Committee view and recommendations
In recent years, the Department of Defence (Defence) has experienced a
period of considerable uncertainty with a number of ministers with short
tenures. This uncertainty has been exacerbated by government decisions to reduce
the number of Defence civilian personnel, restrictions on recruitment, significant
departmental restructures and uncertainty regarding major acquisition
decisions. In particular, the relatively rapid tempo of Defence white papers
processes (2009, 2013 and now 2016) has produced a series of overlapping policy
directions. During this time Defence has also been conducting overseas operations
including in Afghanistan and Iraq, as well as supporting domestic and
international disaster relief operations (most recently to assist recovery
following Cyclone Winston in Fiji).
In this frenetic environment, it is understandable that a clear focus could
be lost in relation to longer term issues such as maintaining the physical
science and engineering (PSE) capabilities of the Defence workforce. However, a
series of reviews and reports over the last decade have delivered similar
messages to Defence regarding the risks of a decline in its PSE workforce
capabilities. This is a significant issue for Defence which has been developing
for some time.
As highlighted in the committee's 2012 report into defence procurement
practices, current situation cannot solely be attributed to on-going
organisational reform or operational commitments. It is also a consequence of
procurement policies which—since the mid 1990s—have increasingly outsourced
services such as engineering support and increased the percentage of 'off-the-shelf'
acquisition options exercised on a project by project basis.
Despite the number of reviews which have highlighted problems with the
Defence management of PSE workforce, there have been no structural changes to
procurement processes which take into account the contribution to defence
capability made by suitable levels of competence and capacity in PSE staff
across defence and industry from a whole-of-program perspective. There is a
risk this cycle of down-skilling has become self-perpetuating with less staff
within Defence having a suitable combination of qualifications and experience
to act as the 'smart buyer' to identify and manage risk, leading to further
'off-the-shelf' acquisitions and an increasing reliance on our allies.
The First Principles Review (FPR) report noted that Defence has been
subject to a large number of recent reviews of its operations. It stated that
the 'sheer frequency of reviews over the past decade has meant that many were
short-lived or simply overtaken by the next review'. A consequence of this was that
recommended changes 'were not allowed to bed in before another review began'.
Conscious of this state of affairs, the committee has targeted its
recommendations in the context of Defence's existing obligations to 'bed in'
the recommendations of the FPR report and the policy directions set by the
Defence White Paper 2016.
The committee has been pleased to see that some of the concerns raised
during the inquiry have been addressed in the Defence White Paper. However, it
has been difficult for the committee to reconcile Defence's assurances that its
PSE workforce 'is capable, meets the Government's requirements and is well
placed to meet future challenges' with the other evidence received during the
inquiry. This evidence included:
the findings of previous reviews highlighting on-going issues,
particularly with regard to the capabilities of the Defence engineering
the declining capability to the Defence PSE workforce due to staffing
reductions, recruitment restrictions and lack of workforce planning;
reports of difficulties recruiting some specialist technical
redundancies offered and taken up by specialist PSE personnel in
areas of major future acquisitions;
descriptions of low morale in areas of the Defence PSE workforce;
an increasing reliance on contractors to undertake PSE
The committee has made recommendations in a number of key areas in
relation to Defence's PSE workforce. These include:
a commitment to maintain PSE capabilities in workforce planning;
a strategic approach to PSE workforce professional development;
examining a more flexible PSE workforce model;
a commitment to keeping Defence science separate; and
a review to facilitate collaboration in the PSE sector.
A commitment to maintain Defence's PSE workforce capabilities
The committee welcomes the Defence White Paper's focus on innovation and
development of new technological capabilities for Defence. However, the
committee notes that further burdens appear to have been placed on the Defence
PSE workforce. The Defence White Paper provides for a Defence workforce of
18,200 (FTE) down from 22,300 in 2012. It also provides for 800 new APS
positions in 'intelligence, space and cyber security capabilities' and 400 new
positions in 'information technology support, simulation, support to Navy
engineering and logistics, security, force design and analysis, and strategic
and international policy, including civilian policy officers posted overseas'.
It notes that:
These new APS positions in areas of high priority will be
offset by ongoing reductions elsewhere in the APS workforce, including through the
reform of service delivery areas of Defence's business, as part of the implementation
of the Government's First Principles Review.
Defence appears to have been given objectives which include reducing its
workforce head count while increasing its engineering and scientific
capabilities. This approach does not necessarily accord with the recommendation
of the FPR that 'the focus on public service reductions as the primary
efficiency mechanism for Defence cease'.
The committee does not agree that a strict staffing cap approach is the appropriate
framework for decision-making regarding Defence's PSE workforce capabilities.
The Defence White Paper's focus on innovation and new capabilities strengthens
the case for the maintenance and development of an effective in-house Defence
However, the committee received evidence that some Defence PSE workforce
capabilities had been significantly reduced through lack of recruitment, a lack
of investment in skills development and a lack of succession planning for those
leaving Defence. A key concern is that Defence, in responding to a series of
repeated efficiency measures from government, has permitted its in-house PSE
capabilities to decline to critical levels.
In its review of the Defence Annual Report 2013-14 the Defence
Sub-Committee of the Joint Standing Committee on Foreign Affairs, Defence and
Trade questioned whether Defence's job family approach was 'adequate for
delivering people with the right skills to successfully undertake certain jobs
and noted that there was a shortfall in people with task-specific competence'.
It recommended that the 'Jobs Families Project be further developed to
incorporate accurate assessments of both qualifications and experience that are
required for a given role' and that 'Defence, in its implementation of the FPR
'develop its strategic planning and appointment process to ensure employees
have task-specific competence for their role, and that opportunities are
actively created for personnel to obtain this relevant experience'.
The committee also questions whether the current 'job families' approach
to workforce planning for the Defence PSE workforce. This issue seems
particularly relevant to getting the right people into positions which require
specialist skills, qualifications and professional experience in the areas of
science, technology and engineering. While the FPR recommended Defence build a
strategic workforce plan based on 'job families' there appears to be an ongoing
risk that personnel with similar backgrounds will be inaccurately categorised
into broad groups. There also appears to be an insufficient emphasis in the
'job families' approach on assessing the previous professional experience required
for a person to fill certain specialised and technical positions within
Defence. The committee endorses the Defence Sub-Committee's finding and
recommendation on this issue.
The committee is concerned at the extensive focus on 'job families' as
opposed to competence (task specific qualifications and experience). A
'job-families' framework may be suitable for many management and administrative
roles within a large organisation but it appears inadequate for many
engineering or technical appointments that require knowledge and experience
specific to the task. The relatively functional nature of Defence aerospace
engineering is in some measure linked to the fact that the Director General of
Technical Airworthiness (DGTA) has retained the right to grant, grant-with-conditions
or refuse delegated engineering authority to officers regardless of their
notional suitability for the role as determined by their job family. In the
view of the committee this regulatory approach should be adopted more broadly
within the Defence procurement and sustainment workforce with a nominated
regulator to assess the competencies required in the role and the suitability
of any given candidate to fill it.
The Defence White Paper 2016 has outlined an ambitious program of
investment and major procurement. In this context, the committee is concerned
that the mistakes of the past may be repeated. Having an experienced PSE
workforce within Defence will be critical to ensuring that major strategic
purchases are a success. Further, the gradual erosion of the technical and
quality assurance PSE staff within Defence appears to be a skills gap which
needs to be addressed.
In the view of the committee, following the completion of the workforce
planning strategies arising from the FPR, Defence should identify critical
areas in these two key parts of the Defence PSE workforce. Firstly, Defence
needs to be effective at specifying its requirements and be capable of being a 'smart
buyer'. Secondly, it must be a technically proficient owner and sustainer of
its materiel. Defence should clearly articulate that it will recruit,
retain and develop staff in these two areas of critical Defence PSE capability
regardless of any broad FTE staffing target. In areas of Defence where critical
specialist PSE skills are required, managers should be able to focus on recruiting
and keeping the 'right staff' rather than just the 'right number' of staff.
The committee recommends that the Department of Defence commit to
maintaining its physical science and engineering workforce capabilities in key
areas to allow it to be both a 'smart buyer' and a technically proficient owner
The committee recommends that the Department of Defence create a role,
with appropriate subject matter expertise, analogous to the Director General of
Technical Airworthiness, as a regulator to assess the competencies required for
specific procurement and sustainment positions and the suitability of
candidates to meet those competencies.
A strategic approach to PSE workforce professional development
Defence must ensure that it has sufficient flexibility in its workforce planning
approaches so that its personnel not only possess the required qualifications,
but also have the appropriate professional experience to undertake the tasks
they are required to perform. Defence should be proactively seeking to create
opportunities for its PSE workforce for competency development through its
procurement and sustainment programs and other relationships. The current Integrated
Investment Program does not appear to clearly link PSE workforce capabilities
with major Defence acquisitions and sustainment decisions.
The new Defence Industry Policy Statement includes the creation of a
Sovereign Industrial Capability Assessment Framework to improve the
identification and management of the sovereign industrial capabilities that
develop and support ADF capabilities. This framework will be collaboratively
developed by Defence and the Centre for Defence Industry Capability (CDIC) and
inform the Defence Industry Capability Plan which will identify the sovereign
industrial capabilities that are required to be maintained and supported in
The committee considers there are opportunities in this process for
Defence to strategically develop the skills, expertise and experience of its
PSE personnel within its relationships with the broader defence industry. The
Sovereign Industrial Capability Assessment Framework that forensically examines
the sovereign need for industry qualifications and skills should also be
applied to Defence PSE workforce.
This process should directly impact on procurement decisions so as to
use acquisition and support contracts to maintain the required level of
competence in Australia’s workforce spanning both industry and defence. As an
extension to this, the Defence Industry Capability Plan and Defence Workforce
Plan should be coordinated to facilitate PSE workforce movement between Defence
and industry to foster expertise and 'hands-on' practical experience. This
could be via a posting cycle or involve discharge and re-engagement with
Defence after a period within industry. Either option would see Defence enhance
its ability to meet the FPR directive to develop a workforce with the expertise
to be a smart-buyer, making well-informed procurement and sustainment
The Defence Industry Capability Plan should facilitate PSE workforce
movement between Defence and industry to foster expertise and 'hands-on'
practical experience. For example, this approach should provide opportunities
for Defence PSE personnel to gain experience with prime contractors to enable
them to return to Defence with the expertise to make well-informed procurement
and sustainment decisions.
The committee recommends that the Department of Defence take a strategic
approach to the professional development of its physical science and
engineering workforce as part of the Defence Industry Capability Plan.
A more flexible PSE workforce model
One recent area of reform for Defence has been on delivering a flexible
'total workforce model' with an increased range of full-time and part-time
service categories and options for permanent and reserve ADF personnel. Project
Suakin has been aimed at enhancing the opportunities for ADF members to serve
as their circumstances change across their working life.
The committee considers there may be opportunities for similar reforms
in relation to the Defence PSE workforce. The need for more flexible arrangements
to allow personnel with relevant scientific and engineering expertise to move
out of Defence, gain experience in the private sector, and then return was
highlighted during the inquiry. The importance of fostering junior Defence PSE
personnel to develop their qualifications and training was also stressed. Many
also highlighted the absence of clear career paths for some categories of PSE
Defence personnel and a lack of succession planning as an ageing workforce
These interlinked and overlapping workforce issues suggest a complement
to Project Suakin should be considered. The committee recommends that Defence consider
reforms to provide enhanced workforce arrangements to the existing PSE
workforce. The focus should be on establishing an employment framework that
encourages mobility amongst academia and the broader research community as well
as the defence industry. Creating a framework of incentives for skilled
personnel to join and stay with the department should also be a priority.
The committee recommends that the Department of Defence undertake an
assessment of workforce models to encourage more flexible and attractive
arrangements for its critical physical science and engineering workforce.
Keeping Defence science and technology separate
While the Australian Government did not agree with the recommendation of
the FPR that the then DSTO become part of the new CASG, it did not completely
close off this proposal. The Defence White Paper also indicated that the
Australian Government 'will further consider this recommendation'.
Rather than leave this issue unresolved, the Australian Government should clarify
that it does not intend to proceed with this recommendation in the future.
There are both practical and symbolic benefits to maintaining a clearly
separate identity for the science and technology group within Defence. Evidence
during the inquiry highlighted the potential problems if DSTG was overly
focused on its role in providing technical risk assessments and operational
support to the detriment of its other responsibilities and functions.
For example, Dr Davies from ASPI identified a risk that 'tasking Defence
science with becoming a technical advisor will detract from its core defence
This risk would be further exacerbated if DSTG were integrated within CASG.
In the view of the committee, DSTG should not be the prime agency
responsible for technical risk assessments (given the engineering and
certification nature of much of such work) but rather be tasked to providing
advice on specific technologies which may the subject of a technical risk
assessment being undertaken by Defence. The Defence Test and Evaluation Organisation
would be a more appropriate agency to conduct risk assessments, coordinating
input from suitably qualified and experienced engineers, operational staff and
scientists as required.
DSTG's PSE workforce has an established position within the Australian
research community, together with an international profile. This recognised position
has been highlighted in the research leadership role for DSTG outlined in the
Defence White Paper including through the Next Generation Technologies Fund.
This will invest $730 million to 2025-26 'to better position Defence to respond
to strategic challenges and develop the next generation of game-changing
In this context, maintaining a separate identity and a clear delineation of
responsibilities for DSTG is preferable.
The committee recommends that the Australian Government clarify that the
Defence Science and Technology Group will not be integrated into the
Capability, Sustainable and Acquisition Group.
The committee recommends that the Department of Defence ensure that the
roles and responsibilities of the Defence Science and Technology Group are
directed to its areas of competence, rather than to technical risk assessments.
Some contributors to the inquiry recommended Australia examine the
advantages of a counterpart to the US Defence Advanced Research Projects Agency
(DARPA). The Defence White Paper's establishment of a virtual Defence
Innovation Hub and the Next Generation Technologies Fund to be led by DSTG
appears to be a move in this direction. However, the committee notes that DARPA
has a number of specific characteristics which allow it to be both flexible in
its approach to innovation and disciplined in its focus on pragmatically useful
The evidence received during the inquiry repeatedly highlighted the
opportunities for better collaboration between DSTG, publicly funded research
organisations, academia and industry. The committee is pleased these particular
issues have been picked up in the Defence White Paper, including through the 'new
virtual Defence Innovation Hub, with funding of around $640 million across the
decade to 2025–26':
The Hub will enhance the ability of Defence, the Commonwealth
Scientific and Industrial Research Organisation, academia and key industry
partners to work collaboratively to accelerate the transfer of innovative
technologies into Defence capability. The Hub will be managed by Defence to
focus innovation activities on priority capability development requirements,
some of which require high levels of security classification.
There was evidence during the inquiry that relevant employment
frameworks, and other conditions such as security clearances, could be a
significant obstacle to cooperation and involvement in defence projects by
academia and industry. In particular, Mr Callinan and Mr Gray made the point
that Australia's allies are more advanced in the processes and infrastructure to
facilitate contributors from outside the defence organisation to 'enable them
to divide their time between working on their day jobs and working in secure
environments to the benefit of their nation's security'.
In the view of the committee, Defence should assess if it can do better at
facilitating collaboration as these new initiatives are established.
The committee recommends that the Department of Defence, in establishing
the Defence Innovation Hub and the Next Generation Technology Fund review the
obstacles to public research agencies, academia and industry personnel participating
in research and development initiatives.
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