For defence, if you ignore accountability for long enough, it goes away

Australia’s ramping up of defence spending, and the proposed allocation of hundreds of billions of dollars to the incoherent, unjustified AUKUS submarine project, amounts to the generous rewarding of the least competent, and least accountable, department in the Commonwealth.

An examination of the auditor-general’s recent evaluations of a range of defence programs shows that the department and its staff have an atrocious record of managing not merely major arms projects but a wide range of activities across the portfolio.

In 28 performance audits since 2018, the Australian National Audit Office (ANAO) has issued 11 highly critical reports, including four in the past 12 months, suggesting that many years of pressure on defence to improve its internal processes and management have yielded nothing.

The greatest hits of the defence establishment in recent years include:

• management of its $2.5 billion’ worth of General Stores Inventory, in which defence could not “demonstrate that it is achieving efficiency and economy”, while there was no “active focus or response by defence senior leaders on known issues contributing to inefficiency and overstocking”
• management of health services to ADF personnel, which “demonstrated shortcomings in ensuring the implementation of all contracted requirements” and lacked “assurance that services are being delivered effectively against the contracted requirements”
• the acquisition of Hunter-class frigates, which “lacked a value for money focus”, suffered from lost documents, had a poor tender process, resulted in long delays and cost blowouts, and saw the undocumented decision by a panel headed by then-defence secretary Dennis Richardson to include an ultimately successful tender by BAE in the process.
• defence’s overall management of contractors, in which the department “cannot demonstrate the effectiveness of its arrangements”
• management of the Defence Industry Security Program, intended to enable contractors to meet security requirements, for which there’s no “assurance that the program is effective”, no “fit-for-purpose arrangements to monitor compliance”, no “arrangements to manage identified non-compliance”, and defence didn’t even know which contractors needed to participate
• defence’s support for its ANZAC-class frigates, for which it “cannot demonstrate the efficiency or outcomes of its sustainment arrangements” and which was marked by uncompetitive tender processes
• significant problems with its acquisition of a battle management system as part of the Land 200 project
• the failure of defence’s Projects of Concern process, such that the department can’t “show that the Projects of Concern regime contributes materially to the recovery of underperforming projects and products”.

While major defence acquisition projects the world over are marked by delays and cost blowouts — exacerbated in Australia by defence’s preference for bespoke materiel rather than purchasing off-the-shelf hardware, and politicians’ preference for building locally — the ANAO reports show a department failing across not merely procurement but health services for personnel, security requirements for contractors, contract management and asset control.

Nor does that list include the worst defence failure of all: its inability or refusal to deliver effective internal systems to manage the mental health of ADF personnel and curb suicide rates among both serving members and veterans — a problem so bad a royal commission was needed to tackle the crisis.

At no stage has defence suffered any repercussions from the revelation of its management failures beyond the occasional embarrassing question at Senate estimates. Successive governments have been unwilling to think critically about the permanent state of management incompetence at defence, preferring instead to hide behind the flag and the hardware. The pattern continues under the current government, with dim Victorian Right hack Richard Marles — deputy prime minister because he’s not from NSW and not from the Left — the latest defence minister to fall into line with what the brass and the national security establishment wants.

The lack of any consequences for defence officials was picked up by the Greens’ best parliamentary performer, the experienced NSW Senator David Shoebridge, who — referring to the Hunter-class frigate audit — wondered at the most recent estimates hearings in Foreign Affairs, Defence and Trade why the new government’s defence strategic review had been conducted by a panel including Richardson:

the secretary who pulled the BAE frigate tender out of the dustbin and whacked it on the shortlist for a project that’s now blown out to $45 billion and counting, that’s 18 months delayed and that should never have been put on the shortlist because it was a thought bubble? It wasn’t an actual in-the-water design … the secretary while all of these problems on acquisition and capability delivery had their genesis?

As Shoebridge then elicited from defence officials, Richardson’s name was put forward by defence on a list of three for the review panel — for three positions.

A lack of competition in a selection process at defence? What a shock…