Defence: off-the-shelf is not just about jobs

One of the key elements of the Government’s cost saving program for Defence is the hardy perennial that we should do more off the shelf purchasing – instead of having materiel that is especially designed for our needs, we should as far as possible purchase items that are already in production and available off the shelf – ready-to-wear rather than bespoke tailoring, so to speak.

This sounds fine in theory and where possible it should be the practice. There are, however, one or two catches. The first is the one identified by the Australian Industry Group’s Defence Council, as reported by defence writer John Kerin in today’s Australian Financial Review:

[The Council] warned that Rudd government moves to buy more overseas sourced and off-the-shelf equipment in a bid to slash costs on the program, if overdone, could cost jobs in the 29,000 strong defence sector.

That is true, and is an important issue. Perhaps more important is the related issue of maintaining the industrial capacity to sustain our defence equipment in times of conflict, and in peacetime to modify and upgrade it, both to improve its performance and to ensure that it remains capable of dealing with emerging counter-measures. To do that we need a diversified and profitable domestic defence industry – not necessarily Australian owned, but certainly located here.

Perhaps most important of all is ensuring that the materiel we buy is genuinely fit for purpose, and in this regard overseas equipment will not always make the cut. Submarines are a classic case – diesel electric submarines are normally designed for short patrols in deep cold water, we want ours to do very long range patrols in warm shallow water.

Another example would be the Infantry Mobility Vehicle (IMV), for which Australia uses the Australian designed Bendigo manufactured Bushmaster vehicle. Perhaps it would have been cheaper to buy US Humvees off the shelf? It depends what you mean by cheap. The Bushmaster was designed for high levels of crew and passenger protection. It has a shaped, armoured hull, which deflects the blast from the equivalent of a 9.5kg high-explosive land mine detonated under any wheel or under the centre section of the vehicle. As a consequence, Australian forces serving in Iraq and Afghanistan have suffered very low numbers of casualties resulting from land-mines and improvised explosive devices (IEDS). Because this level of protection was designed into the vehicle from the outset, they are taken into account in designing the vehicle for its acceleration, braking and rollover characteristics. They have proved themselves so well that we have sold them to our Dutch allies in for use in Oruzgan Province.

Humvees on the other hand were initially designed as thin-skinned vehicles to provide mobility behind the front lines. In urban and counter-insurgency situations they proved something of a disaster. After the “Blackhawk Down” incident at Mogadishu the M114 version was developed to provide protection against small arms fire, but it remained thin skinned underneath. “Up-armour” kits were provided for the older M998 version, but not in great numbers. After the invasion of Iraq in 2003 US troops began use scrap materials to improvise additional protection (“hillbilly armour” or “farmer armour”), but the extra weight compromised the handling characteristics and service life of the vehicle. The Americans are now in the process of a full-scale program to produce Mine Resistant Ambush Protected (MRAP) vehicles, but meanwhile they have suffered very high rates of casualties from mines and IEDs – over 60% of casualties in Iraq and 75% of casualties in Afghanistan. Many a grieving US parent would derive little comfort from knowing that the outcome might have been very different if their son or daughter had been in a Bushmaster.

I remember a US Congressional Committee in the early 1970s agonising about the fact that the last 50% of the cost of major military development projects went on the last 5% of performance. The trick is that the people who take that equipment into harm’s way tend to place a very high value on that last 5% of performance. My supervisor at the time had been a bomber pilot in New Guinea. He used to say to me, “I’ve been to war in the second best aircraft in the sky. It is not a lot of fun”.

The decision to buy “off-the-shelf” is not a simple one, and I do not think we will see it used nearly as extensively as the Government might hope.