SECURING DEFENCE CAPABILITY FIXING THE ENGINEERING, SCIENCE AND TECHNICAL SKILLS CRISIS IN DEFENCE “Why is it that governments never learn that cutting back on engineering and science in Defence is a false economy.” Neil James, executive director of the Australia Defence Association.

Above: Bushmaster convoy in early morning light, Afghanistan March 2015. Copyright Commonwealth of Australia 2015. Front cover: Air warfare destroyer HMAS Hobart in the shiplift, Port Adelaide March 2015. Copyright Commonwealth of Australia 2015.

Images in this publication are drawn from a range of sources and used to depict the scale and complexity of the science, engineering and technical skills required to keep our forces operational, both in Australia and around the world. Due care has been taken to acknowledge and respect individual copyright through proper acknowledgement and captioning that reflects the owner, the true nature and intent of the image. This publication is for non-commercial use within Professionals Australia and its members. Use of images does not imply endorsement or association with the Department of Defence. Images without copyright mark are owned by Professionals Australia. Call to Government: Fix the technical skills crisis in Defence The challenge

Australia’s modern defence capability depends on its technological edge, yet technology alone cannot achieve our nation’s security. It is the people - their knowledge and what they create - that shapes the development, operation and future of our defence forces.

The responsiveness and capacity of the 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. When the HMAS Kanimbla broke down in Sydney Harbour and was, together with sister ship HMAS Manoora, subsequently decommissioned early at a cost to taxpayers of $500 million, the Rizzo Review attributed the disaster to shortcuts in maintenance and the loss of engineering capability in Defence.

Four years later, engineering capability has been eroded further by governments intent on Chris Walton making savings by cutting staff, rather than understanding the fundamental link between our Chief Executive Officer defence capacity, and the technical integrity of what underpins it. Professionals Australia If our government was serious about its responsibilities to taxpayers, it would operate as a ‘smart customer’ in defence. With the right engineering and science skills in-house, it could achieve best value both now, and through a dedicated workforce that could provide critical continuity and cost-effectiveness in the long term. There is no doubt that fixing the skills crisis in Defence would facilitate exponential cost savings that could be used to build the schools, roads and hospitals our country needs, however there is much more at stake. As a country, we cannot afford to lose more specialist expertise, have more Defence projects run late, or have more lives put at risk. As the Australian Academy of Technological Sciences and Engineering put it in their submission to the First Principles Review, “There is a critical need to enhance Australia’s capacity in science, technology, engineering and mathematics, to provide a workforce capable of designing, building, operating and maintaining Australia’s defence materiel”. In 2012, Professionals Australia and the Chiefs of Army, Navy, Airforce, the Defence Materiel Organisation and the Department of Defence committed to work together to improve, “Defence’s required engineering and technical capability.” Yet still we see the Defence workforce facing another round of untargeted staff cuts. We can no longer stand by and see our national security and safety put at risk while billions of taxpayer dollars are wasted. We can no longer stand by and see lives put on the line because of a culture that prioritises short-term cuts above the need for technical integrity. It’s clear our nation and its forces need greater engineering and technical capacity - not less.

Chris Walton Chief Executive Officer Professionals Australia

3 The technical skills crisis threatens national safety and security Act now to fix the technical skills crisis

Nulka Missile firing from HMAS Melbourne. The Nulka is one of the most successful Electronic Warfare projects undertaken in Australia. It uses a unique combination of a hovering rocket and electronic warfare technologies to mislead or attract enemy missiles away from the target ship.

Copyright Commonwealth of Australia 2015. Use of this image does not imply endorsement or association by the Department of Defence.

Professionals Australia Action 1: The Government must stop the erosion of science, engineering and technical expertise in Defence by committing to an APS technical and is calling for the professional workforce, based on medium to long-term requirements. Government to take Action 2: The Government must create and invest in a plan to attract, develop six actions to fix the and retain Defence’s national engineering and science capability. It needs to engineering, science and commit to resourcing streams of technical expertise - to ensure that we have a talent pool for the next 10-15 years. technical skills crisis in Defence. Action 3: The Government must prioritise technical integrity and safety in the specification, development, delivery and maintenance of Defence materiel, systems and infrastructure.

Action 4: The Government must review all existing contracts for engineering services to identify what can be delivered more effectively in-house, what is required to maintain sovereignty of professional expertise, and to ensure Defence is a smart customer in both acquisition and sustainment activities.

Action 5: The Government must commit to leading-edge public science and engineering research that secures our military capability and safety.

Action 6: The Government must embed genuine workforce development initiatives in enterprise bargaining processes that support and value the engineering and science workforce. This will drive real productivity and capability.

4 Technical expertise underpins every element of modern defence Secure Defence capability

The capability and responsiveness of the Australian Defence Force depends on the expertise and capacity of Defence’s engineering, science and technical workforce.

If the Government wants to deliver ships, submarines and For these reasons, any strategic planning for the next surveillance systems that ensure the effective defence decade needs to include workforce development that of our nation - without bankrupting taxpayers - it must will ensure internal skills and sustained technological have people that know how to develop, select, acquire, and industrial expertise is maintained and updated. integrate, maintain and operate the technology that To build and maintain these skills, there needs to underpins every element of the ADF. be clear acknowledgement of the long lead time Yet, critical science and engineering organisations are required to develop appropriate levels of expertise and being forced to paper over significant skills gaps. experience in specialised skills streams. The Defence Science and Technology Organisation The sovereignty of the provision of in-house knowledge (DSTO) alone is struggling to cope with a 25 per cent is vital, but perhaps more important is the need hole in their workforce, as a result of APS cuts and for Defence to have the capacity to develop new recruitment freezes. technologies where the market would have no appetite Defence projects, particularly where they deal with new or capacity to do so. or emergent technology, are often inherently complex - and this adds a layer of risk to materiel that is already laden with risk to cost, reputation and life. At a time when Government is spending significantly on new and updated weapon “Without a competent APS engineering and systems, it makes no sense to erode the technical workforce, the probability of capacity to be a smart customer. material failures or unplanned retirements - of capability greatly increases, with large It is also critical to ensure that existing capability - financial consequences (yet) our engineering including the ability to manage the Defence estate - is not put at greater risk. and technical capacity is diminishing,” The Defence industry already perceives Defence Deloitte Engineering Review (2012). has been de-engineered, raising concerns that it is susceptible to opportunistic practice by contractors The Defence civilian technical workforce provides a who think they can operate unchecked. critical continuity of cost-effective expertise, unable to Cuts to Defence’s technical workforce may appear be provided by Defence contractors or ADF personnel. penny-wise, but they are pound-foolish. It is simply not The Navy Engineering Review in 2010 went further and prudent for governments to chase short-term financial found, “Sound independent engineering saves money gains, while eroding the nation’s defence and security. and probably most importantly, lives and reputation” . Defence’s science, engineering and technical Action 1 workforce maintain a critical sovereignty of The Government must stop the erosion of science, expertise, not motivated by profit, that ensures their engineering and technical expertise in Defence by recommendations and decisions are based on integrity and concern for both the well-being of, and value for, committing to an APS technical and professional workforce the Australian community. based on medium to long-term requirements.

5 Risking Australia’s defence capability

The Rizzo Review, which arose out of the failure of the Navy’s amphibious fleet, exposed the high level of risk caused by the loss of engineering capability in government agencies.

The need to rebuild civilian engineering capability had The consistent findings by varied independent and already been identified in the Navy Civilian Engineering government reports all acknowledge a significant Workforce Study in 2010 with the startling observation “you do not really appreciate the value of something until it technical skills gap that is getting worse. 1 is almost gone”. The Senate Foreign Affairs, Defence and Trade Similar issues have been identified in a range of reviews References Committee Report,“Procurement procedures and reports. These findings were consistent in the for Defence capital projects” (August 2012), identified the Deloitte-authored Engineering Workforce Review (2012), causes of project blowouts to include: and in the Senate Inquiry into Defence procurement • Shortfalls in skilled labour; (2012).2 • Risks identified by technical experts being Further, the Coles Review (2012), into submarine misunderstood or ignored by more senior non- maintenance, identified substantial problems, including experts; the failure to retain and develop engineering skills • Inadequate specifications and underestimation of caused by a recruitment freeze. technical complexity; and Warning bells were sounded even further back, with the • A shallow understanding of contractors’ capacity to Sea King (2005) and HMAS Westralia (1998) disasters. deliver.

1. (2010), p5. Navy Engineering Workforce Review: Report on the Navy Civilian Engineering Workforce Study. 2. Deloitte (2012), p4. APS Technical Regulatory Frameworks Workforce Review Stage 3 Report. 3. Defence Materiel Organisation, Ernst & Young (2014), p4. Internal Audit of the Professionalisation of Engineers (2013/14 No. 6).

6 - The Deloitte Review in 2012 identified that 55% of engineering vacancies in Defence were critical to, or provided a risk to, engineering capability. - The dollar cost of not addressing these issues is significant. Defence, primarily through the Defence Materiel Organisation, will spend around $16 billion in 2015/16 on procurement and sustainment activities. The high cost and complexity of such spends comes with significant risks. According to the Australian National Audit Office 2011-12 Major Projects Report, the total budgeted costs for the 28 major projects included in the report, had at the time, increased by $7.8 billion (20 per cent) after approval. In a submission to a Senate Inquiry, Consult Australia C-17 Globemaster, the largest of Australia’s fleet, impressive for its size and capacity. stated that “it can be argued that the loss of public sector engineering expertise increases project costs by 20%”. Copyright Commonwealth of Australia 2015. Use of this image does not imply endorsement by the Department of Defence. - Australians are looking at funding cost Despite the consistent and clear identification of the blowouts of over $1 billion a year on problems, there remains an unwillingness to deal with acquisition projects alone if the causes are technical skills gaps because of pressure to reduce APS numbers - without due consideration of the long term not addressed. consequences. - The problems were highlighted in the DMO’s Internal The Government has now initiated a reform agenda in Audit into the Professionalisation of Engineers: Defence under the Creating One Defence plan. “The state of the engineering and technical It’s time for the compact between Defence leadership and Professionals Australia to be revitalised. Merging workforce is a risk to Defence capability... Defence groups may result in some organisational the organisation has limited visibility of its efficiencies if well executed, however it won’t move workforce skills and no targeted strategy for one step toward fixing the technical skills crisis. Billions of dollars in capability, and the safety of our ADF the attraction and retention of the right skills forces, are being put at risk by not addressing this crisis and resources for future capability.” 3 and investing in technical expertise.

Further, a Senate Committee report found, “the shortage of engineers and allied technical skills Action 2 is a matter that requires immediate and serious The Government must create and invest in a plan to attention…the committee sees it is imperative for Defence to grow its engineering and allied skills base.” attract, develop and retain our Defence engineering and Technical expertise across engineering disciplines is science capability as it relates to ongoing and future paper-thin. Too many areas of expertise are effectively requirements. It needs to commit to resourcing streams of one or two deep with a significant gap between senior technical expertise to ensure that we have a talent pool and early career expertise. This has been exacerbated for the next 10-15 years. in recent years by the limited capacity to recruit, promote and recognise technical skills.

7 The waste equation

There is waste because of a lack of expertise in Defence

Consult Australia reports: 20% increase in project costs due to lack of expertise

Government will spend $45 billion on Defence procurement in next 5 years

20% x $45 billion =

$9 billion will be wasted by 2019 $9 billion could build

FOUR HOSPITALS SEVENTY SCHOOLS

STAGE 1 WESTCONNEX SYDNEY LIGHT RAIL

HMAS ANZAC in the Mediterranean in March 2015.

Copyright Commonwealth of Australia 2015. Use of this image does not imply association or endorsement by the Department of Defence. Restore technical integrity in Defence Restore technical integrity

Technical integrity is critical in ensuring that Defence materiel and infrastructure is fit-for-purpose, meets Australian standards and legislation, and limits risks to Defence personnel.

Ensuring there are effectively engaged, sufficient HMAS Kanimbla numbers of skilled and experienced professionals within In Sydney Harbour on 21 September 2010, a fire the Department, is essential to technical integrity and caused HMAS Kanimbla to lose power. Fortunately no achieving best value for money. This message too has lives were lost, but as a result of significant technical been consistently communicated from the flotilla of issues, the HMAS Kanimbla and her sister ship the reviews into Defence engineering. HMAS Manoora were decommissioned early, resulting The consequences of a “make do” culture have now in a loss of $500 million worth of capability. resulted in a number of tragedies that serve as a The Rizzo Review into the incident later found a legion poignant reminder of what is ultimately at stake. of problems, including: HMAS Westralia • Inadequate risk management; The HMAS Westralia ship fire in 1998 resulted in the • Poor compliance and assurance; death of four personnel. The fire was caused by an • A “hollowed out” engineering function and incorrectly chosen flexible hose, inappropriate for that resource shortages; and service, that consequently failed and sprayed diesel onto • A culture that places the short-term operational a hot engine component. The decision to use the hoses mission above the need for technical integrity. was made without competent technical authority and was not subject to appropriate engineering process. In an opinion piece (“Navy sunk by Rizzo Review”, 2011) addressing the Rizzo Review, defence specialist Sea King James Brown said, “identifying the problem is one In 2005 a Navy Sea King helicopter crashed, killing nine thing; making good on a recommendation like personnel. The primary cause of the accident was found ‘reinstate the cultural importance of technical to be a failure in the flight control systems, caused by integrity’ is another”. systematic errors and deficiencies in the engineering maintenance program.

Sydney, March 12 2011, Landing Platform Amphibious ship HMAS Manoora (L52) awaiting decommissioning at Garden Island. The Manoora and sister ship HMAS Kanimbla were decommissioned early because of critical failures in sustainment, resulting in a loss of half a billion dollars’worth of capability.

10 Recognise expertise underpins safety and security

Nimrod serves as a dire warning The human cost of de-engineering The Westralia, Sea King and Kanimbla disasters have WESTRALIA 4 DEATHS been linked directly to the technical skills crisis in Defence, however further staff cuts mirror the experiences in Britain that led to the Nimrod disaster. After successive cuts and restructures in Britain’s Ministry of Defence (MOD), the Haddon-Cave Inquiry attributed SEA KING 9 DEATHS the deaths of 14 personnel in a Nimrod surveillance plane crash in Afghanistan in 2006, to “financial pressures and staff cuts at MOD”, that resulted in: • Undervaluing and dilution of engineering skills; • Decline in the ability to be an “intelligent customer”; NIMROD 14 DEATHS • Lack of trained safety engineers; and • Shortage of manpower and skills fade. The Nimrod disaster should serve as a salient warning, that beyond costs, lives can be lost when engineering and scientific skills are diluted. Dechaineux just 20 seconds from disaster On 12 February 2003, the submarine Dechaineux was DECHAINEUX 20 SECONDS FROM 50 DEATHS operating near her maximum safe diving depth off the coast of Western Australia when a seawater hose burst. High pressure seawater flooded the lower engine room before the hose was sealed off: it was estimated that if the inflow had continued for another twenty seconds, the weight of the water would have prevented Dechaineux from returning to the surface. Twenty seconds later and more than 50 ADF personnel would have been lost. What will it take for governments to act? Review after review have formed the same conclusion. A more secure Australia relies on greater sophistication Action 3 and specialist expertise - not less. The government must The Government must prioritise technical integrity now recognise the pivotal contribution engineering and technical expertise makes to national security and the and safety in the specification, development, delivery safety of our forces. and maintenance of Defence materiel, systems and infrastructure.

11 In-house engineering and science expertise saves costs Become a smarter customer

Delivering engineering services better, and providing continuity over the lifecycle of assets, with enable Defence to be a smarter customer across capability development, acquisition and sustainment.

The 2014 Australian National Audit Office (ANAO) review Professionals Australia calls on the Government to engage of the Air Warfare Destroyer (AWD) program found with its APS engineering and science workforce, to that costs on the project blew out as a result of critical identify more functional solutions as it progresses with engineering oversight roles having been outsourced. the implementation of the First Principles Review. - If the Government is serious about its responsibilities to be an intelligent customer in the acquisition, sustainment In a proposed restructure of critical fuels and development of existing and emergent technologies teams an integral chief engineering role was and infrastructure, then it needs to ensure it has a outsourced at an assessed financial cost of continuity of in-house science and engineering expertise. The Government can no longer wait to address existing almost four times than had the role been deficiencies - there is simply too much as stake. in-house, and at the expense of Reviewing existing contracts for services has the capacity ensuring critical, multi-disciplinary expertise to deliver ongoing, effective oversight of critical projects and provide significant whole-of-life cost savings. was maintained and developed in-house. Implementing the workforce recommendations of the - Rizzo and Coles Reviews remain critical and should not Professionals Australia is aware of numerous other subsumed by the First Principles Review, which does not examples where outsourcing, or partial outsourcing address the technical skills crisis in Defence. of engineering support for acquisition or sustainment - has led to inefficiencies, added bureaucracy, delays and Not investing in and prioritising technical blurred accountabilities for multi-billion dollar programs. integrity and safety, will result in not just There needs to be far greater capacity to ensure that the appropriate level of in-house skilled personnel is lost capability, project cost and schedule assigned to oversee and manage materiel, infrastructure overruns, but another Sea King, Westralia or and research. It is now vital that the Government Nimrod. acknowledges and supports changes to get past the - organisational dysfunction of full time equivalent (FTE) constraints, compounded by organisational fragmentation. Action 4 To do this existing skills gaps need to be addressed and The Government must review all existing contracts for a review of all existing contracts for engineering services engineering services to identify what can be delivered should be conducted to determine what services can be delivered more effectively in-house and provide a more effectively in-house, what is required to maintain continuity of technical expertise over the lifecycle of sovereignty of professional expertise and to ensure Defence assets and systems. Defence is a smart customer in both acquisition and sustainment activities.

12 “We have for too long treated engineering as an overhead and not as a mission enabler”. The Chief of Navy, Vice Ray Griggs.

An CH-47 Chinook helicopter transports an M777 howitzer gun during exercises 20-30 June 2015.

Copyright Commonwealth of Australia 2015. Use of this image does not imply association or endorsement by the Department of Defence. Australia will lose its technological edge without investment in expertise Science and research

Australia’s Defence Science and Technology Organisation If the Government wants to maintain Australia’s position (DSTO) has a strong record of innovation and and technological edge, it needs to stop focusing on advancement. The black box flight recorder, the Jindalee outsourcing or merging capability, and start focusing radar network, anechoic submarine tiles and the Nulka on strengthening it, improving integration and missile decoy system – all internationally-renowned engaging the science and engineering workforce. projects that came from DSTO research. It is critical that the Defence science and engineering DSTO is now in real danger of being sidelined, beyond groups resist the pressure to place more emphasis on a change in acronym to DSTG. In the last 12 months, “span of control” and less emphasis on depth of expertise through the restructure of DSTO we have seen a at the executive level. It’s specialist expertise, not significant erosion of senior science leadership and a generalist skills, that are needed and difficult to replace. failure to fill one in four positions across the organisation. Nonetheless, it may be time to separate the managerial This has seen DSTO become distracted from developing and peak level advisory responsibilities of the Chief technological advances for the ADF (identified in the Defence Scientist. Perhaps the CDS could take a broader Kinnaird review4 ten years ago), and instead focus on the portfolio responsibility as the peak scientific advisor to provision of advice to the defence and security portfolios Defence, and relinquish administrative control of DSTG? This advisory function is important, but should be allied It is critical that science and engineering research to the development of new capabilities. Right now, the has a voice to provide independent advice on current situation puts both functions at risk. Defence science to the Government while taking on The decline in a focus on technological advances is responsibility for the development of the profession also a function of a deteriorating investment in defence across Defence free from the constraints of the science and technology. management chain. As a proportion of defence budgets, DSTO expenditure has decreased from 2.31 per cent in 2001-02 to 1.52 per Action 5 cent in the 2014-15 budget. The Government must commit to leading-edge public Given science underpins every element of defence capability, it is imperative that government invests science and engineering research that secures our military in science and explores models that use ingenuity to capability and safety. deliver greater capability. Use Agreement making as an enabler

It’s critical that the current negotiations for a new These factors are now critical to the survival and long Defence enterprise agreement break from a “one size fits term integrity of the science and engineering workforce. all” approach to public service pay and conditions. In the past, the generic nature of agreement making Action 6 has been an impediment to recognising and rewarding development and maintenance of technical expertise. The Government must embed genuine workforce The Government needs to take the opportunity in the development initiatives in enterprise bargaining, that current agreement negotiations, to embed initiatives in support and value the technical workforce. This will drive that facilitate mentoring, succession planning and that real productivity and capability. recognise technical expertise and management.

4. Defence Procurement Review (2003) 14 Call to Government: Fix the technical skills crisis in Defence The way forward

It’s time for the Government to stop passing the buck (or buckets of bucks) and fix the technical skills crisis in Defence. Until this crisis is addressed, there will be failures, there will be waste and lost military capability, and there will certainly be cost blow-outs. And in Defence settings, when things go wrong, lives are at risk.

Professionals Australia is calling for the Government to take these six actions:

Action 1: The Government must stop the erosion of science, engineering and technical expertise in Defence by committing to an APS technical and professional workforce, based on medium to long-term requirements.

Action 2: The Government must create and invest in a plan to attract, develop and retain Defence’s national engineering and science capability. It needs to commit to resourcing streams of technical expertise - to ensure that we have a talent pool for the next 10-15 years.

Action 3: The Government must prioritise technical integrity and safety in the specification, development, delivery and maintenance of Defence materiel, systems and infrastructure.

Action 4: The Government must review all existing contracts for engineering services to identify what can be delivered more effectively in-house, what is required to maintain sovereignty of professional expertise and to ensure Defence is a smart customer in both acquisition and sustainment activities.

Action 5: The Government must commit to leading-edge public science and engineering research that secures our military capability and safety.

Action 6: The Government must embed genuine workforce development initiatives in enterprise bargaining that support and value the engineering and science workforce. This will drive real productivity and capability. Contact Professionals Australia Lvl 1, 163 Eastern Rd, South Melbourne, VIC 3205 Phone: 1300 273 762 Email: [email protected] www.professionalsaustralia.org.au/advocacy/campaigns/integrity-in-defence/