PRIORITY INDUSTRY CAPABILITIES Michelle Kelly and Rob Bourke - PowerPoint PPT Presentation

PRIORITY INDUSTRY CAPABILITIES Michelle Kelly and Rob Bourke Commercial Enabling Services Division Defence Materiel Organisation

PIC Agenda • Objectives • Definition • Health checking/intervention

Three Core Concepts • PICs provide a significant strategic advantage to Australia by supporting the capital equipment requirements of the ADF • a healthy PIC is one which can deliver now, and in the foreseeable future, a designated capability on time and to an acceptable technical standard - all at a reasonable price • Government is prepared to intervene in the market to support a PIC should a significant capability shortfall exist, the benefits of intervention clearly exceed the costs and sufficient budget funding is available

Three Key Steps • defining the capabilities most important to the Australian Defence Force (ADF) achieving its operational objectives (‘demand’)  assessing whether these capabilities are available from Australian- based companies or, in some cases, from within the public sector (‘supply’)  determining whether, and in what form, intervention by Government to support an ailing capability should occur - where Defence’s demand exceeds what industry and others can reasonably provide

Five Potential Intervention Measures • altering the size or timing of capital equipment acquisition or sustainment projects to better suit the requirements of industry • changing the procurement method eg. from open competition to sole source • extending a preference to companies competing for skilling, innovation, export and other types of grants • revising Defence’s general planning procedures  letting a capability diminish, with a view to restoring later

Core PIC Selection Criteria • the risk to ADF operations should a capability not be available from within the Australia • the impediments to that capability being supplied from overseas • the availability of domestic supply alternatives, like stockpiling

Ancillary PIC Selection Criteria • expanding ADF capability options • developing technologies and products to exchange with allies • cost • other - eg promoting market competition or providing ‘strategic insurance’

Priority Industry Capabilities 1. Combat Uniform and Personal Equipment 2. Selected Ballistic Munitions and Explosives 3. Infantry Weapons and Remote Weapons Stations 4. Ship Dry Docking Facilities and Common User Facilities 5. Acoustic Technologies and Systems 6. High Frequency and Phased Array Radars 7. Electronic Warfare 8. In-service Support of Collins submarine combat system 9. Signature Management 10.Anti-Tampering Capabilities 11.Through-life and Real Time Support of Mission and Safety Critical Software 12. ‘High End’ System and ‘Systems of Systems’ Integration

Selection Criteria Review • strategic threats - short .v. long term • PIC availability - short .v. long term • technology development - inside .v. outside the PIC policy umbrella

What Selection Criteria Doesn’t Specify • quantity of the capability required • the period of availability • specific technologies or products • Defence’s willingness to pay

Structure-Conduct-Performance Paradigm • the number and size of existing suppliers • their dependence on Defence workload • the position of potential suppliers • barriers to market entry • demand for the PIC, now and in foreseeable future • the prices existing suppliers charge and their financial viability

PRIORITY INDUSTRY CAPABILITIES QUESTIONS?