There is an old rule to successful contracting to government which dictates that in responding to business opportunities executed through tender documents, one should simply parrot back the respective agency-provided terms of reference and deliverables, and then tick ‘comply’ to all the sub-requirement boxes.
Not much innovation there, but for those proposing to continue a successful run in government contracting beyond 2016, the release of Malcolm Turnbull’s National Innovation and Science Agenda (NISA) has ensured that all future tender responses will need to be seeded with words like ‘ideas boom’, ‘innovation’, ‘disruption’, ‘agility’ and brought to government as a result of ‘industry-led’ engagement with scientific and academic institutions.
Indeed, it appears that traditional defence science has fallen out of favour with the change to a Prime Minister who sees the primary source of future technology and innovation coming from a generation of entrepreneurs with a distinct inkling for disruption. In turn, this also means the vast majority of next-generation technologies embraced by the Australian Defence Force over the coming decade will likely derive from these same entrepreneurs, not traditional defence corporations or government-directed military research institutions.
The other thing is you generally don’t find these entrepreneurial innovators at traditional military technology exhibitions such as the Farnborough or Paris airshows, or DSEi, Euronaval or even the Pacific Maritime show in Sydney. Instead, they are more likely to be found at international consumer electronics shows or adjacent coffee shops, or hidden away in innovation incubators such as Fishburners and BlueChilli and hunched over their laptops.
So what does the arrival of the Prime Minister’s NISA mean for entities such as the former Defence Science and Technology Organisation (DSTO), which last year found itself reduced to a Group within the Department of Defence as part of early First Principles Review reforms? The May 2015 budget papers provided some insight via forecasts of a continual shrinking of the DSTG’s resources right through to the end of the current decade.
No doubt, the absence of Minister for Defence Materiel and Science, Mal Brough, in the run-up to the government’s delivery of NISA worked to bolster the prospects for disruptive elements seeking to sway innovation funding their way. One is hesitant to finger the Commonwealth Scientific and Industrial Research Organisation (CSIRO) directly, but its February announcement of a major restructure that will see traditional land and environmental research efforts ditched in favour of the likes of big data and IT clearly shows its leadership is well on the money trail.
Whether resolution of the senior leadership of the National Party and a subsequent Turnbull government ministerial reshuffle sees progress in clarifying the ministerial status of defence science, is yet to be seen. Brough was suspended as Special Minister of State pending the outcome of an ongoing police investigation into his role in the downfall of Peter Slipper, so it is likely he will not be permanently replaced until this matter has been resolved. In the meantime, his former responsibilities have been added to the remit of Defence Minister Payne.
Brough’s departure within weeks of the government laying out its new innovation and science agenda only compounded perceptions of the demise of defence science as a priority in national security affairs, especially after the rebranding to DSTG and the May budget outcome. Of course, the First Principles report had recommended that the DSTO be given focus by merging it into the new capability and acquisition group (now CASG) within Defence.
Debate over the role and value of the DSTO, including its all-important Defence customer not perceiving enough scientific output being directly credited to the organisation itself (compared to activities seen to be piggy-backing on ideas from the services), sparked a flurry of activities during 2015 to realign the organisation with the new strategic focus. It also saw the staging of several interactions with customer and industry groups to showcase the value of its work in providing game-changing capabilities for Defence, and the wider national security community.
A small organisation at the far end of the southern hemisphere naturally has challenges in keeping up with what is happening in the major centres of innovation in the US and Europe (and increasingly in Asia). Efforts to do this have also driven debate as to the amount of time scientists spend away from their customer participating in networks to bolster the organisation’s own role as an informed advisor to government, compared to other demands from government to serve as an intermediary in global security fora.
Now awaiting its third Minister within the tenure of the current government, and the 11th such change to portfolio management arrangements since 2000, the absence of a strong advocate for defence science is set to accelerate the ADF’s transition away from defence corporations and government-directed military research institutions in the search for disruptive technologies required to combat increasingly burgeoning threats. This shift will also progressively undermine the workings of the Global Supply Chain program, along with many other traditional defence-industry interaction points.
The government’s new-found faith in sources of disruptive technology and innovation (or otherwise, its lack of faith in its traditional sources of new technology), was clearly amplified in several key NISA initiatives, including the striking of a global innovation strategy, the re-definition of tax incentives for early stage investors (including venture capital providers) in innovation, the elevation of the CSIRO’s role in funding innovation, and the raising of a new independent body – Innovation and Science Australia (ISA) – to provide strategic whole-of-government advice to executive government on all science, research and innovation matters.
At the heart of the government’s determination to promote disruptive influences into the halls of the government share of the economy is a new mechanism aiming to transform government procurement. The mechanism will provide a portal to work around intermediaries and gatekeepers by directly engaging small and medium-sized enterprise (SME) solution providers to address important policy and implementation problems through the sponsoring of pilot activities to address a series of priority ‘challenges’.
The Australian Government spends about $50 billion on procurement annually, but ranks just 70th out of 140 countries on how well its procurement fosters innovation. Accordingly, the advent of Malcolm Turnbull as Prime Minister is now driving a change of attitude that sees Australia needing to be a country that embraces risk, learns from mistakes, is ambitious and experiments to find solutions. This is the complete antithesis of how many SMEs describe their engagement with most departments of federal government. If you don’t believe me, just look at the track record of the former DMO’s ‘unsolicited bids’ portal.
Although small relative to the billions of dollars up for grabs in traditional government procurement, the implementation of NISA will see $19 million spent to fund a three-stage Business Research and Innovation Initiative (BRII). First, the government will work with the independent ISA to nominate five national policy and service delivery challenges. Second, innovative businesses will be invited to submit proposals to address challenges, with the winners receiving grants of up to $100,000 to test their ideas over three to six months of development.
Third, the most successful ideas may then be eligible for a further grant of up to $1 million to develop a prototype or proof of concept over the next 18 months. Where this leaves the DSTG with its own Capability Technology Demonstration program is an interesting question, given the BRII initiative has been hatched on the basis of reference to the latest global best practices for procurement.
In short, key takeaways to construct the BRII have been sourced from aspects of the US Small Business Innovation Research (SBIR) program and the UK’s Small Business Research Initiative (SBRI). The SBIR, in particular, is said to have supported a number of businesses in their early stage development that have gone on to become global success stories, such as Symantec and Qualcomm.
The BRII also seeks to complement another major NISA initiative – the digital marketplace. This aims to create an online directory of digital and technology services for all government agencies to enable them to procure SME-provided information and communications technology (ICT) solutions packaged in the form of modular products and services. The physical digital marketplace is under construction by the Digital Transformation Office for a ‘go live’ in January 2017.
As alluded to previously, the second significant element of NISA was its direction to re-position the CSIRO as the central agency for the provision of support for the commercialisation of research generated either by itself, or other research organisations and universities through a two-part early stage funding approach.
The first component encompasses a $200 million early stage innovation fund to support co-investment in new spin-off and start-up companies, products and services created by Australian research institutions. Resources will come from $70 million of new government funding, the redirection of revenue coming from the successful licensing of the CSIRO’s wireless LAN innovations, as well as private sector investment. The second element involves a $20 million expansion of the CSIRO’s accelerator program to include other publicly-funded research organisations to more rapidly prepare their research for commercial adoption.
Work is currently underway to finalise a new Defence Industry Policy Statement (DIPS) to be released in concert with the new Defence White Paper. Defence Minister Payne says she is “very proud” of science and technology innovation work done in Australia, “particularly through the DSTG and contributions to that from across the services and further through the Public Service”. Perhaps the new DIPS will also outline more clearly the future relationship between the DSTG and industry in the aftermath of the NISA.
The commercial world is increasingly taking the lead over government contractors and domestic agencies in the provision of new technology to the armed forces – a shift that even the Pentagon has recognised and is trying to capitalise on via its so-called ‘third offset’ plan. Let’s hope the new Minister in her first round of AUSMIN talks with US officials caught the ‘ideas boom’ bug. If not, like many in defence-industry itself, I’m planning to skip this year’s Farnborough airshow and summer in Europe in order to be in Las Vegas in January 2017 at prospectively the world’s largest consumer electronics show.