07 May 2009

Project Wedgetail: a cautionary tale

Project Wedgetail, the project to develop the Royal Australian Air Force’s airborne early warning and control system, is in deep, deep trouble. There are (not unexpected) problems with integration of the aircraft’s Northrop Grumman Multi-role Electronically Scanned Radar Array (MESA) with the mission system, the communications system and the electronic support measures system on board the modified Boeing 737 aircraft. In addition, the MESA system itself has been referred to Massachusetts Institute of Technology’s Lincoln Laboratory for independent review.

Defence has stopped making progress payments to Boeing on the project, and Boeing has written off hundreds of millions of dollars.

Cancellation of the project is by no means beyond the bounds of possibility, which would be a tragedy not only because of the billions of dollars that have been invested in the capability but because the capability itself is so fundamental to the intended capabilities and modus operandi of the Australian Defence Force.

In light of this alarming prospect, it is worth rewinding the tape to remind ourselves what was said about Project Wedgetail in its early days and consider whether there are any lessons to be learned about defence acquisition processes and defence acquisition reform.

By way of background, in 1999 when Boeing was selected as the preferred tenderer for this very complex and difficult project, defence acquisition was the responsibility of the then Defence Acquisition Organisation (DAO), which was headed by a Deputy Secretary. In light of delays to the completion of earlier developmental projects, the Collins class submarine project and the Jindalee Over-the-Horizon Radar Network (JORN), the Howard Government decided that the acquisition system needed to be reformed. The Deputy Secretary who headed DAO was dumped in brutal fashion, the position was upgraded to a higher level position, and the Defence Materiel Organisation was born.

In fact Defence had already learned some important lessons from these two complex indigenous projects, and had proceeded in a very innovative fashion to minimise the technological risk of Project Wedgetail. First, it had involved the Defence Science and Technology Organisation (DSTO) very closely in the process, something that had been conspicuously lacking long after JORN was found to be in trouble. Second, after reviewing the bids from consortia led by Boeing, Raytheon and Lockheed Martin, it obtained Government approval to pay these companies about $27 million in total to refine their bids, so that source selection could be made on the basis of more highly developed proposals. Needless to say Defence was criticised in some quarters for “giving” money to these international defence primes, but for a project that was expected to cost $3.5 billion and involved high technological risk, this was prudent expenditure designed to look after the interests of Defence and the taxpayer.

In the event, Boeing was selected in 1999 as the preferred tenderer, and the contract was signed in 2000. In his 20 December 2000 media release announcing the contract, the then Minister, John Moore said, inter alia:

The AEW&C Project has been leading the way for reform within the Defence Materiel Organisation, with an innovative tender and selection process involving close liaison with the Defence Science and Technology Organisation (DSTO) and the Air Force, and close interaction with Boeing as a part of Integrated Product Teams during the development and production phase will lead to Australia acquiring a world class AEW&C capability.

Note how the innovation of the dumped Deputy Secretary was held up as an example of the success of the Government’s reform of the acquisition system.

Fast forward to 1 November 2002, when another Defence Minister, Robert Hill, again held up Project Wedgetail as an example of the success of Government’s acquisition reforms. In a media release of that date, Senator Hill said:

Defence Minister Robert Hill today saw the first airframe for Australia's new $3.45 billion airborne early warning and control aircraft fleet - fresh off the production line at Boeing's Military Flight Centre in Seattle, United States....

With the first air frame ready for modification we expect our first Wedgetail aircraft to fly before the end of the year - around six months ahead of schedule - with the first two aircraft of the fleet expected to be in service in 2007.

Defence's Project Wedgetail is off to a great start. It is under budget and ahead of schedule - evidence that the Government's acquisition reforms are beginning to bear fruit.

Actually, all that had been demonstrated by this was that Boeing knew how to build a B-737 aircraft, and I think we already knew that.

My takeouts from this story, none of them particularly intellectually challenging, are:

- The hard part of these high risk developmental projects always comes at the end, not the beginning, and meeting early milestones on time and within budget is no guide to the final outcome.

- Because of this it takes many years to establish that reforms to the acquisition system do actually constitute an improvement (if indeed they contribute anything), and in the meantime a little humility would be appropriate.

- No matter how hard one tries to minimise the risk of developmental projects, doing something at a level of technology and systems integration that has never been achieved before is inherently risky.

- No amount of tampering with the defence acquisition organisation chart will ameliorate the intrinsic technological challenges that it is the responsibility of the contractor to resolve.

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