue down this now well-worn path, claiming ever-greater savings through trimming back an ever-leaner support system, including further reductions in spare parts inventories. In many respects, this is all simply good management practice that prudently optimises Defence’s use of scarce public funds, but there may be some unintended strategic impacts.

The push to drive sustainment costs down has occurred alongside the deepening globalisation of the defence industry. The Australian defence industry has steadily lost the limited manufacturing capabilities that it once possessed, and foreign equipment suppliers are now dominant. The upsides are that the quality of the equipment is higher than Australia could develop with its limited technological base and the costs are dramatically lower—although still very high in absolute terms.

Supply-side gains, though, impose some costs on the demand side. Sudden changes in operational demands are now harder to meet, because the local defence industry has only very limited capability and capacity to manufacture additional spares to meet ADF rates of effort beyond the peacetime training tempo. Globalisation means that sustaining a higher ADF operational tempo requires the defence industries of many other countries to be both willing and able to sharply increase their outputs.

The combination of efficiency reforms and defence industry globalisation means that ADF maintenance and logistic support has a certain fragility that becomes evident when operational deployments are contemplated. This constrained ability to meet sudden changes in rates of effort suggests that the ADF is now becoming able to undertake only distant wars of choice. In such conflicts, Australian involvement is discretionary; time isn’t an imperative and there’s considerable latitude in the nature of the contribution we make. There’s time to contract foreign equipment suppliers to increase production rates, manufacture more spares for us (and for the other nations also involved), to deliver them to Australia and for their Australian offshoot companies to train more local maintenance technicians and logistics specialists. In the worst case, problems or delays in fielding and sustaining specific equipment might require the deployed force composition and functions to be reconsidered or new equipment to be acquired. Given that these conflicts are wars of choice, this is tolerable.

Today the support tail wags the operational dog, even if it’s a carefully optimised tail of our choosing that’s doing the wagging. It’s the same for almost all nations. Modern military equipment is sourced globally—key components often come from many different countries, each with their own lean manufacturing production lines optimised to meet just the expected sales and usage rates. Most militaries now suffer the same strategic shackles as the ADF.

The success of this approach relies on our present favourable strategic circumstances continuing, but situations can change. What if we become involved in a war of necessity, rather than being a small coalition force participant in a war of choice with the ability to pick and choose the most suitable operational roles for our forces? What if our foreign supplier nations become operationally focused elsewhere, or politically opposed to the conflict, and their support becomes problematic? What if some of our foreign suppliers embrace different defence postures or policies as their strategic or economic circumstances change?

Among various alternatives, one way to at least partly overcome these concerns is to sustain a larger maintenance capability than needed to meet peacetime training demands, but one that could be ramped up to meet increased rates of effort if operationally necessary.

Such a capability could be provided through contracted support options, but it may also be possible to make greater use of the reserves for such a role. In recent years, they’ve shifted from being a strategic reserve for a possible big and pressing war to being an operational reserve for today’s protracted discretionary wars. Maybe there could be a partial return to earlier practice, using them to develop greater depth in local maintenance and sustainment for those specific force element groups considered to be particularly important.

The general logic of developing such a latent capability able to drawn upon in extremis is in line with the 2009 White Paper’s strategic hedging logic, but taking this path at least partly offsets cost reduction reforms like smart sustainment. Building such a capability would require specialised training, a skilled workforce and additional maintenance equipment and stockholdings. This would be costly to sustain in the long term. Moreover, the initial and ongoing training of such a reserve capability would be particularly challenging.

If there are doubts about the practicality or desirability of Australia sustaining a larger support capability, they simply reflect an unexamined expectation that Australia will be able to readily access such support from offshore in any circumstance and over the longer term. Support is necessary regardless of where it’s located; it’s outsourced offshore largely based on the underlying assumption that others maintain a national support capability which we can easily exploit whenever we require.

In most circumstances Australia can beneficially leverage off the activities of others in a most cost-effective manner, but implicit in this free-riding are both a great deal of hoping for the best and an unconscious decision about the type of conflicts the ADF is structured to be able to fight.

Peter Layton is undertaking a research PhD in grand strategy at UNSW, and has been an associate professor of national security strategy at the US National Defense University. Image courtesy of Department of Defence.

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