Left High and Dry
An AIDN National Op-ed
Written by AIDN National CEO Brent Clark
“The long-feared day arrived, on May 1st, with the PLAN launching an invasion convoy across the Taiwan Straits. President Biden responded to calls from Taiwanese President Tsai Ing-wen for support, with assets from the third and seventh fleets joining into a maritime engagement.
President Biden issued an ultimatum to Chinese President Xi Jinping to call back the PLAN fleet or face immediate consequences, and called on allied nations to join an international naval coalition to engage the PLAN and enforce the peace in the Taiwan Straits.
Australian Prime Minister Scott Morrison responded to this call, by deploying a task group to the naval coalition. HMAS Sydney, which had been in a stand-off position 350km south of Taiwan, immediately joined the fray, firing multiple salvos of long range Evolved Sea Sparrow missiles (ESSM) at PLAN targets in the Straits.
Apparently, the USN and RAN action was successful, with no PLAN ships reaching Taiwan. Media reports suggested that the ESSM’s had been particularly effective and had scored many direct hits on PLAN vessels. PLAN launches of DF-26 anti-ship missiles at HMAS Sydney were ineffective, and foiled by use of advanced electronic countermeasures (ECM).
The silence from Beijing from May 3 suggested that President Xi was licking his wounds, and considering how to back out of a crisis he had engineered without losing face. Polls taken in both the US and Australia indicated that each country’s public strongly supported their government’s military action.
Unbeknownst in Washington and Canberra, the real posture in Beijing was very different. During the initial engagement, the PLAN had collected a wide range of Electronic Intelligence (ELINT) covering the operation of the ESSM’s guidance system, and the operation of the ECM deployed against their own DF-26 missiles. This intelligence was immediately transferred to the China Electronics Technology Group (CETG) Corporation that had designed the guidance system of the DF-26, and the ECM utilized on PLAN warships. The CETG engineers had an intimate understanding of the strengths and weaknesses of the algorithms used within their systems, and within two days had understood why the DF-26 missiles had been deceived into missing their targets. And on the third day their engineers pieced together the puzzle of how the ESSM guidance system had remained locked onto their ships while their own ECM was deployed. Armed with this understanding, CETG’s engineers updated the algorithms of the DF-26 guidance system and the fleet’s ECM suite, implemented the changes within the software systems, and used the collected ELINT to ‘replay’ the engagement, but this time with the updated algorithms in place. The replay suggested a reversal of the outcome.
Chen Zhaoxiong, CETG’s Managing Director and his senior executives hastily arranged a meeting with VADM Shen Jinlong (Commander of PLAN) and described the outcome of the technical investigation. During the meeting, VADM Shen signed an order for the immediate update of all of the missiles and the fleet’s ECM suite. BY May 9th, all the updates had been made, and a second invasion fleet sailed towards Taiwan.
As previously, USN and RAN assets conducted long range strikes against the PLAN fleet. Unfortunately, the reports indicated that these were not successful, and PLAN vessels were able to cross the straits reaching Taiwan. Even worse, DF-26 launches against USN and RAN vessels scored direct strikes. Media reports indicated appalling scenes; opinion polls indicated that the Australian public’s support of the war had plummeted.
President Biden was also shocked by the loss of USN vessels. His military experts updated him on how the PLAN’s successes had been based on recent improvements they had made to the EW capabilities of their systems, but also that American military industry was itself working round the clock to overturn those advantages. Re-assured that the pendulum would swing back to the USN, President Biden declared that the US would continue to fight for the freedom of Taiwan.
Prime Minister Morrison discussed with Biden whether the RAN would also be able to receive the equipment updates. After all, without the updates, the RAN’s ESSM’s were now effectively useless against the PLAN. And the ships of the RAN task group were in grave danger unless their ECM was updated to cope with the new versions of the DF-26. The US President assured Prime Minister Morrison that the RAN would receive the updates. This would occur after the USN fleet was itself updated, and once the military communications satellite link to Australia had been re-assured as being secure. This was a factor PM Morrison had not expected, and enquired further about the link. Unfortunately, during the week after May 1, US intelligence had identified that the link had been breached by cyber-attack, and it could not be used to relay to Australia the software updates until the exact nature of the breach had been understood and rectified. Apparently this might take some time, as the US had other internal cyber-breaches that needed to be addressed as higher priorities.
Prime Minister Morrison hastily convened the National Security Committee of cabinet, and demanded from his minister’s answers to two questions: How was it that after the hundreds of billions the government had invested in Defence capability, that Australian forces were left vulnerable and unable to have their capability updated to match our adversary; and: Had we not learned anything from the COVID crisis about the need for self-reliance”
While the tale above is fiction, it largely follows actual events that occurred between Israel and the US during the 1973 middle-east war. In that war, the Israel Air Force (IAF) was surprised by new model SA-6’s Surface Air Missiles which the IAF’s existing electronic countermeasures (ECM) could not handle. The SA-6 was downing unsustainably large numbers of aircraft. The IAF was forced to suspend close air support missions on the Golan Heights, where the Syrian army was on the verge of defeating the Israeli army. Whether for political reasons, or simply because it still did not have them, the US did not supply Israel with updated ECM effective against the newer SA-6’s.
However, there is a key difference between the two stories.
Unlike Australia, Israel had for many years nurtured within its domestic industry the capacity to undertake scientifically and technologically advanced tasks. When the hour of need arose, industry (Rafael ) was able to rapidly implement a countermeasure that did defeat the SA-6 threat, restoring the IAF’s freedom of action over the battlefield.
The purpose of relaying these tales – both fiction and fact – is to set out the real risks that face the ADF if we continue to rely on off-shore supply of military equipment.
In the current environment, warfare between high-end adversaries with technology-based warfighting materiel, becomes an arm wrestle between the algorithms and software of one side’s systems against the equivalent capabilities of the adversary’s systems. During warfare, these systems rapidly become obsolescent as each side analyses how their opponent’s equipment works, and how the algorithms and software within their own side’s equipment can be adjusted to defeat the adversary. This work is done by technologists who have been intimately involved in the design of the algorithms and software of the original equipment.
A nation that does not have access to sufficient scientific and technological smarts in industry to keep pace with these modifications, is a nation that is willing to place its servicemen and women in grave risk. AIDN cannot accept that Australia is willing to treat its brave service people this way.
Yet, Australia’s consistent approach to procure military equipment on the basis of price competitiveness does exactly this, and deprives the ADF of critical industrial support from its domestic industry.
AIDN’s position is clear. CASG must adjust its approach to procurement, if the issue is one of policy or procurement rules, then Government must revise both of these to ensure that Australian controlled Industry is able to provide this service to the Government and therefore the ADF.
The reflexive assumption that all advanced, science-based systems must be procured from overseas, rather than be developed in Australia must stop. Australia must be allowed to develop these industries. Doing otherwise undermines the ADF’s ability to sustain operations against technologically capable adversaries.
AIDN National 4th Quarter 2020 Newsletter.pdf
A Machiavellian Tale – Or a Tale of Self-Reliance
Written by AIDN National CEO Brent Clark
Italy from 1450 through 1550 was a tumultuous time. The land comprised a series of independent city states which were often warring with each other, with the central papal authority and with external influences from France, Spain and Austria.
The Princes of the city states were certainly living in (to use the PM's terminology from the July 1 Defence Strategic Update) a "challenging strategic environment", and weighty decisions over how to prepare their principality for conflict had to be made.
Foremost of these was how best to raise an army. Recruiting personnel, equipping them, training them was an expensive proposition. And the establishment of such an army was just the start, keeping the army available was a continuing drain of resources. Could this expense be justified if for most of the time the army was not actually being deployed?
And then there was the question of risk; would a home-grown army actually be effective?
These considerations led to an alternative approach becoming the norm; the use of mercenaries.
This brought various advantages. Mercenaries offered a ready built ("off the shelf") system. All of the costs of raising and training an army were averted, as they were already battle-ready.
Mercenaries could be used for the shorter intervals of pressing need, and did not need to be engaged over a longer period. This was economically attractive.
An active market of mercenaries existed, so their supply was seemingly assured. Most of all, they had experience in war-fighting, experience that a home-grown army could not match.
From a rational assessment of cost, and an evaluation of the risk of campaign loss, the use of mercenary forces became the prevalent model.
The results were disastrous.
Ultimately, in the heat of battle, the agenda of a mercenary was not aligned with the agenda of the principality that hired them. If the battle turned, at the very moment that a Prince really needed to rely on them, the mercenaries would melt away.
Prince Machiavelli wrote:
"I say, then, that the arms with which a Prince defends his state are either his own, or they are those of mercenaries or auxiliaries, or mixed troops. The mercenaries and auxiliaries are useless and dangerous".
What Machiavelli understood, but which the rational "value for money" assessment applied by the Princes entirely missed, was the value of self-reliance.
Machiavelli's point has applicability well beyond the armed services themselves, and extends to questions of supply of equipment to our armed forces.
Which brings us to the current debate on military industrial supply.
Australia has a defence procurement model that has been designed for the more benign strategic environment that prevailed until recently. The underlying assumption has been that a market for supply will always be available, and that the rational choice is to select suppliers that are cheapest and have existing equipment that we can readily procure. This minimises the risk that acquisition projects will fail to deliver, or that costs will increase beyond planned.
The outcome is that Australia overwhelmingly imports the bulk of its military materiel.
Yet, in the more challenging strategic environment that Australia is now confronting, the question must be asked whether this procurement model remains fit for our purpose?
Clearly, Australia is not self-reliant for supply of the defence materiel the ADF uses. How much of a risk does this pose to Australia?
The view of AIDN is that the risk is substantial, and is being consistently underplayed by our procurement organisation.
Why? Consider what may occur should a serious theatre war arise against an adversary that is equipped with technologically advanced weaponry.
We will want our brave service people to not only have the best equipment possible on the day that such a conflict commenced, but continually thereafter and for the entire duration of the conflict.
That includes the resupply of consumables that are expended, and the rapid repair of equipment and assets to enable their return to the battlespace. Yet if much of our materiel is imported, would the ADF be reliant on repair facilities located offshore? This creates serious risks if sea lanes and air corridors are cut.
A more serious issue relates to addressing the accelerated obsolescence of military technology during armed conflict. Modern military systems are rooted in technology, yet unforeseen vulnerabilities of those technologies are rapidly exposed when fielded against an adversary that also has advanced technologies. Rapid evolution of technology is required so that the equipment in the ADF's hands stays a step ahead of the adversary's equipment. Yet if the ADF's technology systems are sourced from overseas, those updates will need to occur in foreign industry.
But will they be interested? Maybe their own forces will have their own pressing needs, and their engineers' attention will of course turn to meet the needs of their own forces first, "ADF, I know it is urgent, but you are in the queue, we are getting through our queue as quickly as possible".
Even if the foreign industrial resource is available to update the algorithms in our equipment quickly; how will we receive delivery? Use communications networks to "download" the patch?
When confronting a technologically sophisticated adversary, such networks are vulnerable both to cyber and physical attack. Would we want to download an update to our sonar algorithms and risk having our adversary intercept that download and understand the updated design?
Reliance on foreign supply creates massive risks that the ADF will not be able to keep pace with the evolution of technology as the conflict progresses, and that our troops will be left vulnerable.
As with Machiavelli's assessment of the use of mercenaries over home-grown forces, the question of relying on foreign industrial supply over domestic supply boils down to a question of self-reliance.
Yes, there are costs associated with developing a home grown industry, and yes there are risks associated with asking Australian industry to develop certain technologies.
But what are the risks to the ADF by continuing a course of reliance on foreign industry?
Where and how does this factor enter into source supply evaluations routinely conducted by CASG?
Our world has changed. We are now in an era where the ADF may be called upon to engage an adversary significantly more capable than those it has confronted in recent times.
Our procurement model must be changed to not only address the needs of our troops on Day 1 of a future conflict, but on Days 2, 3 and throughout the full duration of conflict.
That means correctly accounting for the value to the ADF of an independent Australian military industry when assessing value for money of procurement decisions.
Published by Defence Connect
The IP Paradox
By Brent Clark
There has been much recent comment in the press regarding the underwhelming levels of local work resulting from the Government’s generational increase in investment in Defence capability. Discussion has arisen over the merits or otherwise of the AIC programme, and on Defence’s statements to the effect that they have little control over the primes’ subcontracting.
This stands in stark contrast to the experience many Australian companies have had in contracting with Defence.
To-date, CASG’s views on how formal interaction with industry should occur are enshrined in the suite of ASDEFCON contracting templates. In a recent joint Ministerial statement, it appears that the “best endeavours” approach of the existing AIC policy may be replaced by harder contractual commitments to expenditure levels on local Australian industry (ideally Australian-owned). Whether these changes can achieve this outcome, or there remains the ‘but not at additional cost nor impact to schedule’ for the ‘acquisition phase’ escape clause remains to be seen.
It is fair to say that these templates reflect a view that Defence must treat industry with a great degree of caution. Under these templates, Defence retains controls over many steps of the process of the supply (by industry) of defence equipment. Additionally, in the event that Defence wishes to exert authority over its supplier, Defence retains a range of powerful contractual remedies able to be drawn upon at different acquisition or sustainment stages. Defence even retains the power to simply walk away from a contract for no better reason than it be ‘convenient’ to do so.
So local industry is understandably perplexed when Defence representatives claim that they are powerless to enforce prime contractors to abide by the local AIC levels that the Prime’s themselves tendered – and contracted for.
There has to be a Sovereign commitment to AIC. Defence needs to use its wide-ranging powers to support Australian owned SMEs. This includes external auditing to ensure compliance. No longer can Defence allow enforcement of AIC to be put in the ‘too hard basket’. Stove-piped project-by-project acquisition methodologies has allowed this to happen. Consider the paradox of intellectual property (IP).
Among the many measures enshrined within Defence’s ASDEFCON suite is its position on IP.
Defence demands licenses to the IP underlying a supplier’s products. Such licenses are nuanced by the supposed constraint that the supplied products/technologies be used only for “defence purposes” – as compared to “commercial purposes”; but for much of military technology, defence purposes are the only purposes for the goods, so this constraint is immaterial if, for example, Defence subsequently gives away or exchanges this technology with our allies – which often are the only commercial export market for those goods.
For suppliers of high technology items, such licenses demand further access to the technology’s source code and other technical data. Now while this same approach ostensibly also applies to goods that are imported; in practice, Defence contracting personnel appear to implicitly accept that this level of control of IP of systems developed overseas, and often supplied by the local branch of the foreign primes, are beyond their reach.
After all, who would realistically expect to be supplied, for example, the full source code of the US-developed Aegis combat system and the SPY radars that equip the RAN’s Hobart Class DDGs?
But Australian developed technology gets harsher treatment. Local SMEs report cases where they are told by Defence’s contracting personnel that: “you are an Australian company, so we must have paid for the IP on previous contracts, so we should own it”.
Such statements may simply reflect a low-level of-understanding by public servants that have not benefited from Defence private sector experience, of the level of commercial risk borne by SMEs in their continuing investment in the development of Australian technology between often intermittent Defence contracts.
But the consequences are well understood - the ability to supplant the SME from the longer-term support of its own product by handing the SME’s IP necessary to support the product to a larger aggregated services supplier.
If Defence is genuinely concerned about long term access to IP, as distinct from just the perpetual licence that it secures through the contractual Defence Licence, then there are already provisions for placing IP and source code in escrow. Being an Australian SME should not be used as an excuse by Defence procurement to take ‘the easy path’.
It is unfortunate that, faced with the prospect of having the local supplier of technology engaged over the longer term to support its product, Defence’s instinctive response is one of innate discomfort, rather than enthusiasm at an opportunity to partner with its local industry.
AIDN appreciates that Defence has reached these positions following unfortunate prior experience on some large programmes where foreign owned primes have utilised their control over IP to block Defence’s access to sufficient technical information to enable other parties (including SMEs) to interface equipment to the prime’s equipment and /or address obsolescence issues.
Pragmatically there may be some cases where for strategic reasons, a procurement may be undertaken through an FMS procurement – however there is a whole section on AIC for Foreign Military Sales acquisitions that rarely has had more than lip service ever paid to it.
What irony that IP positions developed to protect Defence against the occasional proprietary practices of foreign owned primes are used to stymie the health and growth of local defence industry.
More to the point, is the inconsistency of this contracting approach with the oft-stated desire to develop sovereign industrial capabilities.
How can local industry be expected to develop defence systems if, whenever it makes a sale, it is required to include rights to higher -Tier contractors, that enable them, as potential competitors, to use that technology.
And if due to this risk, there is only a poor business case to develop the desired types of technology locally, how can a sovereign industry capability ever emerge, let alone flourish?
Yet Government has made it crystal clear that it not only wants, but demands, that Defence act in a manner that allows such a sovereign industrial capability to develop.
It is AIDN’s view that, in implementing its announced ‘enhanced AIC’ initiative, the time has come for Defence to reconsider the approach it takes to IP in tendering and contracting local industry.
Instead of continuing with an approach that tilts the field against local industry, it must take a stand that aids local industry. Existing requirements for local industry to provide licenses to its underlying source code and technical data should be revisited to ensure local developers that signal non-compliance with such requirements are not disadvantaged.
Defence’s masters have declared that Defence must act to develop sovereign industry capability and remove the obstacles to the progress of local defence industry.
Whether Defence recalibrates its approach to local industry IP will be a sure indicator of whether its response to the challenge laid down by its masters is substantive - or merely rhetoric.
Published in Defence Connect 8 October 2020
The AIDN National 3rd Quarter Newsletter 2020 is available below.
AIDN National 3rd Quarter Newsletter 2020.pdf
Its one thing to build war fighting capability it’s another to build industrial capability.pdf
AIDN Newsletter National 2nd Quarter Newsletter 2020.pdf
The Australian Industry & Defence Network (AIDN), Australia’s largest national defence advocacy group representing small business, has appointed Brent Clark as their new CEO.
Brent joins the organisation after a multi-decade career in defence and defence industry. He is a former submariner and has held a number of senior roles within Defence Industry.
“AIDN is thrilled to have Brent on board to help us develop as Australia’s voice for defence industry,” AIDN National chair, Lester Sutton said.
“Defence policy is an Australia wide concern and that obviously requires a strong voice in Canberra, which Brent will provide,” Mr Sutton said.
“The COVID-19 crisis has shown defence industry’s importance to the Australian economy, and that importance will only grow as the future submarine, future frigate and other significant defence programs ramp up,” Mr Sutton said.
“Our job at AIDN is to advocate as strongly as we can for our members to make sure they benefit as much as possible from the Federal Government’s defence spend to maximise sovereign capability.
“Beyond the benefits for AIDN members, ensuring a maximum level of sovereign capability is the right thing to do for our national security and the economy,” Mr Sutton said.
Brent Clark will continue in his role as CEO of Industry Voice, a complementary defence industry body that has taken a lead role in the debate around Australian Industry Capability (AIC) - particularly sovereign capability.
Industry Voice has joined AIDN as an Associate Member and signed onto the MOU to form a single national organisation representing small business in the sector.
“I congratulate Brent Clark on his appointment, and I look forward to working in collaboration with AIDN to jointly further the cause for Australian small businesses,” Industry Voice Chairman, William Hutchinson said.
Download the AIDN Newsletter for the 1st Quarter 2020 now!
Released on the 18th of March 2020. Click on the link below to open.
The Australian Industry & Defence Network (AIDN), Australia’s peak national industry body representing primarily Australian small and medium businesses operating in Australia’s defence and national security industry, has called for an urgent review of the Australian Industry Capability (AIC) Program to ensure it meets its objectives of:
“The current AIC policy framework, established by the Government through the Department of Defence, is well intentioned and has been warmly received by Australian industry. However, the AIC Program as implemented is not facilitating development of sovereign industry capability or business opportunities for the local Australian defence supply chain to the extent envisioned.” said Lester Sutton, National Board Chair of AIDN.
“Australian industry, particularly small and medium business, is now at risk of losing out on sovereign industry capability, billions of dollars of work, and thousands of local jobs,” he added.
AIDN members across Australia are reporting significant frustration in getting Australian industry involved to the extent envisioned across major new defence programs including the Future Submarine, Future Frigate, Offshore Patrol Vessel, Combat Reconnaissance Vehicle and Joint Strike Fighter programs – Australia’s largest ever defence acquisitions. If AIC implementation continues ‘as is’, the outcome will be to lock-in more overseas suppliers and exclude Australian industry from participating in these acquisitions, including through-life-support.
AIDN is recommending a number of changes to improve the AIC Program’s effectiveness and to ensure Australian industry, particularly small and medium businesses, are not further excluded from such opportunities:
“These are relatively straightforward changes, which we believe can and need to be implemented without delay.” Chairman Lester Sutton went on to add.
“AIDN members are grateful for the significant reform achieved in defence industry policy by the government over the last five years and fully support the drive to generate more local capability and corresponding jobs through the transfer of overseas technology. But we need to ensure the intent and extent of these good policy settings, particularly around AIC, are actually achieved.”
“Australian industry is not after a hand out, but it wants the opportunity to compete on a level playing field, for the first-of-class of Australian military platforms, otherwise there is a high likelihood Australian industry will be excluded for the life of the platforms – and sovereign industry capability will not be achieved.”
“With these major programs across all of defence, including SEA1000 Future Submarine, SEA5000 Future Frigate, SEA1180 Offshore Patrol Vessels, LAND400 Phase 2 Combat Reconnaissance Vehicle, LAND400 Phase 3 Mounted Close Combat Vehicle, LAND4503 Armed Reconnaissance Helicopter and LAND2097 Phase 4 Special Operations Helicopter, now is the time, without detracting from delivering the defence capability our defence forces need, to focus defence acquisition on supporting sovereign industry capability, local jobs and the significant economic benefit this brings to the country.”
Mel Woon, Executive DirectorE firstname.lastname@example.org
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