Defence

Capability Development

Planning for the future

The Minister for Defence, the Hon. Dr Brendan Nelson, MP, released an updated public version of the $51 billion Defence Capability Plan (DCP) 2006–16 during his speech at the recent Defence and Industry Conference. The proposals in the DCP are essential to deliver the capability required by the Australian Defence Force (ADF) to meet Australia's security challenges in an increasingly complex world.

Lieutenant General David Hurley
Photo provided by Public Affairs

The DCP is produced to identify the major capability needs of the ADF and to forecast their submission to the Government for acquisition approval.

The full version of the document is classified for national security reasons. It is also issued in a public version to keep Australian industry abreast of Defence's major acquisition planning so that industry can perform its role as a crucial component of national defence capability.

Chief Capability Development Group (CCDG), Lieutenant General (LTGEN) David Hurley, said there is high interest in the updated version of the DCP.

'The public version of the DCP sparks this interest as it telegraphs to Defence industry the volume, timeframe and focus of the Government's multi-billion dollar investment in Defence capability.

'The interest in the DCP is wider than this as it also provides strategic analysts and commentators, the media and our allies with a practical idea of how the ADF sees its capability needs in order to deliver the strategic requirements of the Defence White Paper 2000 and subsequent updates,' LTGEN Hurley said.

The DCP is comprehensively updated at regular intervals, and the DCP 2006–16 was informed by Australia's National Security—A Defence Update 2005. This update was issued in December 2005 by the then Defence Minister, Senator Hill, in concert with the announcement of the Hardening and Networking the Army initiative.

In the foreword of the Update, Senator Hill confirmed that providing the capability to defend Australia and Australian interests is the first responsibility of government. The current and forecast security situation had influenced the Government's allocation decisions, he said.

The engine room

Headed by LTGEN Hurley, the Capability Development Group (CDG) has the responsibility for updating the DCP.

'The fundamentals behind the DCP are the Defence Planning Guidance and Defence Capability Strategy which are both classified Defence documents,' he said.

'The capability drivers in these strategic documents are reflected in the project entries in the DCP. The contributing effect of every project is matched against our overall capability goals.

However, managing the competing elements of capability need, priority, expenditure phasing, adequate project development, acquisition and training time, and industry capability is a task that requires considerable deliberation and hard decisions so as to create a plan that is fundamentally affordable and achievable.'

The task of updating the DCP 2006–16 was conducted by CDG over eight months and the DCP was forwarded to the Government for consideration as part of the budget development process.

The announcement

The DCP 2006–16 was endorsed by the National Security Committee of Cabinet earlier this year. In the 2006–07 Budget handed down on 9 May, the Government announced the continuation of the 3 per cent real increase in defence funding (originally announced in the 2000 Defence White Paper) for a further five years. This level of funding means an additional $2.4 billion will be provided to the DCP over the period from 2011–12 to 2015–16.

LTGEN Hurley argues that the DCP 2006–16 is focused on outcomes, not individual platform replacement solutions.

'The Government has endorsed a DCP that will deliver the capabilities required by the ADF to maintain Australia's security and strengthen our ability to promote our national interests. This change from being solution-focused to outcome-focused is enabled by our better understanding of the capability development process as it matures under the successful Kinnaird reforms.

This DCP retains a degree of planning flexibility to manage the risk of unforeseeable and uncontrollable events occurring through changes in the strategic environment, technological development and Defence industry ability to meet global demand. The DCP is not immutable. It is correct at a point in time, and like all good plans, it is revised to reflect changing circumstances,' LTGEN Hurley said.

Like previous DCPs, the DCP 2006–16 has a deliberate level of over-programming so that, if the progress of a project is unavoidably delayed, the over-programming allows for another project to be progressed in its place and maintain expenditure in that financial year's budget.

The total value of projects in the DCP 2006–16 is around $51 billion, and the total value of projects approved and planned (in the DCP 2006–16) since the 2000 Defence White Paper is over $79 billion.

'Since the last public DCP was released in February 2004, more than 58 projects or project phases with a value of over $11.5 billion have been approved (1st or 2nd pass), with a number of other approvals for studies, intermediate passes, capability and technology demonstrators and so on also being given.

So far in this financial year (2005–06), 24 projects with a total value of around $7.2 billion have received either 1st- or 2nd-pass approvals,' LTGEN Hurley said.

For LTGEN Hurley there is an obvious sense of pride in the achievements of CDG against the milestones set with the implementation of the Kinnaird reforms. Essentially the project officers are now producing for 1st-pass consideration the quality of data and soundness of business case that was previously considered sufficient for a decision to commence acquisition.

'The fidelity of data now obtained in the lead-up to 2nd-pass consideration is proving to be very effective in avoiding the types of issues inherent in some past projects,' he said.

However, LTGEN Hurley expressed a concern that the benefits of this additional, but necessary, work have been outweighed by a perception of some projects stalling during the transition to Kinnaird.

'If the DCP 2004–14 is used as a simplistic benchmark, then some projects could give the impression of schedule slippage. The transition to the new two-pass system occurred as the DCP 2004–14 was published and it was not possible to update the schedules in the public version. So for some projects the Year of Decision (YoD) date listed is what is now considered to be a 1st-pass point.

However, as a result of implementing Kinnaird, the additional work undertaken in the earlier stages of a project is, in most cases, still enabling the In-Service-Date of the DCP 2004–14 to be achieved,' LTGEN Hurley said.

All YoD timeframes in the DCP 2006–16 now refer to the planned 2nd-pass decision point.

LTGEN Hurley noted: 'Project delivery within budget and on schedule is an area of focus for Government. The reforms to Defence capability acquisition are having positive effects as illustrated by the bringing forward in the 2005–06 budget of some $300 million and in the most recent budget an additional $625 million of previously reprogrammed funds to ensure that key projects can progress in the light of improved project delivery by the Defence Materiel Organisation (DMO).

'This tells me that CDG and DMO have a much better understanding of the schedule, capability, technical and cost risks, so we [at CDG] are not throwing 'dead cats' over to the DMO to revive. CDG and DMO are much more focused on managing the cost and schedule, and getting the right capability from the pages of the DCP into actual service so our troops can successfully counter threats in the future.'

More information

For more information on the Defence Capability Update process, see the story in the May 2005 issue of Defence or access the Defence Capability Development Manual on the Defence Restricted Network.

For more information on the elements of the DCP see the breakout box below or go to www.minister.defence.gov.au/nelson/media.cfm to see the Minister's Media Releases on the DCP 2006–16.

Compiled by Ara Nalbandian

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