As so often, the Australian Defence Force wanted the exquisite solution. It wanted uncrewed battlefield reconnaissance aircraft of a design that wasn’t operational anywhere and would achieve performance that other countries didn’t have.

And the acquisition led nowhere—except to prompt a successful replacement effort that gave the ADF a powerful lesson in the merits of toning down requirements to get something that is good enough and can go into service fast enough.

The lesson has been formalised. Defence now defines the two key concepts in its Capability Lifecycle Manual. They boil down to this: identify a ‘minimum viable capability’ (MVC), which is a lowest acceptable military effect that meets the requirement, then get a ‘minimum viable product’ (MVP), something that will deliver that capability on time.

The 2023 Defence Strategic Review told the ADF to go for MVC and MVP.

MVP is widely known in business, but not in Defence. At a 2023 ASPI conference, several senior speakers couldn’t clearly describe it or give an example when asked.

Well, that uncrewed aircraft project offers a fine example.

It was Joint Project 129 Phase 2 (JP129-2), a long and unnecessarily complex process of providing aircraft for intelligence-gathering, reconnaissance and target identification for the Australian Army.

The story of acquiring an uncrewed aerial reconnaissance capability for the army ultimately involved three aircraft types and their associated ground systems: first the overly ambitious original design that Defence had to abandon; then the Boeing Institu MQ-27A ScanEagle that was leased as a gap-filler; and finally RQ-7B Shadow 200 from AAI Corporation of the United States.

The original design was still at the prototype stage in 2005 when Defence chose it and was authorised to proceed to acquisition. So that design had not in fact been finalised and could still have had plenty of problems.

And the ADF wanted the design certified to an airworthiness standard that no uncrewed aircraft anywhere had achieved. Furthermore, the aircraft were to operate at such long ranges that their radio communications would work at the extremes of physics. The communications would also have encryption cyber security not yet in use in any other Australian tactical systems. And all this was to be fully integrated into Australian Army vehicles supplying power, the other end of the radio link and command and control.

Over three years of contract negotiation the aircraft grew 50 percent in weight, the project needed release of contingency funds as costs rose, and there were signs of insurmountable technical difficulties.

Meanwhile, the ADF could not wait. It was on operations in Afghanistan and Iraq and in 2006 leased ScanEagles as an interim solution; they remained in use until 2013.

In 2008 the capability management team for JP129-2 recommended a reset to the Chief of the Army. It proposed:

—Terminating the contract for the original design;

—Defining an MVC as an approximately 80 percent solution to the specification;

—Choosing a US design that the US Army was already using and was available through the US Foreign Military Sales process—specifically, the Shadow 200; and

—Doing it all fast.

Toning down the requirement meant dropping nice-to-haves, as distinct from must-haves: the aircraft wouldn’t have to operate from amphibious ships, and the army would do without the unique airworthiness requirements. Ironically, the RQ-7B was an updated version of a design that had been rejected in 2005 for the project because of supposed capability shortfalls.

Over the next two years the equipment was acquired, the US Army trained Australian soldiers to use it at Fort Huachuca, Arizona, it was rapidly proven in tests at Woomera, and the first of the two systems was sent straight from Woomera to Afghanistan. Each system comprised the ground station and five aircraft; eight more aircraft were bought as spares.

Shadow 200s sent to Afghanistan were in a bare-MVP configuration and adapted to operate from shelters instead of US Army HMMWV trucks. What the Australian Army got at first was in fact only a 70 percent solution. But it worked, and it worked well.

Over the next few years it was progressively improved. It was adapted for mounting on the army’s own battlefield trucks, Unimogs, given ADF combat-net radios, tested and certified to Australian weapons targeting and engagement requirements, and made compliant with Australian work-safety standards.

It was also given systems as bolt-ons, meaning they weren’t tightly (and expensively) integrated into it. One was for interpreting and sharing pictures from the aircraft; the others were a flight data recorder and a cockpit voice recorder on the ground operating station, both needed to meet aviation safety requirements.

All this was done in Australia by local businesses. By 2016, when the system was declared to have reached final operating capability, the Shadow 200s had achieved the intended 80 percent MVC configuration—and had been acquired for only half of the budget that Defence had expected to spend before changing horses in 2008.

The lesson is that Defence can greatly improve acquisition efficiency if a capability manager first agrees with operators what the 100 percent solution looks like, then approves going ahead with an MVC of 70 to 90 percent.

As with the Shadow 200s, a program can first deliver an initial operational capability at the 70 percent level then progressively advance to 90 percent. Declaring a final operational capability isn’t necessary, because it’s recognised that 100 percent will never be achieved. This model is particularly suitable for areas in which technology is advancing faster than the pace of Defence acquisition.

It involves a preference for mature, off-the-shelf, in-production equipment and teaming with a supplier that has an industry presence in Australia.

The need for speed must loom over the whole process, and it’s essential to try to come in under budget. With current constraints in the capability acquisition program, every dollar saved on one project is needed for another.

Geopolitics and technological innovation are transforming the economic base on which nations build national security. They are also transforming how Australia relates to its closest allies, particularly the United States.

National security no longer rests on fielding operational weaponry alone; it requires the ability to link warfighters in all domains of conflict—sea, air, land, space and cyber—with actionable information from global arrays of sensors, through fast, resilient and secure networks.

Geostrategic competition has also changed. In contrast to the Cold War with the Soviet Union, today Australia, the US and their allies face a Chinese competitor that is their peer not only militarily, but also technologically and economically.

Policymakers in the US and Australia must recognise that circumstances are changing the ways in which governments and militaries relate to their economies—and the ways allies relate to each other. This new environment presents Australia with both a strategic imperative and an enormous commercial opportunity.

The unprecedented scale of the Chinese challenge is transforming a US national security system that was built to counter the Soviet threat. During the Cold War, the US system grew to reflect its Soviet rival in its bureaucratic weight and wastefulness. China’s rise has forced US policymakers to recognise that this system is no longer fit for purpose. Transformation in the US will affect Australia directly.

The most striking feature of the plodding US defence system is its disconnection from the underlying US economy that generates consistent waves of disruptive technological innovation. Responding to China, US policymakers seek to reconnect national security to the dynamic commercial sector.

This means adapting technologies of the hyperconnected commercial world for military use. US defence planners are harnessing the latest commercial technologies to magnify the speed, agility and lethality of forces. They are drawing forces together in a ‘joint all-domain warfighting concept’.

The backbone of this posture is a decentralised, artificial-intelligence-driven joint all-domain command and control system that uses a resilient, space-based network to link ‘every sensor to every shooter’ with actionable information. Building this military internet of things requires that the Pentagon access Silicon Valley’s latest gadgets and motivate companies to solve the most pressing defence problems—without stifling innovation.

To attract innovators and private investors, each of the US armed services has constructed an alternative acquisition agency equipped with unconventional contracting authorities: the air force created AFWERX, the special forces have SOFWERX, the navy has NavalX and the army has the Army Futures Command. There’s also the Defense Innovation Unit, which covers the defence and intelligence communities.

Pentagon leaders have special plans for the new US Space Force, which stands at the centre of the emerging joint all-domain force. Rather than giving it an adjunct Silicon Valley agency, they are waging a battle against defenders of the status quo to build an entirely new acquisition system. The aim is to bypass the dysfunctions of the Cold War–spawned Pentagon–Congress nexus and construct channels directly between the space force and the innovative, ‘new space’ commercial sector.

A joint all-domain strategy, of course, does not sit easily within the geographical boundaries of national borders. At the same time, a decade of state-sponsored attacks and disinformation operations demonstrates that geostrategic competition has become transnational.

The joint all-domain concept is also transforming alliances. US policymakers no longer believe they can win alone in a competition with China. The logic of a joint all-domain security system—and its underlying technologies—is expansive; it draws allies and the data they generate into a network. Recognising the new network logic of alliances, Congress redefined the US national technology and industrial base in 2016 to include Australia and the UK. In doing so, it sought to expand the material, technological and innovation base on which security is built.

Recent events indicate that Australia cannot sit on the geostrategic sidelines, and no palatable or practicable alternative exists to integration into the joint all-domain system. A free and open Australian society and an international system organised to support the Chinese Communist Party elite are incompatible. Only a US-led coalition can marshal the material, ideal and leadership resources to sustain a liberal, rules-based alternative.

Embracing these developments as a ‘fast follower’ promises significant commercial rewards. The ‘iron triangles’ of Pentagon program offices, congressional committees and defence prime integrators that have a lock on conventional defence procurement in the US—and Australia—do not dominate emerging acquisition channels. This creates openings for innovative Australian businesses to offer solutions into the emerging joint all-domain security structure, a market with truly global reach. Recent Australian company successes demonstrate that US policymakers’ overtures ensuring these channels are open to allies are genuine.

To embrace the opportunities of the emerging system, Australia must engage US counterparts at three levels. First, at a strategic level, senior politicians and defence planners will need to discuss with the US and its allies how to integrate operational capabilities into a joint all-domain structure.

Engagement must also take place at the level of acquisition processes. US policymakers have discovered that a joint all-domain structure requires not only different capabilities, but also a completely different system for acquiring capabilities. Over the past five years, they have experimented with processes to accelerate the pace of innovation and procurement. Australian defence acquisition professionals can learn from, and import, this experience, but they can also link directly to it, by running joint procurement programs, where possible. It’s noteworthy that the venture capital organisation serving the US intelligence community, In-Q-Tel, was established in Sydney (and London) in 2019.

Finally, Australian government agencies can work with US counterparts to reduce barriers that inhibit the movement of capabilities between allies. This is a task where Austrade offers a powerful complement to the Defence Department’s Capability Acquisition and Sustainment Group and Defence Export Controls, the Department of the Treasury and the Department of Home Affairs. Charged under the defence export strategy with building Australia’s sovereign defence capabilities and defence exports, Austrade confronts daily the trade and investment barriers that inhibit the flow of companies, capital, labour and technology between Australia, the US and other allies.

Indeed, while the logic of joint all-domain operation points towards closer allied integration, Austrade’s work with tech companies shows geostrategic competition raising new barriers that are fast becoming the biggest challenge to this approach. To prevent adversary ownership, influence or control over sensitive technologies, critical infrastructure and personal data, the US, Australia, Canada, the UK and the EU have significantly increased their scrutiny of the national security implications of foreign investment. Similar measures in the US and elsewhere seek to mitigate the risks of adversarial influence in supply chains. While the motivations for such measures are laudable, their indiscriminate application captures desirable transactions (those between allies) as well as undesirable ones. In doing so, they threaten the rapid innovation and procurement on which a joint all-domain security system rests.

As a fast follower and one of the US’s most trusted allies, Australia can identify and raise these barriers with US counterparts and propose solutions that could be extended to other partners. That would not only serve Australia’s security interests, but also provide innovative Australian companies with commercial first-mover advantages in the emerging acquisition channels that will supply the US and its allies.

In my previous article on the future of the Aussie Tiger helicopter, I suggested two possible paths for the Australian Army’s future armed reconnaissance helicopter (ARH) capability. The first is to extend the Aussie Tiger’s service and participate in the US Future Vertical Lift (FVL) project.

The second option would see the ADF replace the Tiger with a more effective new capability by 2025 (or maybe sooner). That would then allow a transition to a mature FVL capability at a later date. This  option would boost the Army’s ARH capability much more rapidly by acquiring an operationally mature platform that could operate well into the future.

In considering the new capability option, two obvious candidates are available now: the Boeing AH-64E Apache and the Bell AH-1Z Viper. Both would offer a high degree of networking compatibility with other ADF platforms and benefit from a sustained global support chain.

If the Apache were to be acquired and be fully supported by its well-established international maintenance and supply network, the acquisition would substantially boost the Army’s ‘attack reconnaissance capability’ over the Tiger. But it would be the more expensive option, and the more complex to operate and support.

The main advantage of a new capability option is that it reduces future risks and would avoid Australia continuing to be exposed to the effects of a lightly funded development path for the Tiger. Any new capability could serve until a FVL-type platform emerged that was sufficiently mature to be acquired by the Army, perhaps by the late 2030s.

A key question to consider is whether the Army really needs an ARH capability like the Aussie Tiger, or any replacement platform like the Apache or Viper? The $5–7 billion budgeted for the Aussie Tiger replacement could easily be spent on other platforms and capabilities that meet operational and tactical needs without exposing aircrew to proliferating missile and air defence systems.

As my colleague Andrew Davies noted recently, the Army is unlikely to be deployed against a major power as part of an independent operation in Australia’s surrounding region. Instead, it would most likely be part of a joint task force operating as part of a coalition.

Under those circumstances it could always do what it did in Afghanistan and rely on other states to provide the ARH support. The disadvantage of doing so is that our dependency on others adds to their operational burden. It also increases the risks that friction and the fog of war, or the inability of other states to sustain air operations, could leave Australian troops much more exposed. The danger of casualties would be higher as a result.

So simply going without may not be the best solution.

But that doesn’t imply that a ‘like-for-like’ replacement is the way forward. Future technologies offer the potential to take humans out of harm’s way by removing aircrew from the cockpit of armed reconnaissance. The manned element might be well to the rear, perhaps aboard platforms like E-7 Wedgetails.

A return to force design principles at a more fundamental level suggests that a better investment might be for Australia to spend its money in other ways that contribute support in higher intensity scenarios differently. This would force us to confront the issue of whether the ADF is more useful in a coalition if it primarily contributes air and naval forces, versus trying to maintain a balanced capability.

The question over the Aussie Tiger replacement really gets to the heart of just what it is that the ADF is expected to do. That would be determined by where we are fighting and against whom, and when future conflicts might arise. This is a fundamental challenge for any force planner considering a much more uncertain and dangerous strategic outlook.

Certainly, the future land battlespace will be increasingly complex and contested, with hybrid adversaries equipped with much more capable air defence systems that could make manned helicopters a vulnerable target.

Now might just be the time for the ADF to jump into the unmanned battlespace by investing in networks of tactical UAVs coming out of LAND 129 that provide the sensor end of the ‘sensor-to-shooter link’ where the AIR 7003 armed UAV is the shooter. It might be better simply to cut our losses with manned platforms and do something novel.

It’s clear that Australia has some options—and that’s good. It can do a quick replacement with a US product like the Apache or Viper, buying a platform that is proven but that may be expensive to operate and potentially vulnerable—even for something like the Apache. Or we can rely on others—but that tends to clip the Army’s wings in terms of operational flexibility, which may not be appropriate in a worsening strategic outlook. We could explore networks of UAVs that offer battlespace intelligence, surveillance, reconnaissance and attack, perhaps at reduced cost and risk.

The ADF and Army’s force planners need to get busy doing a hard-nosed analysis of all the options, rather than simply accepting a like-for-like replacement in 2025.

The organisational reforms to defence acquisition that followed the First Principles Review were extensive. Cassandras that we are, at the time we worried about the risk of a ‘perfect storm’ of deteriorating external strategic circumstances, internal organisational disruption, an extensive backlog of unapproved projects and an aggressive forward program of large development projects to be steered through government approval and into the project management phase. We thought that the most likely outcome was a badly lagging investment program, with concomitant delays in the delivery of capability to the ADF.

It’s now getting on for two years since the release of the 2016 defence white paper and its associated integrated investment plan, and patterns are emerging. We don’t have as much data as we’d like because the government has abandoned the long-standing practice of disclosing the projects it has approved. But it looks like things are already behind schedule; there are simply too many projects that were slated for approval about which nothing has been said.

Significant if not substantial delays wouldn’t be surprising. The target of 10 first-pass and 23 second-pass approvals in 2016–17 was well above the annual average of 6.8 first-pass and 11.5 second-pass approvals for the preceding 12 years. And things are only going to get more difficult. In 2017–18, the target is for 20 first-pass and 37 second-pass approvals. Such was the ambition of the 2016 white paper.

Nevertheless, we must concede that approvals are proceeding at a faster than usual pace. And it’s not just smaller projects—progress is being made on some of the largest and most expensive defence projects ever contemplated by Australia.

But we’re mindful of the old catchphrase of dodgy tailors, ‘Never mind the quality, feel the width’, so it’s worth looking at the quality of some of those decisions. And there are good reasons to worry about that; the acquisition reforms of the 2000s were mostly about taking the time to get things right before approval, rather than rushing into poorly conceived projects and wearing the delays and cost overruns that often result.

It has long been a tenet of project management that you may pick only two of the three variables of fast delivery, high performance and low cost. Here’s what one of us said earlier this year about the balance being struck in current defence planning (the benefit of being a professional doomsayer is that you’re bound to be right about something):

While the new arrangements appear to have led to a surge in project approvals … the acceleration has been achieved by adopting a different trade-off between time and risk. Under the old system, we expended time to reduce risks. Now we accept greater risks to save time. While today’s [strategic] challenges justify greater risks in procurement, it would be penny wise and pound foolish now to short change the management of the initial stages of the costly and militarily critical projects now being developed.

A few examples show how the balance between risk and expeditious approval has shifted. And, in some cases, they illustrate how uncertainties that would previously have been sorted out prior to approval are now being left for afterwards. Probably the most visible programs—and therefore closest to the heart of our political masters—are in the naval shipbuilding sector. And, true to its word, the government hasn’t let the grass grow under its feet. It has approved the selection of the combat system (actually systems, plural) for the future frigate and, most recently, the design of the new offshore patrol vessels (OPVs) and the arrangements for building them. For different reasons, both of those decisions reflect immaturity in the program design at the time of approval.

One of the early lessons we learned in this job is that once the government has made a decision, there’s little to be gained from saying ‘This is nuts’. Instead, the constructive thing to do is to explain the context of the decision, identify the benefits the government expects to gain, and point out any challenges for implementing the decision. So, in the spirit of being constructive, we’ll just say that there will be no shortage of interesting implementation challenges in the OPV program. The approved model requires the German ship designer to work with three Australian shipbuilders at two different sites. Given the difficulties (read ‘years of delay and billions of dollars of cost overruns’) the air warfare destroyer project ran into in translating a Spanish frigate design into local production practices at one yard with one local builder, that’s a bold move. We’re not at all sure how it will work, or even who will do what. But one thing is certain: when the government takes it upon itself to dictate industrial partnerships, it substantially shifts the onus of responsibility for success or failure back onto the Commonwealth.  

Turning to the future frigate combat system, the decision to use a hybrid of the US-sourced Aegis system and Saab Australia’s 9LV is a good one. A previous ASPI analysis explained how that approach could lead to a world-class capability outcome. But it also cautioned that ‘[b]efore heading irrevocably down that path, some rigorous systems engineering work that follows on from the existing risk reduction work is required’. Again, there’s been no explanation of how the systems will fit together, and it seems that many of the details are still to be sorted out—even at the level of who will be responsible for what. The approval actually seems to have been for serious work to begin on system design. In other words, risk reduction steps that might’ve occurred prior to approval under the Kinnaird model of acquisition that held sway from 2003 until 2015 will now occur after the fact.

And it’s not just us having trouble understanding what’s going on. We’ve discussed these examples and other recent approvals with a range of industry players—including both successful and unsuccessful bidders—and we often find that they’re also scratching their heads. Because the government is a monopsony buyer, defence contractors are naturally reluctant to be openly critical of a decision, usually having their eye on future competitions. So only rarely will dissent be made public. That makes the negative industry response to the decision on the army’s ground-based air defence system more noteworthy. We won’t delve into the entrails of the decision here, other than to note that it was a sole-source decision when there seemed to be several credible contenders for the contract. The process was expedited under Defence’s ‘smart buyer’ model, whereby low-risk acquisitions can bypass the usual competitive models. Defence (and the minister for defence industry) say that the decision meets the criteria of being straightforward and low risk. But there’s a widespread view that the preferred ‘short cut’ involves substantial developmental work.

Some or all of the decisions we’ve discussed here might turn out to be corkers. We’d dearly like to be proved wrong, but we think the shift in thinking that’s occurred is worth noting. Rapid decisions have sometimes worked well in the past—such as the procurement of F/A-18 Super Hornets and C-17 transport aircraft—but they were off-the-shelf purchases from long-established production lines. We’re in unknown territory when applying the same ‘damn the torpedos’ approach to bespoke acquisitions involving complex systems integration and greenfield industrial start-ups.