Submarine Group David Gould General Manager Submarines

Transcription

1 Submarine Group David Gould General Manager Submarines

2 Business of Defence Acquisition Defence acquisition process itself in industrial states is unavoidably complicated this should not be confused with inefficiency or incompetence. It is an uncertain business where there should be wariness of any simple guidance or conclusion. The absolutist notion of success or failure is problematic as a project that is late or over budget is not necessarily a failure in terms of the capability delivered...since the end of World War II, the US has conducted around 130 studies on acquisition reform. Despite this number of reviews that have often echoed the same themes and highlighted the same weaknesses in the acquisition process, acquisition reform efforts have been unable to rein in cost and schedule growth.

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5 Orthodoxy s Ten Sacred Truths The dominant discourse that is applied to reform discussions on Defence acquisition 1. The benefits of competition. 2. The gains from outsourcing. 3. The centrality of project management metrics. 4. The utility of the idea of value for Money 5. The availability of both project certainty and technological advantage 6. The belief that defence acquisition projects are prone to failure 7. The (naive) endorsement of partnering. 8. The optimism that change management programmes are transformative. 9. The assumption that science and technology and research and development are identical. 10.The faith that SMEs will help build a New Jerusalem

6 Truth 1: The Benefits of Competition Competition on Defence acquisition tends to be the default position for Government policy ~ best way to satisfy today s requirements & tomorrow s defence capabilities. Conspiracy of Optimism exists often drives companies, at bid stage to offer highly hopeful performance, time, cost parameters to generate competitive price. After a successful but artificially low bid, performance is evitable squeezed, costs grow and delays occur. To claw back profits future contracts can become overpriced PROJECT IMPACT Competitive tendering is a force for good and may ease short term financial pressures. BUT it can drive inappropriate behaviours leaving a single supplier within some parts of the Defence sector AND generate an unrealistic performance time costenvelope stubbornly immune to project management interventions.

7 The Nuclear Submarine Procurement Programme : Case Study Truth 1: The Benefits of Competition Case Study Astute Programme Engineered competition was run between the shipyard (with submarine design & build experience) and a systems integrator (no submarine build experience). The system integrator won (more innovative, better price) despite having little submarine design experience and now had an unhappy shipyard as a sub contractor. Schedule and cost expectations were unrealistic: 85 months from cut steel to exit Barrow (same as later Trafalgar class), but submarine 50% bigger.

8 Truth 2: The Gains from Outsourcing Belief in the merits of outsourcing tied in part, to the quest for value for money and efficiency. Knowns the less risk perceived by the contractor, the better the price that can be negotiated between the parties. Simple Message: if government is looking for flexibility and to portfolio manage its defence investment it must be wary of continual outsourcing and; expect to be charged higher prices by the private sector if it s contracts can be easily reduced in scale or abandoned.

9 Truth 3: The Centrality of Project Management Metrics Departments and industry tend to be wedded to project management techniques that often treat defence equipments as stand alone entities. Techniques such as earned value management, project costings and project risk and opportunity management collude to lock thinking into desired certainties associated with a specific project rather than the broader defence acquisition portfolio. Is the cancellation of a project due to it being late and over budget a gesture of politics rather than good corporate or project management? Will it be seen as a missing capability in the years ahead? PROJECT IMPACT Effective Project management is important both for taxpayer and shareholder. Defence projects should be seen as part of a coherent, larger investment strategy which puts the emphasis on effective requirements setting; portfolio management; and financial planning as the key government skills.

10 Truth 3: Case Study: Nimrod MRA4

11 Truth 4: The Utility of the idea of Value for Money Certainty that all defence acquisition is essentially a search for value for money but the meaning is subjective. Known's Governments know that the notion of value for money is difficult to properly grasp and significantly, that competition does not of itself generate value for money within Defence. Competition can have an adverse relationship to the generation of the value for money, for: Procurement processes may place undue emphasis on short-run competition at the expense of long-run non-price competition. A short run costs saving may undermine investment and innovation incentives or may even force unsuccessful bidders out of the market. Example: Competing refits not the most effective way of maintaining warships

12 Truth 4: The Utility of the idea of Value for Money Other DLoD Contributors DShips Alliance Managamen t Team NCHQ Fleet Level SCA SEA Class Management Platform Level Force Readiness Marine Equipment Performance Management Combat Systems Equipment Technical Authority Supply Chain other Maintenance IKM Restricted Commercial 12

13 Truth 5: The Availability of both Project certainty &Technological Advantage

14 Truth 6: Belief that Defence Acquisition Projects are particularly prone to failure Belief that defence projects are somehow, not like other complex governmental or corporate activities but inherently prone to failure NOT TRUE DMO Average slippage has reduced from 50% to 30% over past decade. Median DMO schedule performance was superior to Australian commercial industry & comparable to global industry. Rare for DMO projects to overrun their cost budgets whereas overruns of 25% in similar commercial projects are common MPR ANAO

15 Truth 7: The (naive) endorsement of international partnering Partnering with others is a good thing pooling and sharing defence capabilities with other nations and developing joint requirements and matching programme/project solution. Defence acquisition should be based on a level of commitment to the requirement to act nationally, to understand where a level of mutual dependence is acceptable and where the risks of dependence or whether they can be tolerated

16 Truth 8: The optimism that change management programmes are transformative Optimism exists that a change management programme will transform for the better. Known's the virtues of stability, continuity, organisational learning and endurance must not be forgotten..

17 The Submarine Enterprise 1. Deliver required capability at benchmark availability. 2. Sustainment costs reduce over time through productivity improvements. 3. Participants collaborate in a successful Enterprise with aligned objectives and interests; and 4. Build an enterprise workforce with sustained submarine knowledge embedded in a collaborative working environment.

18 Truth 9: The assumption that science and technology AND research and development are identical Investment in science and technology AND research and development is a good and smart! But they are not one and the same thing..

19 Truth 10: The faith that SMEs will help to build a new Jerusalem Defence capabilities should be seen as complex value chain whereby prime contractors, other large businesses and SMES all combine to generate effective defence solution. There exists a belief that SMEs possess enormous flexibility, innovation and untapped capabilities that will somehow transform the Defence acquisition process and development capabilities. It is a mistake to consider just SMEs and to focus on the development of policies for this one economic area. The role of larger companies must be considered and how and what they can provide in bridging the requirements of the Department to the skills of a niche, small specialist provider.

20 Truth 10: Industry Partnering Future Carrier Future Carrier uses alliancing with industry partners, the key features are: A single integrated high performance team including MOD An uncompromising commitment to trust, collaboration, innovation and mutual support A collective ownership of risks and reward Incentivised to achieve outstanding performance in pre-aligned project objectives Full Open-book accounting Decisions taken on Best for Project basis A culture of No fault, No Blame and No dispute But there are clear roles, responsibilities & accountabilities

21 Lessons for SEA 1000 Put the Schedule at the Heart of the Programme and Manage it - one Integrated Master Schedule. The Industrial Landscape - understand it and understand that it changes Have senior and regular engagement between Government and Industry leads together in the same room. Ensure that key Industry partners are clear on their roles and responsibilities. No opportunity to grab market share from one another. Ensure that the Procurement Strategy recognise what the Government is trying to buy in each phase & who can best manage the risk. The Commercial Strategy must reflect the Government s intent and acknowledge where risk is best managed. Personnel Continuity & work towards Organisational & Management Stability

22 Lessons for SEA 1000 Have a single pan programme set of Design Management Arrangements Make a substantial investment in Systems, Tools and Processes. Design Contract: Design the product against these design management arrangements Collaborate with partners Meet the schedule Work within this governance framework Government will make the big cost/risk/schedule calls Get Construction and commissioning experts involved early in the design process to ensure we can build and commission the submarine to schedule. The functional and spatial design maturity is managed together under a single process. Maintain political support Have US engagement and assistance

23 Does this Guarantee Success No, but large procurement programmes cannot succeed without most, if not all, of these precursors in place. Sea 1000 will come with uncertainty and risk due to complexity and scale. The upfront planning, analysis, decision making and design choice must be right.

24 QUESTION.. If Defence business is complicated, is it right to apply a binary, absolutist notion of success or failure?