Current capability, importance, potential risks and workforce planning
Chapter 3 will cover the first three terms of reference of the inquiry.
In particular, it will consider evidence received relating to the current
capability of the Defence PSE workforce, its importance and the risks of skills
shortages and a decline in Defence's PSE capabilities. It will also consider workforce
Current Defence PSE workforce
Defence provided an overview of the current Defence PSE workforce in its
submission to the inquiry (extracted below). This workforce covers members of
the Australian Defence Force (ADF), the Australian Public Service (APS) and
support from Defence contractors. It stated:
In July 2015, there were 14,534 ADF members working in the
engineering and technical domain and 2,815 ADF members working in the ICT
domain. The ADF does not have a dedicated 'physical science' workforce stream,
but is organised around corps, categories or musterings across Navy, Army and
Air Force. The ADF PSE workforce is directly aligned to capability outputs and
supports tasks ranging from warfighting, to sustainment, to meeting military or
departmental requirements. Members of the engineering and technical workforce
are recruited at entry level and trained by the ADF, with each service
undertaking its own workforce demand, management and supply functions.
The APS PSE workforce currently comprised 9,748 employees often
integrated with ADF members. Defence noted that while this number has fallen
from 'a high of around 10,500 in 2013' it has remained static as a proportion
of the overall number of employees working in the Department.
The Defence PSE workforce was organised around eight 'job families',
with positions grouped according to technical or functional disciplines.
2,050 in the Science and Technology job family;
2,050 in the Engineering and Technical job family;
2,100 in the Intelligence and Security job family;
1,550 in the Logistics job family;
1,300 in the Information Communication Technologies job family;
450 in the Health job family;
150 in the Senior Officer job family; and
150 in the Trades and Labour job family.
The Defence submission also provided additional information on the roles
and responsibilities of the two key groups, the Defence Science and Technology
Group (DSTG) and the Capability Acquisition and Sustainment Group (CASG) (extracted
The Defence Science and Technology Group's PSE workforce falls within
the Science and Technology job family. It completes the following roles:
supporting operational capability with science and technology
providing science and technology support to Defence to sustain
and enhance current capability;
providing science and technology support throughout the genesis,
development, acquisition and introduction into service of major capability
conducting research into high-impact areas for future Defence
scanning the environment to gain an understanding of emerging
science and technology threats and opportunities;
investigating client-focused future concepts, contexts and
capability through science and technology;
shaping defence and national security strategic policy through
expert and impartial science and technology advice;
leading the coordination and delivery of science and technology
to enhance whole-of-government national security;
enhancing Defence science and technology impact by collaborating
with research and industry partners, nationally and globally; and
promoting defence science and education in the broader Australian
The Capability Acquisition and Sustainment Group's PSE work is
deriving, translating and analysing Defence requirements of military
equipment to the level that can be expressed in specifications used for
providing advice on technical implementation feasibility, risks,
costs and issues in the identification of options and trade-offs in capability
development leading to Government approval;
preparing the plans, strategy and statement of work in contracts
that accurately reflects the system development, modification, and integration
activities to be conducted;
monitoring progress and representing the Commonwealth's interests
in the execution of contracts to ensure that vendors are delivering as required
in terms of cost, schedule, and product capability;
initiating and conducting reviews of technical issues associated
with acquisition, sustainment, and disposal of military equipment;
ensuring that military equipment satisfies Australian Law and
Regulation throughout its service life;
ensuring that equipment meets Technical Regulatory requirements
throughout its service life;
ensuring the military equipment is operationally available when
providing on-going analysis to ensure the effective and efficient
management of military equipment throughout its service life.
Others also highlighted the diverse roles and spectrum of work
undertaken by the Defence PSE workforce. The Australian Manufacturing Workers'
Union (AMWU) noted that the Defence PSE workforce included 'trade work,
information technology work, work in a physical science or engineering and
management work associated with any of these'. It outlined:
The [Defence Classification Manual (DCM)] describes "physical
science or engineering" as including "Air Traffic Control, Avionics,
Bio/chemistry, Dental assistance/therapy, Engineering, Fuel Science,
Geoscience, Graphic Design, Land Surveying, Logistics, Marine Surveying,
Materials Science, Metallurgy, Meteorology, Metrology, Naval Architecture,
Oceanography, Petroleum Technology, Pharmacy, Physics, Surveying and Textile
The complex nature of the PSE workforce within Defence was often
emphasised. Northrop Grumman observed that within Defence there are a variety
of entities and functions involved with 'defence science and engineering'
Some are standalone units; some are functional
responsibilities within other entities; some are within the Defence Science and
Technology Group; and some are within other parts of the Australian Defence
Organisation, including the Services. Typical of these science and engineering
related functions are: test, evaluation and development; modelling and
simulation; operational analysis; materials testing; etc – with perhaps the
best known of these entities being the RAAF Aircraft Research and Development
The emphasis on the diverse nature of the Defence PSE workforce led to
arguments that tailored and specific approaches were required. For example,
Northrop Grumman stated that 'discrimination needs be made between defence
science and defence engineering, given the different application of the two
diverse disciplines within Defence, and the need for a tailored management
approach to each'.
Dr Andrew Davies from the Australian Strategic Policy Institute (ASPI)
also described the different roles played by each professional group:
Defence needs engineers and scientists. It needs engineers to
help it identify and manage risk in projects and to manage its fleet of complex
platforms and complex data and communications architectures. It needs scientists
to collect data and conduct research that help inform operations and force
structuring decision making and to investigate novel and promising technologies...
Engineers in Defence are mostly about managing and reducing
risk and uncertainty....while scientists require uncertainty to have sufficiently
worthwhile problems to examine. There's a subtle but real conflict of interest
Importance of Defence's PSE workforce
There was broad agreement with Defence's description of its PSE
workforce as 'critical to the organisation'.
Defence PSE workforce was perceived as important to Defence projects, as well
as more generally to Australia's security and national interest. For example,
Mr Callinan and Mr Gray observed:
Just as Australia's circumstances are unique, so too are our
defence needs, dependent as they are on geography, population (talent), budget
and access/limits to overseas sources of PSE. This creates a unique demand for
an onshore defence PSE capacity...An effective PSE workforce underpins all our
defence efforts in an increasingly technologically driven world.
Similarly, Northrop Grumman observed that '[a]s a capability enabler,
the Australian Defence Organisation's science and engineering resource is of
critical importance to Australia's national security'.
Several key areas were emphasised in discussing the importance of the
Defence PSE workforce, including being a 'smart buyer', operational support,
defence-specific research, economic value and safety.
A smart buyer and user
The significance of the PSE workforce's advice and support for Defence
acquisitions, sustainment and maintenance was the most frequently stressed
aspect of the PSE workforces' importance. Defence noted it was 'reliant upon a
materiel engineering and maintenance capability to efficiently and effectively
define, acquire and support materiel that is fit-for-purpose, and legally
Further, the PSE workforce plays a critical role in
delivering required capability through providing advice, assurance and risk
management. The workforce also plays an essential role in ensuring that
industry continues to deliver Defence capability through cost effective and
productive partnerships between industry and Defence.
The Australian Manufacturing Workers' Union (AMWU) noted that 'approved
expenditure for a single acquisition project can be up to $15.2 billion in
total and up to $890 million in a single year, with the total approved
expenditure for the top 30 acquisition projects being nearly $57 billion'.
The AMWU highlighted a report undertaken by Deloitte in 2012 on the engineering
and technical stream:
Ensuring Defence has appropriate APS engineering and
technical skills is of critical importance for a number of reasons; most
importantly because the APS engineering and technical workforce is central to
the management of the integrity, worthiness and safety of capability over its
lifetime. The workforce plays a critical role in delivering required capability
through providing advice, assurance and risk management. The workforce also
plays an essential role in ensuring that industry continues to deliver Defence
capability through cost-effective and productive partnerships between industry,
the Australian Defence Force (ADF) and APS.
Several submissions and witnesses emphasised the need for Defence to have
a sufficient PSE workforce to allow it to be a 'smart' buyer or an informed
customer. For example, Dr Davies noted that in his experience, having in-house
expertise from public service engineers who could examine bids for work from
external firms made him 'a much smarter buyer'.
The Royal Institute of Naval Architects (RINA) considered the 'core
importance of the physical sciences and engineering workforce is to provide
Defence (including ADF) with sufficient skills to be "informed customers
and users" of the technical equipment that it acquires and uses'.
Defence policy over the past two or three decades has been,
wherever possible, to purchase proven existing designs. However...the designs on
offer in relation to a specific requirement invariably need to be closely
examined and adapted to meet the engineering, strategic, environmental, safety
and operational requirements of the Royal Australian Navy. For these purposes,
the PSE workforce needs to have appropriate skills to ensure that the ship when
in service, as the end product of the acquisition process, fulfils the
capability, sustainability and reliability requirements of the Navy.
The capacity of the PSE workforce to provide responsive field support
and advice to the ADF on operations was also highly valued. Work that DSTG has
undertaken to provide advice and solve specific problems for ADF operations in Iraq
and Afghanistan was often cited in submissions.
Defence noted that 'the ability of the workforce to respond rapidly to changes
in military needs, particularly regarding force protection, remains a
fundamental role for the Science and Technology and Engineering and Technical
Defence specific research and
Many submitters pointed to the increasing role of advanced technology in
the operations of modern military forces. Defence noted that over 'the past two
decades Western militaries have transitioned from being the primary driver of
global technology innovation to becoming targeted innovators of defence unique
technology, and fast followers/adopters of commercial technologies'. In this
context, the importance of defence-focused science was repeatedly emphasised.
For example, Mr Lovell from Northrop Grumman stated:
While academia is heavily involved in doing some fundamental
scientific research and some of it has military application, there are quite a
number of areas that it is just not in the interests of academia to even look
at, quite frankly. The other thing is that industry, while it does do
scientific research, is mainly focussed on engineering and developing new
products, because essentially it is about return to shareholders. So we believe
that it is really important for Defence to do defence related science, the
sorts of science that we see DSTG doing.
The First Principles Review (FPR) acknowledged that the then DTSO
undertook 'good work' but that it 'struggled to articulate clearly to the
review team the value that it contributes to Defence outcomes'. It recommend DSTG
be required to 'clearly articulate its value proposition'.
As part of the implementation of the FPR recommendations, DSTG
commissioned an independent study of the economic value of Defence's science
and technology program since 2003. Ten case studies were considered by ACIL
Allen Consulting including DSTG's projects for the Jindalee Operational Radar
Network and the F/A-18 Structural Refurbishment. It conservatively assessed the
tangible economic benefits of the DSTG's research and support associated with
the ten case studies as being approximately $5.1 billion. It concluded:
In taking into account the conservative bias in our
assessment of benefits and the case studies represent a relatively small
proportion of the total [DSTG] effect, it may be reasonable to conclude that
the extension of the case study approach across all [DSTG] projects would yield
4 to 5 times the value ($20 to $25 billion).
An effective Defence PSE workforce was also perceived as critical to
protect the safety of ADF personnel and others. For example, Professionals
Australia described how a lack of investment in technical integrity could
result in 'another Sea King, Westralia or Nimrod', referring to well-recognised
military accidents in Australia and the UK which were at least partially
attributed to failures in engineering and technical safety. Similarly, Mr Peter
Leggatt highlighted the potential risks of flawed or faulty ammunition and
ordnance provided to the ADF:
Any future decline in [Proof and Experimental Establishment]
capabilities and of the physical sciences and engineering will limit the
ability of the Government through Defence to provide safe and suitable
explosive ordnance that increases our force multiplication and also the ability
to investigate and analyse future incidences of failure of defence ammunition
and ordnance, of which historic evidence suggests is increasing...
While the above is a physical science issue, the moral issue
of the government abrogating its responsibilities of ensuring soldiers, sailors
and airmen/women are supplied with safe and effective ammunition/ordnance
sourced from commercial suppliers whose primary interest is profit, is of
Several submissions argued that the capabilities of Defence's PSE
workforce have been reduced over the previous decade and that a number of
skills shortages had been allowed to develop. Professionals Australia noted
that when HMAS Kanimbla broke down in Sydney Harbour in 2010 and was
subsequently decommissioned, the Rizzo review 'attributed the disaster to
shortcuts in maintenance and the loss of engineering capability in Defence'. It
also outlined a series of other previous failures or 'near misses' which it
attributed to a reduction in technical and engineering expertise in Defence. It
The responsiveness and capacity of the Australian Defence
Force is fundamentally underpinned by the knowledge and expertise of the
engineering, science and technical workforce - the people who develop, select,
integrate, maintain and operate our modern defence effort. The problem is this
intellectual capital has been run down to dangerous levels.
Mr Alan Gray and Mr Martin Callinan also noted that public records
suggest that 'the PSE workforce in Defence has recently diminished and current
services are under significant stress':
From a Budget perspective, in areas where the PSE workforce
is most likely to be found, namely defence R&D, data says that total
expenditure on defence R&D has fallen steadily since 2011. Further, the
government R&D share of the overall defence R&D budget has dropped from
2% in 2008-09 to a forecast 1.1% in 2017-18. Between 2012-13 and 2017-18, DSTO
is budgeted to reduce expenditure by around $169 million.
In short, Australian defence science and technology
investment, as a proportion of defence spending, is less than that of the
Netherlands, Canada, Sweden and Singapore. With respect to population growth,
per person expenditure has more than halved since 1977.
Mr Gray and Mr Callinan suggested that Defence had followed the usual
pattern of organisations when confronted by budget and staff cuts 'namely, to
protect at all costs existing programs and activities'. This situation had created
conditions that 'discourage risk and innovation and is exacerbated by government
signals that no new policy or program initiatives will be considered without
The AMWU pointed to budgetary cuts, outsourcing and centralisation of
Australian Public Service workplace relations policy as leading causes of these
reductions in capabilities.
Mr Nicholaides from the AMWU told the committee 'that Defence has in recent
times lost a great deal of PSE experience and is about to lose considerably
more'. He noted that in 2014 the average age of the engineering and technical
job family was estimated to be 52.
Defence personnel also provided submissions which highlighted concerns in their
areas regarding PSE capabilities. A loss of technical capabilities and
experience was frequently highlighted. Some referred to PSE capability being
'one deep', implying that if a single person retired, took a redundancy or
moved to the private sector a key area of technical expertise would be lost.
Mr Smith from Professionals Australia stated:
We have a workforce that is rapidly headed towards
retirement. Our view is that across too many disciplines, because we are either
only one deep or, at the most, two or three deep, we do not have the expertise
to be a smart buyer. We do not have the capacity to be necessarily in both the
procurement and sustainment spaces.
RINA contended that 'the many Defence re-organisations imposed over the
past 25 years, with many PSE staff taken/transferred from the original Service
technical areas, has resulted in the organizational separation of staffs into
small groups of engineers that are relatively isolated from one another and
below a critical mass for adequate staff development'. 
Mr Bushell, a retired Air Commodore, described DMO as having
'floundered' because it had been administered by people lacking in sound
knowledge of the military capabilities being acquired, their unique operational
and engineering challenges and the project methodologies critical to their
The result has been a series of extremely costly project
failures in required capabilities, schedule, cost and adverse impacts upon
Australia's military capabilities. What is needed are hard-core operational,
engineering and project management competencies appropriate to the system being
acquired, and the technologies comprising it.
A particular area of concern was the role and stress on the PSE
workforce in DSTG. DSTG's budget for 2015-16 is $432 million, which is
approximately 1.4 per cent of the total Defence budget.
The Defence Annual Report 2014-15 stated that one of the Key Performance
Indicators for 'Programme 1.9 Defence Science and Technology' was
'substantially met'. However it noted that '[b]udget management and rebalancing
within the department led to Defence clients agreeing to some medium- and
lower-priority tasks being cancelled or deferred'.
Mr Day, an electronic technician, considered that the government seemed
to be happy to let DSTG 'wither and die':
The average age of workers here is 52 and there's been almost
no recruitment for 8 years. Staff numbers are falling, especially in the
technical ranks, and the admin overhead is increasing, so we're having
difficulties meeting our work commitments.
Concerns were expressed during the inquiry that the role of the DSTG had
altered. For example, Mr Gray told the committee that 'since the Kinnaird review
in 2003, the mission for [DSTG] has changed':
You are seeing far less of that new technology and the technology
that will make a difference for the war fighter in the battlefield to win and
prevail. They are not doing as much of that as they used to. They are still
doing a bit, but they are now being drawn more and more into being expert
advisers or consultants on particular matters.
Dr Davies also outlined challenges for DSTG. He considered Defence had
'blurred the lines' by asking DSTG 'to perform what is effectively a systems
engineering task in the form of technical risk assessments in support of decision
making on major projects'. He argued:
At best that is a misapplication of expertise, and at worst
it is a recipe for poor engineering outcomes. Either the [DSTG] has to move
into the business of engineering, thus diluting its core science mission, or it
will bring a scientific mindset to an engineering problem.
This potential risk to DSTG's scientific research role was also
articulated by others. For example, the Australian Academy of Science urged that
Defence 're-commit to a program of basic and applied scientific research as a
core activity, to develop future expertise and technology'.
The consequences of a decline in PSE workforce capability were perceived
as serious. For example, Dr Davies noted that '[i]f you do not have
sufficiently robust engineering capability to run major projects, particularly in
a rigorous systems engineering way, you get poor outcomes in terms of project
schedule, budget and sometimes capability outcomes as well'.
Mr Callinan and Mr Gray described the 'real risk posed by having neither
adequate PSE skills within Defence nor being able to readily and quickly
harness such skills from outside of Defence, is that our national security
system will not be suitably agile in responding to surprise developments'.
Mr Gray characterised Australia's technological advantage in defence as
Some of this erosion is self-inflicted. To be frank, we have
taken our eyes off the technology ball to the extent that today Australia is
lagging vis-a-vis a number of our neighbours in the Asia-Pacific in building
and investing in high-quality science, technology, engineering and mathematics
research capacities and infrastructure.
In contrast, Defence assessed the 'the risk of a skills shortage in its
PSE workforce and decline in PSE capability to be low'. While it acknowledged
that some 'shortages remain in a limited number of related trade and technician
occupations', Defence considered they were likely to 'ease in the short term'.
Defence argued that the PSE workforce has continued to be effective in
supporting Defence and the Australian Government. It noted that the 'ADF is
running multiple overseas and domestic operations, and Defence is undertaking
classified high-end research while simultaneously improving force protection
for Australia's partners in Afghanistan' while simultaneously there are 180
acquisition projects under way. Defence argued that its PSE workforce has
achieved this success during a period of APS downsizing through careful
management of priorities against workforce resources. It outlined that Defence
monitors its PSE workforce against capability requirements and seeks to recruit
APS staff before vulnerabilities emerge.
Ms Skinner, Deputy Secretary of Defence People Group, told the
It is worth noting that successive governments have asked us
to reduce the size of the APS workforce, and we have come down from a high of
22½ thousand three or so years ago to around 18,000 today. It means that the
physical science and engineering workforce reductions have generally been in
line with those of the rest of the department, with changes driven by need. The
variation in PSE numbers has not compromised Defence's ability to meet
capability and government requirements, and that remains the focus of how we
make our decisions.
Defence PSE workforce planning
A June 2014 internal audit of the Defence Materiel Organisation's
engineering and technical workforce concluded that the state of its engineering
and technical workforce was 'a risk to Defence capability'. It noted that DMO has
limited visibility of their workforce skills, no targeted strategies for
attraction and retention of the right skills and resources required for future
capability and no ability to model engineering and technical workforce
requirements for the future.
These concerns were echoed in the First Principles Review. It recommended
Defence 'build a strategic workforce plan for the enabling functions, and
incorporate workforce plans for each job family in order to drive recruitment,
learning and development, performance and talent management'.
Insufficient or inadequate workforce planning was a common issue raised
in submissions. Mr Alan Gray and Mr Martin Callinan suggested the
committee 'may find it difficult to establish the true state of PSE capability within
Defence as the statistical collections within the portfolio are not collected or
managed in a fashion that make it simple for Parliament to draw ready or accurate
conclusions about even the numerical state of the PSE workforce'.
Mr Gray told the committee that there was 'an urgent need for Defence to bring
out a PSE labour force blueprint which charts civil and ADF labour force
challenges, needs and requirements over the next 10 to 15 years':
Aside from providing as much certainty as possible for the
PSE community within Defence, however you define that, such a document would
also be invaluable for our universities and technical institutions in helping
them plan and develop programs which would meet the fewer recruitment needs of
Defence and the national security community.
The RSL noted that it has previously made submissions that described the
fact that Defence does not systematically collect, store and update
comprehensive information on the skills of its enabling workforce as 'a major
failing'. It has previously argued that Defence 'has limited visibility of
their workforce skills...no targeted strategies for attraction and retention of
the right skills and resources required for future capability....no ability to
model engineering and technical workforce requirements for the future'.
Mr Efthymiou from Professionals Australia characterised Defence's previous
workforce approaches as being incorrectly focused on restraining 'inputs':
When you start to look at something from the input side, you
start to treat it as a cost, as a liability to be minimised and a cost to be
reduced. If you were to look at it...as an investment—what could you achieve if
you had more staff—you may get a different view of things.
Mr Grimm also criticised 'the current crude APS Full Time Equivalent
(FTE) count' approach to workforce planning. He noted:
FTE makes no discrimination between pay grades (ie: actual
salary costs) and indirectly encourages the engagement of external service
providers simply to overcome FTE restrictions, in order to complete the
necessary work, even if this comes at a higher total cost.
Defence acknowledged the workforce planning issues raised in the First
Principles Review. It noted:
The sources of risk included:
- Limited visibility of engineering and technical workforce
- No targeted strategies for attraction and retention of
the skills and resources necessary for future capability.
- No ability to model the engineering and technical
workforce requirements for the future.
- Insufficient support from the Defence People Group to the
Defence Materiel Organisation (now the Capability Acquisition & Sustainment
Defence will deliver a comprehensive workforce strategy
following the release of the White Paper and Force Structure Review. The First
Principles Review recommended developing the strategy to avoid repeating the
patchwork of initiatives drawn from previous reviews that had considered
elements of the Department's workforce in isolation. The priorities set by the
White Paper and Force Structure Review will influence how Defence uses the
strategy to shape its workforce to meet the requirements of the Government.
This improved corporate planning will also drive improved oversight of Defence's
workforce and facilitate earlier warning and more agile responses to workforce
challenges as they emerge.
As noted above, the Defence PSE workforce is organised around eight 'job
families', with positions grouped according to technical or functional
disciplines. In particular, functions supporting sustainment or the acquisition
of Defence materiel generally belong to the Engineering & Technical job
family, and the DSTG's workforce falls within the Science and Technology job
family. However, Defence outlined that a single profession can be represented
in multiple job families, for example engineers are also represented in the ICT
and Intelligence and Security job families.
Defence noted that it had made some adjustments to the job family construct during
the period 2012-2015:
Primarily, these changes were to more closely align
departmental arrangements with the Australian Public Service Commission job
family construct and the overarching Australia New Zealand Standard
Classification of Occupations (ANZCO). Changes to job families are aimed at
providing more accurate descriptions of the roles being carried out and do not
affect the work being conducted by employees. Defence will continue to make
adjustments of this nature, as the impact of changing technology, profession
changes and ongoing evolution of roles within the Department necessitates role
At the public hearing in February, Defence stated it had commenced
development of the strategic workforce plan and it was on schedule as a 'deliverable'
for the middle of the year. Ms Skinner, Deputy Secretary of Defence People
Group, told the committee:
[W]e are working to develop workforce plans for each job
family in order to drive recruitment, learning and development, performance and
talent management, which does go to some of the issues just raised, and to
provide career and skilling pathways. Those workforce plans will be informed by
a census of the current skills of the Defence/APS workforce against
organisational requirements. That census will be undertaken between March and
August this year, initially focusing on the First Principles Review, key job
families, which are engineering and technical, logistics, project management,
procurement and contracting, and strategic and international policy...
[W]e are finalising an engineering technical strategy to
support our APS members within that job family. The strategy will articulate a
pathway from entry level to senior management for specialists wishing to plan a
career in Defence in their field of expertise. Linked to a learning and
development framework, it will assist individuals in identifying the skills
they need to acquire to advance in the APS. By providing that clearer
structure, the strategies will support our ability to develop and retain. Those
programs are in their infancy.
Further, Defence noted that under the FPR 'there is a specific
initiative to take a much more programmatic approach to our acquisition and
life cycle work into the future rather than just looking at things project by
project'. While this had commenced, it was 'in very early stages at the moment'.
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