The largest and most complex defence procurement program in Australia’s history is now underway—the Future Submarine. It will be unique in a number of dimensions. First, no other submarine will have the equivalent suite of systems and capabilities. Second, the next generation submarine fleet will represent a unique partnership between Australia and one of Japan, France or Germany. Third, the submarines will be used to achieve significantly different defence objectives to those of other navies.
To date there has been an informed debate about many of the outstanding issues. The technical requirements and strategic implications of various options are being discussed by the defence community. The issues associated with a local build have been discussed nationally. Each of these is important. But there is another critical issue that is getting significantly less attention. Put simply, Australia will soon be exposed to a ‘leadership risk’ of approximately $15 billion dollars.
Leadership risk reflects all the various leadership and program management mistakes that can be made throughout a program. Examples include problems with contract structure, translation and communication errors, insufficient or unclear design requirements, and inadequate program management and governance. As consultants, we typically find that unless proactively countered, a third of the value of a program will be lost due to leadership risks of various kinds—hence the estimate above. More significantly, if we can’t maintain our submarines, service them when they’re deployed, and integrate new technologies, we risk compromising our national defence.
Some people believe that these risks will be mitigated by building the submarines overseas. Others think that using an American defence conglomerate as the prime contractor will solve the problem. This is wishful thinking—as anybody who’s been through home construction knows, one way or another, the risks, design variations and maintenance issues are always borne by the owner.
There will always be issues with a program as large and complex as the Future Submarine. However material delays, cost over runs and sustainment issues aren’t inevitable. If, as the owner of this new fleet, we develop appropriate domestic capabilities, the submarines can become a successful part of a modern and competitive ADF.
Based on the successful remediation of the Collins program over the past five years, this is likely to be an ‘enterprise program’ consisting of ongoing collaboration between the Navy, Government and industry. This isn’t just a question of owning the intellectual property or the design calculations—though they’re important—it’s about creating a team with a deep level of knowledge and practical experience of the various systems that make up the submarine and an awareness of how these might change over time.
Understanding the various leadership and program management issues is particularly important because the Defence teams that will manage these activities are currently being restructured after the First Principles Review. For better or worse, Future Submarine will be the test case—at least as far as very large projects are concerned—for the newly designed structure. The competitive evaluation process will kick off a range of complex design and integration issues that Defence will need to manage—a particular challenge in a changeable environment.
The right level of domestic capability is of course a matter for discussion. The air force and the navy have different approaches to fleet support and people can reasonably disagree on the level of dependence we’re willing to accept in our relationships. With the United States we share a deep security arrangement, many weapon systems, and a common language. Our relationships with France, Germany or Japan might reasonably require a different (lesser) level of dependence.
What’s clear is that the new submarine’s systems will be significantly more complex and interconnected than those in Collins. As importantly, the rate of change in electronics will be much greater in the next 25 years than it has been in the past 25. Australia will need a deep understanding of how the various components in our boats have been designed and built if we’re to be able to maintain them efficiently and effectively. Without the right domestic capability, Australia is unlikely to stay at the leading edge of capability and, if called upon, be able to fight and win.
Three events will give us a good idea about the level of leadership risk the program faces. First, we can watch how the competitive evaluation process unfolds. Second, we can see who’ll lead capability in the defence department moving forward. Finally, we can assess the extent to which the defence white paper defines Australia’s domestic sustainment requirements. If the White Paper isn’t clear, or the leaders are political appointments, then we’re unlikely to execute a proper knowledge transfer program through the build phase, and losses of the order of $15 billion over the life of the program are very possible.
Sustaining Future Submarine will be hard, as it’s at the edge of our national capability. It will require teamwork and leadership at the political level, in partnership with industry and the Australian community. If we can discuss the issues early in the program’s life cycle and create a sensible bipartisan plan, we’re much more likely to be successful.