Reader response to ‘DMO: industry’s view not accurate’
11 Feb 2014|

I know that my friend Mark Thomson was being somewhat tongue in cheek when sledging defence industry, but his put-downs (and defence of DMO) can’t go without a response. There’s a lot in his piece to demolish but let me start with this outrageous exaggeration:

I for one wouldn’t want to see a multi-billion dollar defence contract scribbled on the back of a restaurant napkin (or, perhaps more likely, a beer mat at a trade show).

Unfortunately, with this comment Mark seems to be channelling a view that’s gaining widespread currency within Defence: that industry is a bunch of liars, schemers and cheats always looking for ways to dud the Commonwealth. In my experience nothing could be further from the truth. During many years in industry, I’ve seen teams of highly motivated people working themselves to death—in two cases I know, literally—to deliver a product that’s often massively over-specified and required to be delivered in a ridiculous timeframe and with onerous commercial penalties for failure.

I’ve had quite senior people in Defence say ‘well, you shouldn’t have signed the contract in the first place’. This sort of out of touch arrogance typically comes from people who are salaried for life and have never experienced the real world, where staff lose their jobs if companies fail to win new work. Bureaucrats, people in uniform and—dare I say it—staff of think tanks, have rarely, if ever, faced the shock of being sacked. For those on the Government payroll, the sun rises and sets, the tides go in and out, the earth gently orbits the sun—and at the end of every fortnight there’s another taxpayer funded paycheck and another generous contribution to the guaranteed superannuation fund. Any ‘downsizing’ is done smoothly by natural attrition and most usually at the expense of contractors.

On the other hand, the sheer commercial imperative of survival means that companies sometimes take on defence contracts the specifications of which they know from the outset will be tough to meet, but do so in the belief that if they work hard enough they’ll get there. And in some cases they fail and are then publicly whipped by Defence for their troubles. In many cases ‘failure’ turns out to be the inability to deliver the final 1% of what’s in any case a leading edge product. I leave out of this the problems of Government-owned entities such as ASC for reasons that by now should be self-evident.

In this article Mark concludes that industry has exaggerated the numbers in the growth of DMO. Be that as it may, what’s far more important is that DMO has become increasingly top heavy, increasingly bound by what seems from the outside to be completely meaningless process, slower than ever before in releasing tenders and slower than ever before in evaluating proposals and actually signing contracts. In the 1990s, the Department had an informal approach to tenders; they’d try to evaluate responses in about the same time that industry was given to write them in the first place. Now the length of time for evaluating RFT submissions has become so drawn out it’d be laughable if the consequences weren’t so serious.

Rather than just looking at ourselves without any external frame of reference, why not examine how countries such as Singapore and South Korea manage their procurement activities? They get far more bang for the buck than Australia does and have far better local defence industry capabilities into the bargain.

As a concluding point: all of these ASPI discussions are extremely useful, but why is there never a contribution from anyone inside Defence?

(Editor’s note: we’d be pleased to receive contributions from Defence on this topic.)
