Annual Report 2003-04

Capability Development Group

The Capability Development Group was established on 16 February 2004 as a result of key recommendations of the Defence Procurement Review 2003 (also known as 'the Kinnaird Review'). The Chief of the Capability Development Group was appointed on 22 December 2003, and is responsible and accountable for assessing and defining new capabilities that the ADF should have now and in the future.

The Group is responsible for taking capability proposals through initial Government consideration, and financial endorsement, to final approval by Government. In June 2004, the Chief of the Capability Development Group endorsed a series of 'implementation tasks', both short-term and strategic, to establish the Group, and ensure the successful carriage and execution of the applicable Kinnaird Review recommendations.

The Group was formed by an amalgamation of previously dispersed Defence capability elements: Capability Systems Division, Capability Investment and Resources Division, Capability and Plans Branch, the Australian Defence Simulation Office, the Directorate of Trials and the Office of Interoperability.

The Group works closely with a wide range of stakeholders, both internal and external to Defence, and is developing a close partnership with the Defence Materiel Organisation to ensure the effective implementation of the Kinnaird recommendations and efficient and timely delivery of capability to Defence.

Results for 2003-04

The following section outlines the Group's roles and its achievements during its first few months of operation.

Capability Systems

The Capability Systems Division resided within the Vice Chief of the Defence Force Group in the earlier part of 2003-04, but moved to Capability Development Group in February 2004.

Notable projects progressed for Government approval included:

• acquisition of five air-to-air refuelling aircraft (Project AIR 5402 - ADF Air Refuelling Capability);
• acquisition of an additional two airborne early warning and control aircraft (Project AIR 5077 - Airborne Early Warning and Control - Project Wedgetail);
• a range of upgrades and refurbishment programs for F/A-18 aircraft (Project AIR 5376 Various Phases - Hornet Upgrade);
• acquisition of a main battle tank for land operations (Project LAND 907 - Main Battle Tank Replacement);
• acquisition of additional explosive ordnance warstocks (Project JP 2085 Phase 1B - Explosive Ordnance Warstocks);
• acquisition of improved anti-ship missile defences for Anzac-class frigates (Project SEA 1448 Phase 2A - ANZAC ASMD Upgrade); and
• acquisition of an auxiliary oiler to replace HMAS Westralia (Project SEA 1654 Phase 2A - Maritime Operational Support Capability - Westralia Replacement).

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Other initiatives undertaken in support of capability development included:

• heading the development of the latest version of the Defence Capability Plan, under the auspices of the Defence Capability Review 2003. This included a review of all cost estimates associated with unapproved major capital projects and the development of new capability proposals to respond to the war against terrorism and to satisfy other identified capability gaps;
• development of departmental processes and procedures associated with the recommendations of the Defence Procurement (Kinnaird) Review 2003. A new version of the Capability Systems Lifecycle Management Manual will reflect those changes and is due for completion by February 2005; and
• development and implementation of the ADF Requirements Development Information System. This is an information/knowledge management system being established within Capability Systems Division that will manage all information, regardless of type or form, for all Defence projects and capabilities. The system will reach maturity in late 2005.

Capability Investment and Resources

The Capability, Investment and Resources Division provides independent analysis and review of capability issues including the overall balance of investment in capability (current and future), the future structure of the ADF, major investment proposals and priorities. It is also responsible for the development of the forward program of new major capital investment, and the coordination of capability information for the annual Defence Plan and the associated Defence Management and Finance Plan.

The division is responsible for implementing the arrangements for the 'two pass' approval process between Defence and other government departments, to codify the arrangements with the Government and to provide an earlier, more comprehensive consideration of capability options, their costs, risks and likely schedule. For more detail on the 'two pass' implementation process, refer to Chapter One - New Capability Development and Acquisition Process section.

The division will implement a more rigorous project-costing methodology which aims to ensure that more accurate project and whole-of-life costs are analysed in support of decisions taken at first and second pass.

Capability and Plans

The Capability and Plans Branch was created by integrating elements from Strategy Group (Preparedness and Capability Guidance) and Continuous Improvement Division (Output Evaluation). The branch provides guidance on the preparedness of the force-in-being and the strategy against which the future force structure for the ADF is developed. Capability and Plans staff contribute to Defence planning guidance, which will provide the following annual advice to the Government.

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Directorate of Trials

The Directorate of Trials manages Defence equipment trials and concept demonstrations that cross Service, Defence and international boundaries. The directorate was previously located in the Defence Science and Technology Organisation.

The directorate is engaging with other Capability Development Group staff to conduct trials to support pre-first and second pass decisions. Examples are the 'Ground-Based Air Defence System transmission of the Recognised Air Picture Trial', and the 'High Frequency Surface Wave Radar Operational Trial' which will be completed over the coming two-year period.

Australian Defence Simulation Office

The Australian Defence Simulation Office, previously part of the Office of the Chief Information Officer, formally joined the Capability Development Group on 1 July 2004.

The office is responsible for policy direction, collaboration and coordination of simulation activities across Defence. It has prime responsibility for developing and overseeing the implementation of Defence simulation policy and the Defence Simulation Plan.

The office promotes the development of approaches to gaining and sustaining knowledge, via simulation, for Defence to make the best use of this technology to enhance capabilities, save resources and reduce risk.

Office of Interoperability

The Secretary and the Chief of the Defence Force established the Office of Interoperability on 1 July 2004. The office consists of a small team that addresses issues of interoperability with the United States Armed Forces and other potential coalition partners. The Director-General Interoperability is responsible to the Chief of Capability Development Group and is responsive to the Chief of Joint Operations, for interoperability issues with an operations perspective, and to the Strategy Group for policy issues that might affect Australian and coalition allies.

Future Directions

The Capability Development Group's future focus is on setting the future capability agenda for Defence. This will be achieved through annual decision making advice to the Government and delivering against the milestones of the Defence Capability Plan. The Group will continue to refine the business and governance processes implemented in 2003-04 and build on relationships with defence industry.

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