What are we to make of the new Defence Capability Plan?

Having announced its intention to publish a new Defence White Paper in the first half of 2013, the government has now taken the curious step of issuing a new Defence Capability Plan (DCP). That is, a new schedule for the approval of defence acquisition projects over the next four years. What’s curious is that a new DCP is normally the outcome of a Defence White Paper, rather than a precursor.

What’s more, given the short time since the substantial cuts to the defence spending in the May budget, the new DCP is at best a quick and dirty shoehorning of existing projects into the much-reduced funding envelope that’s available over the next four years. Moreover, how can the government be developing a new Defence White Paper but already know what capabilities it wants to pursue over pretty much the entire life of the document?

Logically, there are three possibilities; either the new DCP is worthless, the next White Paper is pointless, or both. Let’s hope that it’s the first of those options. The worst outcome would be a White Paper that ex facto justified the hastily cobbled together DCP.

In the meantime we have a new DCP to pore over. I’ll leave it to others to divine the implied shifts in strategy which the projects that have been included and excluded might imply—I’m not sure that strategy has much to do with Australia’s capability planning at the best of times. Instead, here’s my statistical analysis of the planned throughput of projects.

Under the two-pass process introduced back in 2003, defence projects are considered (at least) twice by the government; so-called ‘first pass’ and ‘second pass’ approval. At first pass the priority for the capability is confirmed, along with the range of options to be considered; at second pass an option is selected and given final approval. In the latest DCP, 25 of 111 projects are listed as having a combined or simultaneous first and second pass approval.

Because the DCP provides only multi-year bands for when project approvals are scheduled, it’s necessary to analyse the schedule using a statistical approach. Fortunately, with so many projects that gives a reasonable average result, so it’s possible to calculate the number of approvals required each year to deliver the plan.

The graph below (click to enlarge) shows the average number of projects planned and achieved for second pass approval since 2004—that is, the number of projects that have been green-lighted to commence. Two things are apparent. First, there have been continuing delays to the program; the actual number of projects approved in previous years has consistently been below the number planned. This matters because it means that the defence force will have to wait longer than planned for the equipment it presumably needs, and often means that ageing equipment has to soldier on longer than planned. Second, the number of approvals planned between 2013 and 2015 substantially exceeds recently achieved rates of approval.

Let’s now look at how first pass approvals have been going. As shown below (click to enlarge), the picture is even less encouraging. On past experience, there is little chance of the envisaged rate of approvals being achieved. (There are no planned figures are available for 2004-05 and 2005-06 because the first-pass milestone was introduced after the 2004 DCP was published.)

However, in putting together the graphs above, combined approvals have been counted as both a first- and second-pass approval. It may be that there is less work required when a combined approval occurs, meaning that the task ahead is less difficult than it might first appear. But whatever solace we take from that point must be tempered by the knowledge that there is a White Paper due in 2012–13 and an election in 2013–14, and past experience shows that such events seriously delay the approval of projects.

So where does that leave us? It will be interesting to compare the first post-White Paper DCP with the one just released. Unless there are significant differences between the two documents, the White Paper will have been an irrelevant waste of time—akin to the cheap magician’s trick of telling you the number you first thought of. At the very least, let’s hope that the new schedule of project approvals is more realistically aligned with past experience than what’s just been released.

Mark Thomson is senior analyst for defence economics at ASPI.

Killing the source: Uruzgan and The Liaison Office

The first step to victory is always working out the vital ground. Occupy that and you force the enemy to come to you. You’ve already achieved dominance and are halfway on the path to victory.

Unfortunately, when the battlefield is being fought for hearts and minds, the terrain becomes highly complex. It’s difficult to work out exactly which ‘ground’ is commanding, and what features are irrelevant. That’s why intelligence is so important. Without it, the commander can’t know how to direct their forces or where to fight.

This is particularly the case in situations such as in Uruzgan. Australian forces involved in reconstruction have been deployed here since 2006, but the social dynamics are shifting all the time. This is a prime instance of a battlefield where deciding where the human contours lie is a highly complex task.

Perhaps the best (although by no means the only) instance of this is the tribal nature of society. Like everyone, before I first travelled to the country I’d been aware of the difference between the Hazara and Pashtun people. What brought the distinction home to me, however, was a map pasted onto a wall at The Liaison Office in Kabul. A mass of coloured pins indicated the real diversity of inhabitants within the province. Read more

Defence and expectation management

There has already been some debate about the insurance analogy on this blog. I personally like the theme as it makes it easy to explain Defence funding to those not familiar with what our defence forces actually do.

There was a time when almost every family in the land knew someone who was in the Defence forces, either past or present. Anecdotally, that doesn’t seem to be the case anymore. All they see are mainstream media headlines that Defence costs a bucketload, can’t handle money very well and stuff keeps breaking/is delivered late/doesn’t work properly. And oh, look—another review.

There is no rational, informed public debate outside the community that has an interest in the field. This can be the same for many fields though. Do you know the difference between AMA and Medicare scheduled fees for services? Why have many Masters programs at universities dropped from 12 unit points to 10? If you’re in the field that cares, you know. If it doesn’t directly affect your life, you don’t tend to know.

How defence is funded matters insomuch to the average person as it relates to opportunity cost in their lives; how many university places/hospital beds/roads built could that money have been used for. This is not to say that the average voter doesn’t care about defence but there is a lack of understanding about the political and economic nature of white papers in the wider community. Read more

Graph of the week: JSF, it just grew and grew

This week’s graph is an update of analysis started by ASPI in 2006. Drawing on annual figures published by the Pentagon, it analyses the real cost growth in the projected cost of the F-35 Joint Strike Fighter (JSF).

The first graph (click to enlarge) is the raw figures of the projected average aircraft cost, adjusted for inflation. It’s not a pretty story. But it’s hard to tell from this figure whether this is anything out of the ordinary.

JSF average unit procurement costs

Source: US Dept. of Defense Selected Acquisition Reports 2001–2011

A bit of extra tweaking allows us to compare the cost growth in the JSF with the average for large American defence programs, and with another aircraft program—the development of the Super Hornet—which is generally regarded as an acquisition success story.

This is the same JSF data as in the graph above, but this time plotted as an index (in red, click graph to enlarge).The average historical performance of US weapon programs is in black and the Super Hornet program is in brown.

This all suggests that, while the JSF might yet prove to be a winner, it’s been a harder than average slog so far.

JSF development program cost estimation

Source: US DoD Selected Acquisition Reports 2001–2011 for JSF and Super Hornet data. The curve for the historical average performance is derived from data in Norman R. Augustine’s Augustine’s Laws (1983).

Andrew Davies is senior analyst for defence capability at ASPI and executive editor of The Strategist.

Defence and Tony Abbott’s Heritage Foundation speech

Tony Abbott’s speech at the Heritage Foundation in Washington last week had some messages for Canberra policymakers to help shape next year’s ‘blue’ Incoming Government Brief. The speech was oddly constructed as some commentators have said, but there were four interesting themes: one announced a new bipartisan approach with government and three pointed to emerging differences.

Abbott’s bipartisan point was about defence spending. The one line on spending in the prepared speech said: ‘we will seek efficiencies in defence spending but never at the expense of defence capability.’ In the Q&A, Abbott criticised the cumulative effect of spending cuts but stressed savings could be made as long as they didn’t damage military capability. He said ‘the last thing we want to do is dismay our friends and allies.’ He did not say that a Coalition government would reverse spending cuts.

This is a new element of bipartisanship—to cut defence spending in the four-year period of budget forward estimates. Some Coalition Speaker’s Notes obtained by Crikey ‘commit to restoring the funding of Defence to 3% real growth out to 2017–18 as soon as we can afford it.’ But 3% growth won’t restore what has been cut and Abbott’s comments suggest the Coalition prefers the government’s approach. No one in Defence should imagine they will get an easy ride under a Coalition government. Nor should the Coalition think that cutting Defence will be easy. If they do form government they will get a shock when the Incoming Government Brief advises that cutting future capability is the only way to stay within the new spending guidelines. Read more

Reader response: risk, strategy and luck

Hugh White nicely joins the fray in focusing on the key difference between risks and threats: time. That is, a risk can turn into a threat over time, and vice versa. As Hugh says, risk may be the ‘foundation of defence policy’ but I think we should be sure about what choosing such an approach leaves out.

In an earlier post, I noted that risk management is not a strategy. As Hugh said more eloquently then me, risk management is ‘about preparing against the possibility that dangers might arise in future.’ This means having defence capabilities available just in case, ready to respond to particular events if they occur—and we really, really hope they don’t. By contrast, as strategy has a defined end, defence capabilities are developed and used to try to achieve that end.

If we see military forces as being used as instruments for pursuing ‘politics by other means’ in the best Clausewitzian tradition, then military forces are useful across the spectrum of peace and war. From our point of view as a rather smug status quo power, then we may wish to try to shape our future in a particular direction that ensures that bad things do not happen to us, using the military as one tool amongst many to that end. This is conceptually a long way from sitting and waiting for a tragedy to occur.

Some hold that risk management is more than just awaiting events—that is, it involves being so obviously prepared that this shapes another’s thinking and they are dissuaded from taking ‘risky’ actions. This however sounds somewhat like deterrence, a strategy focused on someone at some time to convince them not to carry out some act. In short, shaping the future into a particular kind of desired international order.

Risk is about preparing for possible dangers, strategy can be working to try to make them not happen. Which is better for us? To paraphrase Clint Eastwood ‘do we feel lucky’? Or should we at least try to make our own luck?

We should think carefully whether risk management is the best foundation for our defence policy as there may be alternatives worth exploring.

Peter Layton is undertaking a research PhD in grand strategy at UNSW.

Reader response: risk, threat and insurance

Paul Monk raises an important issue about that slippery word ‘threat’ and its place in defence policy. I don’t think he quite gets it right, but nor do I agree completely with Rod Lyon’s objections. It is an important debate, because it goes right to the foundations of what defence policy is about: if we can’t get this clear, we have little hope of getting the policy itself right. So by way of saying ‘welcome’ to The Strategist, here is my take:

Let’s start with Paul’s basic point, which I think is right. Defence policymakers often assume that the only place to begin is with a threat, to which defence capability then provides a response. That leads to muddle and embarrassment, because often there isn’t a clear threat to respond to, so they find themselves either conjuring one from the air, or deciding we don’t need armed forces after all. In Paul’s nice phrase, ‘hyperbole at one extreme and lazy skepticism at the other’.

The problem of course is that we do not just build forces to deal with evident current threats. We also, and more often, build them to deal with possible future ones. How do we capture that idea of possible future threats? Paul’s solution is to invoke the idea of defence capability as insurance against threats, rather than a direct response to them. It’s a step in the right direction, because it goes a little way towards capturing the idea of future threats that are not yet evident. Read more

ASPI recommends: Augustine’s Laws

Over the following weeks, The Strategist is going to pore over its bookshelves to bring to you new and classic books for your essential reading list. The first entry is one of ASPI’s defence researcher’s all-time favourites. Reader nominations for this feature are welcome.

Augustine’s Laws

Norman R. Augustine, Augustine’s Laws – an irreverent guide to traps, puzzles and quandaries of the defence business and other complex undertakings. American Institute of Aeronautics and Astronautics, New York, 1983.*

Book cover for Augustine's Laws

In 25 words or less: why should you read this book?

Good books on defence project management are relatively uncommon. Good books on defence project management that are engaging and funny are even rarer. Read more

Grand Strategy? What does that do for me?

Grand strategy is a big idea back in fashion as a useful way to think about and address important issues. But many grand strategic schemes advocated are complicated, incomplete, inappropriate and use arcane terms that perplex policymakers and non-experts alike.

Over the next few posts we’ll build a simple, minimalist framework for thinking more clearly and concisely about grand strategy. We’ll then apply the framework to thinking about two challenges Australia faces; withdrawing from Afghanistan and managing China’s emergence.

Why bother devising a grand strategy though? What does it do that something else doesn’t? Grand strategy is a way to try to get somewhere that you want to go. That may seem simple but can be better understood when compared against two well-known alternatives: opportunism and risk management. These are approaches that await events; they respond to other’s actions. They’re reactive but they can be useful.

Australia is good at opportunism, with notable examples (PDF) in both the Vietnam and Iraq Wars of jumping on board the American grand strategy and exploiting it for our own benefit. We’re also adroit at risk management; our last two Defence White Papers took a risk management approach of building up an armed force just in case a carefully chosen, particular risk eventuated. An insurance policy against a house fire if you will—and hope there’s not a flood, as it might not pay out! Both approaches depend on others and react to their activities. With opportunism you go where others take you, and Australia becomes a player in another country’s project. In risk management you sit down to await the hope-this-doesn’t-happen event. As the old saying goes, ‘hope is not a strategy’, and neither are opportunism and risk management. Read more

Reader response: defence is not an insurance problem

I want to decline Paul Monk’s offer to see Australian defence policy as an insurance policy. I think there are three good reasons for doing so.

The first has to do with the nature of military force. An insurance policy pays out only if disaster strikes; otherwise the ‘premium’ is essentially a donation to the insurance company’s profits. But an extant military capability pays out even in peacetime. Indeed, the best theorists of the use of force—people like Robert Art, for example—will tell you that force is principally used gravitationally rather than directly. That is to say, it is used more as a ‘shaper’ of events, than as an instrument of conflict. It ‘pays out’ every day, exactly the way nuclear weapons did during the Cold War, for example.

The second has to do with methodological utility. I honestly don’t see the gain in seeing defence as an insurance policy. Paul’s second paragraph suggests that the 2009 Defence White Paper was wrong to see China as a threat and to devise a future ADF around that perception. But why couldn’t the authors of that White Paper just say they were taking out insurance against a rising China? They might fairly describe their efforts in just such a fashion. So how does seeing defence as ‘insurance’ help? How does it give us better outcomes? Read more