First Principles Review: a plan to stick to
15 Apr 2015|

Below a welter of cliché and bamboozling modern management mumbo jumbo in the First Principles Review of Defence, there lurks much sound advice.

The government has bought it all except for an unconvincing recommendation about the Defence Science and Technology Organisation. It’s a good start.

Peever’s effort stands out from most of the external reviews of Defence over the last 15-odd years, some of which have likely made things worse. It’s not necessary to name names—the culprits are well known.

In significant parts, however, the Peever analysis isn’t as sound as its recommendations. For example, the report wonders why Defence ‘has been unable to reform itself,’ and suggests it may be due to increased operational tempo, budget uncertainty and high turnover of top leaders, including ministers. Those are more excuses than reasons—such things usually stimulate change rather than suppress it.

So if Defence ‘has been unable to reform itself’ in more recent years, why?

First, ‘reform’ has been largely outsourced to dozens of reviews, the dubious recommendations of which have piled on top of one another. This can make for confusing and distracted managers that could be excused for being less concerned about improvement when they can expect that external reviewers will be asked to do their job for them. Peever’s right to ask for a halt on external reviews that overlap with what he covers in his.

Second, too many people at senior levels with narrow divisions of responsibility and the associated additional requirements to consult have coagulated management and restricted possibilities for action.

Third, ‘reform’ needs to be pushed from the leaders at the top—that is, the defence ministers. With one exception: defence ministers since Robert Ray have been undistinguished. Few have taken a strong interest in the proper workings of the organisation. Indeed, a number have succumbed to the insidious notion that they are ‘customers’ of Defence. They aren’t, but when they pretend to be, management stasis is usually just around the corner.

The success of the Peever review will depend largely on the defence ministers getting behind it and not just getting reports from an ‘external Oversight Board’, as recommended by the review and composed of its members. That isn’t a good idea. Beware of reviewers urging their continued engagement. The Minister should be directing the operation and trusting the Secretary and the CDF to get on with it without an ‘Oversight Board’ looking over their shoulders. Peever reckons, rightly, that there are too many layers in Defence, yet he’s recommended the creation of a new one.

Of the many good things in the Peever Review, the following stand out:

  • Creating a stronger centre: centrifugal forces in Defence need to be contained; a stronger strategic centre should help to keep a better balance with a devolved management structure, although the Service Chiefs might not be thrilled at the prospect of having their wings clipped further.
  • Re-integrating the Defence Materiel Organisation: There’s a reasonable case for a closer connection between capability development and acquisition, and for removing the duplication of finance, legal and personnel functions that came with the DMO.
  • Cutting senior staff: the use of deputy secretary positions has been abused throughout the public service. They were designed to help secretaries overcome span of control problems. In Defence, as elsewhere, they’ve caused the very problem they were intended to overcome. Cutting seven deputies should, as Peever says, ‘cascade’ down the hierarchy and help to free up the organisation.

For all its virtues, the Review has some oddities:

  • It says that a new Defence Committee should be the ‘primary decision-making body’. Typically, defence committees are forums for consultation and promoting agreement. However, decisions on many matters that would come before the Defence Committee will need to be taken by responsible individuals in accordance with legislation or the revised diarchy powers that Peever recommends. Those say, for example, that the Secretary should ‘set the budget’ and the CDF should set requirements for enabling functions’ and the ‘workforce framework for the ADF’.
  • The Review recommends that ‘all policy functions’ be put into ‘one organisational unit’. It’s unclear why.
  • The Review describes finance as a control function. It might be better regarded as an ‘enabler’ and treated so organisationally. Peever also commends that the Chief Finance Officer position should always be filled by a qualified accountant. That’s ridiculous; it ignores the fact that some of Defence’s best CFOs haven’t been accountants.

However these are minor quibbles and, in general, Peever’s on the right track. It’s now up to the Minister(s) to see that Defence sticks to the plan.