the capability life cycle (clc) & capability management · focus on project management,...

Capability Systems Centre

The Capability Life Cycle (CLC)& Capability Management

About the Capability Systems Centre

The Capability Systems Centre at UNSW Canberra is a centre of research excellence focused on disciplines related to the development, acquisition and sustainment of capability throughout the life cycle; including systems engineering, systems thinking and modelling, systems science, requirements engineering, complex systems and project management.

The principal focus of the Centre is to address shortfalls in research of methodologies, tools and techniques for developing capability. We do this through cutting-edge research and analysis, publications, education, and events; drawing on world-class academic expertise across our disciplinary areas.

The Centre is able to provide research, mentoring and assurance support to decision makers, systems engineers, business analysts, and project, program and portfolio managers in Defence, Government and Industry.

Our services include independent assurance; research and independent advice and education, training and events.

Independent Assurance

The Centre provides comprehensive and independent assurance to senior management and project/program managers. These structured assessments focus on project management, technical, business and innovation aspects of capability development or acquisition activities. The assessments can be undertaken to support decision making at any level or at any point throughout the life cycle.

Research & Independent Advice

The Centre offers a comprehensive research and advice service to underpin capability and business decisions. This service provides support to risk reduction activities across the capability life cycle for a project or program through, mentoring, facilitated workshops, modelling and simulation research and ‘above the line’ independent reviews and advice.

Education, Training & Events

The Centre is able to provide avenues to share information relevant to the development, acquisition and sustainment of capabilities, whether that is through technical papers at a Centre conference or through our experts delivering professional education short courses and postgraduate programs.

Postgraduate Education

Short Courses

Events

Education, Training & Events

Independent Assurance

Project & Program Reviews

Technical & Engineering Risk

Assessments

Business & Innovation

Assessments

Research & Independent Advice

Technical ‘Deep Dives’ &

Investigations

Technical Risk Reduction

Mentoring

Introduction to The Capability Life Cycle (CLC)

and Capability Management

Dr Shari Soutberg

Professor Mike Ryan

2020

© January 2020, Version 2 This precis has been prepared by the Capability Systems Centre, UNSW Canberra. This work is copyright. Apart from any fair dealing for the purpose of study, research, criticism or review (as permitted under the Copyright Act 1968), and with standard source credit included, no part may be reproduced by any process without written permission. Any suggested additions or amendments may be sent to [email protected].

CONTENTS

1 INTRODUCTION 1 1.1 BACKGROUND TO FPR AND THE CLC 1 1.2 OVERVIEW OF THE CLC 2 1.3 SIGNIFICANT EMPHASIS ON BEHAVIOUR CHANGE 2 1.4 SUMMARY OF CHANGES AS A RESULT OF FPR AND CLC 3

2 CLC CONTEXT AND BEHAVIOURS 5 2.1 INTRODUCTION 5 2.2 LEGISLATIVE, REGULATORY, AND POLICY CONTEXT 5

2.2.1 Commonwealth Legislation 5 2.2.2 Commonwealth Policies 6 2.2.3 Defence Policies and Directives 7 2.2.4 Defence Regulations: Technical Regulation 7

2.3 BEHAVIOURS 7 2.3.1 CLC Behaviours Add to Existing Values and Applicable Codes of Ethics 8 2.3.2 Summary of CLC Behaviours and Implications for Defence Managers 9

3 FRAMEWORKS RELEVANT TO THE CLC 11 3.1 INTRODUCTION 11 3.2 FORCE DESIGN FRAMEWORK 11 3.3 CONTESTABILITY FRAMEWORK 12 3.4 SMART BUYER FRAMEWORK 13 3.5 INTEGRATION AND INTEROPERABILITY FRAMEWORK (I2F) 14

4 CLC GOVERNANCE AND MANAGEMENT 17 4.1 INTRODUCTION 17 4.2 CLC MANAGEMENT LAYERS 18 4.3 PORTFOLIO 19 4.4 CAPABILITY STREAM 19 4.5 PROGRAM 20 4.6 PROJECT AND PRODUCT 21 4.7 RELATIONSHIP BETWEEN CLC MANAGEMENT LAYERS 22 4.8 GOVERNANCE OF THE CLC 22

4.8.1 Governance of the CLC Policy and Process 22 4.8.2 Investment Committee (IC) 23

4.9 ACCOUNTABILITIES AND ROLES FOR IMPLEMENTING THE CLC 23 4.9.1 ‘Customer’ Side of Accountability Model 25 4.9.2 ‘Supplier’ Side of Accountability Model 26 4.9.3 Contestability 28

5 PHASES OF THE CLC 29 5.1 INTRODUCTION 29 5.2 STRATEGY AND CONCEPTS 29

5.2.1 Tailoring 30 5.2.2 Gate 0 31

5.3 RISK MITIGATION AND REQUIREMENTS SETTING 31 5.3.1 Risk Reduction Activities 32 5.3.2 Requirements Development 33

5.3.3 Gate 1 35 5.3.4 Solicitation and Source Selection—Tendering and Contracting 35 5.3.5 Gate 2 37

5.4 ACQUISITION 38 5.4.1 Transition into Service 38

5.5 IN-SERVICE AND DISPOSAL 39 5.5.1 In-Service Business Cycle 40 5.5.2 Projects during the In-Service Phase 41

6 CLC DOCUMENTS AND ARTEFACTS 42 6.1 INTRODUCTION 42 6.2 PROGRAM-LEVEL DOCUMENTS AND ARTEFACTS 43

6.2.1 Capability Program Narrative (CPN) 44 6.2.2 Program Integrating Operational Concept (PIOC) 45 6.2.3 Program Strategy (PS) 46

6.3 PROPOSAL ARTEFACTS 47 6.3.1 Joint Capability Narrative (JCN) 47 6.3.2 Joint Capability Need Statement (JCNS) 48 6.3.3 Project Execution Strategy (PES) 48 6.3.4 Integrated Project Management Plan (IPMP) 49

7 CAPABILITY MANAGEMENT PRACTICES 51 7.1 INTRODUCTION 51 7.2 PROGRAM MANAGEMENT 52

7.2.1 System-of-Systems (SoS) Engineering 55 7.2.2 SoS Architectures 56

7.3 PRODUCT MANAGEMENT 56 7.3.1 CASG Application of Product Management 57 7.3.2 In-Service Product Management—Sustainment 58

7.4 PROJECT MANAGEMENT 59 7.4.1 Scheduling Practices 61 7.4.2 Costing Practices 62

7.5 SYSTEMS ENGINEERING 64 7.6 INTEGRATED LOGISTICS SUPPORT (ILS) 67 7.7 PROCUREMENT AND CONTRACTING 68

7.7.1 Defence Procurement and Contracting Policy Context 69 7.7.2 CPR Core Principles 69 7.7.3 Method of Procurement, Approach to Market and Delivery Model 71 7.7.4 Procurement Life Cycle 71 7.7.5 Defence Engagement with Industry 73

7.8 RISK MANAGEMENT 74 7.9 ASSURANCE 75

7.9.1 Role of Assurance in Capability Management 76 7.9.2 Establishing the Assurance Program 77

1

1 INTRODUCTION

This booklet is aimed at personnel with responsibilities with regard to any aspect of Defence capability. It explains not only the Capability Life Cycle (CLC) introduced by the First Principles Review (FPR), but also the work required to implement CLC policy and the CLC process. We provide an overview of the wide range of considerations in delivering and managing capability across CLC activities in order to provide those responsible for capability management with a comprehensive understanding which better prepares them with the skills needed to implement their responsibilities. We explain the CLC, including the legislative, regulatory and policy context; the attributes, principles and expected behaviours; the governance, roles and accountabilities; and the core CLC process, its phases and management. Further, we explain the underpinning practices required to implement the CLC and we describe the CLC artefacts and their development.

1.1 BACKGROUND TO FPR AND THE CLC

Notwithstanding the range of previous reviews and reforms, in 2014 the Government and Defence recognised that Defence had to work more effectively to meet future challenges. In August 2014, the Minister for Defence called for a review of Defence—the First Principles Review (FPR)—which was to ensure that, “Defence is fit for purpose and is able to deliver against its strategy with the minimum resources necessary” [1]. The outcome required of Defence was defined as, “Protect and advance Australia’s strategic interests through the provision of appropriately prepared and equipped armed forces. To achieve this, Defence prepares for and conducts military operations and other tasks as directed by the Government.” [2] The FPR team conducted an end-to-end holistic review using an agreed set of ‘First Principles’:

Clear authorities and accountabilities that align with resources. Outcome orientation. Simplicity. Focus on core business. Professionalism. Timely, contestable advice. Transparency.

In conducting their review, the FPR team found (inter alia): extant processes were complicated, slow, and inefficient with unclear accountabilities; evidence of waste, inefficiency, and rework; evidence of delayed decisions and over-escalation of issues for decision; and the need for simplicity, greater agility and more timely delivery.

The resulting report recommended transformational change to an organisation which had “drifted from contemporary best practice” [3]. The FPR team concluded that a unified and integrated Defence organisation, One Defence, is essential if it is to deliver on its mission in the most effective and efficient way. [4] The report made six core recommendations, which would enable the One Defence outcome:

Strong strategic centre with stronger accountability and decision-making. Single end-to-end capability development function. Enterprise approach to corporate and military enabling services.

2 Introduction to the Capability Life Cycle

Right skills in appropriate jobs to create the One Defence workforce. Manage staff resources for optimal use of funds and efficiencies. Commence implementation immediately with the changes required to deliver One

Defence in place within two years. Since the FPR, senior Defence leadership has reinforced the One Defence approach, its implementation, and benefits. Subsequently, Defence has established a fundamental objective to deliberately design an integrated ADF from the earliest stages of capability development in order to achieve a ‘joint force by design’. Implementation of the CLC in Defence commenced in April 2016 and reached a level of maturity for business as usual in July 2017. A full description of the CLC is available on the VCDF CLC website.

1.2 OVERVIEW OF THE CLC

A key element of FPR implementation has been reform of the capability development process and its related functions. This has resulted in the CLC, which is the core business process for realising capability for the ADF spanning all aspects of capability definition, acquisition, sustainment, upgrade, replacement, and retirement/disposal. The CLC and related functions are to be applied to all ADF capability, including major capital equipment, information and communications technology (ICT), and facilities. The CLC has been designed to satisfy FPR requirements including the One Defence Business Model, as well as deliver the integrated joint force by design. Reflecting a number of the ‘First Principles’, the CLC is focused on tailoring, streamlining and better integrating the ADF’s capability solutions into a single warfighting domain. CLC design and execution is based on ten principles [5]:

Joint and integrated approach aligned to strategic and resource guidance. Integrated planning across all Fundamental Inputs to Capability (FIC). Flexible, risk-based, tailored process using the Smart Buyer construct. Contestability to support accountability. Discouraging risk aversion and encouraging the use of risk management strategies. Defence focus on the core business of planning and governance. Default to the fastest and simplest decision-making processes, only adding complexity if

and when absolutely necessary. Transparency involving frequent, honest and clear engagement with defence

stakeholders and government. Responsibilities and accountabilities that are formalised and clear. Early and transparent industry involvement.

1.3 SIGNIFICANT EMPHASIS ON BEHAVIOUR CHANGE

The FPR recognised that giving true effect to the desired One Defence outcomes is only possible through behaviour shift across attitudes, belief systems, and core values. In particular, Defence highlights the importance of leadership as reflected in the One Defence leadership behaviours which engender a high performance culture. The CLC reforms also addressed the need for constructive relationships with all stakeholders, ranging from working-level Defence practitioners involved in capability management through to key external stakeholders including Ministers, National Security Committee (NSC) of Cabinet, Central Agencies, and Industry. Whilst behaviours of collaboration, cooperation, intellectual honesty and trust continue to be critical, a number of additional specific actions have been identified as guiding the behaviours that enable implementation of the CLC [6]:

Acceptance of accountability at all levels. Embracing contestability. One Defence involving partnership, cooperation and collaboration.

Introduction to the Capability Life Cycle 3

Discipline in documentation. Strong behavioural leadership at all levels. Demonstrably delivering on Government direction. Improved relationships within Defence and between Defence and Central Agencies. Dealing with ambiguity and managing risk.

1.4 SUMMARY OF CHANGES AS A RESULT OF FPR AND CLC

For those that have been involved in the Defence capability management in the past, it is useful to identify what has changed and what has not changed as a result of the FPR and CLC. This is worthwhile since we provide a holistic explanation of capability management for practitioners, addressing more than the CLC policy and overarching process.

Prior to FPR, Defence had many sound capability management policies, activities, and practices which have been retained. Key aspects of capability management that have not changed as a result of CLC include:

Traceability to government direction is still necessary. Requirements still need to be defined. Practices in capability management still need to be applied and integrated across the

CLC, including; project management (PM), systems engineering (SE), integrated logistics support (ILS), risk management, and assurance.

Compliance with applicable legislation and regulation is still needed. Accountability for proper use of Commonwealth resources by Commonwealth Officers

is still necessary (even if those roles are contracted out). In summary, the changes to capability management as a result of FPR and the CLC are:

One Defence, including Portfolio investment, collegiate cooperation among Capability Managers (CM) and Delivery Groups.

Single warfighting domain producing integrated Joint Force by Design. Strategy-led capability management traceable to Government Direction. Single end-to-end capability development across all CM and Delivery Groups. Approach to capability management being tailored, risk-based, simple, and sufficient. Contestability to test and improve proposals. Emphasis on behaviours such as accountability, contestability, and collaboration. Modified process and decision points up to acquisition. Additional frameworks such as Force Design, Contestability, Smart Buyer, and

Integration and Interoperability (I2). Modified management ‘structures’, including the incorporation of a Program layer and

new roles. New artefacts such as Program-level capability narrative and strategy. Modified industry role, including the use of industry as part of the integrated project

team (IPT), and greater ‘above-the-line’ roles. The remainder of this precis explains the CLC in summary and introduces the supporting practices to deliver Defence capability. This is important to ensure an understanding of not just the various aspects of CLC policy and overarching process but also the areas of work to realise capability in Defence. Consequently, as illustrated in Figure 1-1, the remaining chapters provide a more comprehensive view of how the CLC is applied including:

the Legislative, Regulatory, and Policy context within which CLC activities are undertaken;


further description of Behaviours and related factors when working in the CLC; the CLC Process including related frameworks, management roles and structures,

documents and artefacts; and the Capability Management Practices that enable the CLC.

In the next chapter we address the first two of those areas.

Capability Management Practices

CLC Process (Artefacts and Frameworks)

Legislative, Regulatory, and Policy Context

Acquisition Strategy and Concepts

Risk Mitigation and Requirements Setting

In-Service and Disposal

Gate 0 Gate 2Gate 1

Behaviours

Systems EngineeringProgram, Product and Project Management

Risk Management and Assurance

Logistics / ILS Commercial / Procurement and Contracting

Figure 1-1. The Context, Behaviours, Process, and Practices of the CLC.


2 CLC CONTEXT AND BEHAVIOURS

2.1 INTRODUCTION

In this chapter we begin by addressing the Legislative, Regulatory, and Policy context behind the CLC—that is, the context within which capability is developed and managed. Those involved in the CLC must ensure that they comply with the relevant requirements that come from legislation, regulations, and policies. We then provide further description of the Behaviours expected when working in the CLC.

2.2 LEGISLATIVE, REGULATORY, AND POLICY CONTEXT

“The Australian Defence Force (ADF) is constituted under the Defence Act 1903, its mission is to defend Australia and its national interests. In fulfilling this mission, Defence serves the Government of the day and is accountable to the Commonwealth Parliament which represents the Australian people to efficiently and effectively carry out the Government's defence policy.” [7]

Defence and its officials operate under various pieces of legislation, regulations and policies. It is important that Defence personnel performing the roles and undertaking activities for the CLC and capability management recognise and understand their obligations in this context. Whilst the CLC manual describes CLC policy and features, it does not explain this broader context, so we pause here to ensure that we cover the important details regarding the context within which CLC activities are undertaken. We will also show in later chapters how those aspects are implemented when undertaking the CLC activities.

2.2.1 Commonwealth Legislation

There are numerous pieces of Commonwealth legislation which apply to the CLC. Defence policy should capture and reflect applicable Commonwealth legislation, so following Defence policy should mean that Defence personnel are complying with Commonwealth legislation. However, it is still important that Defence personnel understand the sources of their need to execute their legal obligations. Significant legislative instruments include but are not limited to:

Public Governance Performance and Accountability (PGPA) Act 2013. Public Service Act 1999. Defence Force Discipline Act 1982. Work Health and Safety Act 2011. Crimes Act 1914. Defence Act 1903. Freedom of Information Act 1982. Fair Work Act 2009. Archives Act 1983. Public Interest Disclosure Act 2013. Copyright Act 1968. Defence Trade Controls Act 2012. Environment Protection and Biodiversity Conservation Act 1999. Australian Radiation Protection and Nuclear Safety Act 1998.


2.2.1.1 PGPA Act 2013

One of the most important pieces of legislation that relates to the implementation of the CLC is the PGPA Act, which establishes a coherent system of governance and accountability for the management of public resources, with an emphasis on planning, performance and reporting. The PGPA Act sets out the financial management, accountability and audit obligations of agencies (including Departments) that are financially part of the Commonwealth (and form part of the General Government Sector), in particular: for managing public resources efficiently, effectively and ethically; for maintaining proper accounts and records of the receipt and expenditure of public money; and compliance.

The PGPA Act applies to all Commonwealth entities and Commonwealth companies. Related rules and other legislative instruments establish the requirements and procedures necessary to give effect to the governance, performance and accountability matters covered by the PGPA Act. The Act also provides for the accountable authorities of entities to issue internal instructions (known as Accountable Authority Instructions). Objectives of the Act include inter alia: to establish a coherent system of governance and accountability; across Commonwealth entities; and to require the Commonwealth and Commonwealth entities to use and manage public resources properly.

The Act applies to all Commonwealth entities as well as to Commonwealth companies including Defence. Officials of a Commonwealth entity are defined as a person who is, or is a member of, the accountable authority of the entity; or a person who is an officer, employee or member of the entity. The status of consultants or advisers is also provided under the PGPA.

The PGPA Framework requires Defence officials to: not be inconsistent with the policies of the Australian Government; use and manage public resources in an efficient, effective, economical and ethical

manner; exercise ‘care and diligence’ in performing their duties; “act honestly, in good faith and for a proper purpose” performing their duties; not improperly use their position in performing their duties; not improperly use information; and disclose interests in relation to the performance of their duties [8].

2.2.1.2 Examples of Other Relevant Legislation

Legislation that impacts the CLC can also be of a technical nature. For example, the WHS Legislation defines legal obligations in relation to Plant, Substances and Structures which, in the CLC context, includes materiel systems, associated spares and consumable items. Furthermore, the Australian Radiation Protection and Nuclear Safety Act 1998 (ARPANS Act 1998) regulates ionising and non-ionising radiation sources to “protect the health and safety of people, and to protect the environment, from the harmful effects of radiation”.

Those implementing the CLC must be aware of the obligations and compliance requirements arising from all applicable legislation. It is therefore important to undertake adequate consultation with subject matter experts (SME) within and outside of Defence as appropriate.

2.2.2 Commonwealth Policies

As well as legislation, a range of Commonwealth Policies have a significant impact on CLC implementation, including:

Commonwealth Procurement Rules (CPR); Procurement Connected Policies (such as Indigenous Procurement Policy); and Commonwealth Risk Management Policy.


The CPR, which have effect under the PGPA Act 2013, are particularly important to CLC activities. The CPR set out the rules that officials must comply with when they procure goods and services and governs the way in which entities such as Defence undertake their own processes. The CPR also indicate good practice and are the keystone of the Government’s procurement policy framework which reflects officials’ responsibilities and the factors that must be considered in meeting the core rule of achieving value for money. Importantly, and consistent with the CLC expectations of innovation and tailoring, the CPR allow flexibility to provide opportunities for innovation and allow officials to design processes that reflect the size, scope and risk of the procurement [9]. Those involved in the CLC must become familiar with the CPR which must be complied with for all procurements.

2.2.3 Defence Policies and Directives

Defence has in place its own policies and directives with which Defence personnel must comply. Examples of the Defence policies and directives relevant to the CLC include, but are not limited to:

Defence Environment Policy. Defence Industry Policy Statement 2016. Defence Procurement Policy Manual (DPPM). Joint Directive on the Management of Risk in Defence (30/2015).

The DPPM promotes responsible and accountable spending by Defence officials when procuring goods and services for Defence. It supports the proactive management of risks relating to procurement, as required by the CPR. The DPPM incorporates both the CPR and additional Defence Procurement Policy Directives (DPPD) that must be complied with by Defence officials in relation to procurement. DPPD supplement specific CPR in the context of the particular circumstances and needs of Defence. [10]

2.2.4 Defence Regulations: Technical Regulation

Defence maintains regulation which ensures the technical integrity of ADF materiel. Examples of this regulation include:

Defence Seaworthiness Management System Manual (June 2017). Defence Aviation Safety Regulation (DASR) which was introduced in 2016 to replace

the Military Operational and Technical Airworthiness Regulations. Land Technical Regulation in accordance with the Technical Regulation of ADF

Materiel Manual—Land (TRAMM-L)—to be replaced by the Landworthiness Manual. Explosive Ordnance Regulation in accordance with the Technical Airworthiness

Advisory Circular.

2.3 BEHAVIOURS

Earlier we identified that there are several behaviours expected of those undertaking capability management activities within the CLC. Here, it is useful to elaborate on several of these behaviours:

Accountability. Accountability is relevant to the CLC in a number of ways. The FPR recommendation for a strong strategic centre is fundamentally about strengthening accountability and the ability for top-level decision making to set direction. The introduction of the centralised force design function and the introduction of the Investment Committee (IC) reflects accountability for decisions driven from the top levels. The CLC design also reflects the fact that well-defined and constructive relationships are pivotal to successful development and delivery of capability. As a result, the CLC details an Accountability Model (discussed in detail later) which ensures that all stakeholders are engaged in a way that reflects these key relationships and respective accountabilities. Perhaps the most important division of responsibility and


accountability is between the CM and the Delivery Group/s for each phase of the CLC. For example, during the In-Service and Disposal Phase the end-to-end Accountability Model makes clear that accountability for disposals will reside with the CM, and the sustaining group (usually Capability Acquisition and Sustainment Group) will plan the disposals on behalf of the CM [11].

Embrace Contestability. The CLC aspires to a culture of wanting to have ideas, proposals and agendas contested in order to ensure robustness in proposals and improved decisions. Contestability is also key to establishing and maintaining trust with Government and the Central Agencies. Senior Defence leadership has reinforced the importance for Defence to adopt a culture of contestability—that is, openly testing ideas, proposals, and analyses. While this testing most obviously manifests in the Contestability function executed through the Investment Approval Pathway up to Gate 2 (more detail later), the value of a culture which embraces contestability will improve decisions throughout the CLC. An important benefit of such a culture is to provide a more robust analytical and decision-making environment that is seen to be key in establishing and maintaining trust with Government and the Central Agencies. The formal Contestability function is discussed later.

Discipline in Documentation. There are a number of important behaviours with regard to documentation: o Tailoring. There are no prescribed approaches, and a ‘cookie cutter’ approach is not

to be followed. Implementation is to be tailored to suit the circumstances, including addressing risk. Those accountable and responsible must define and argue the tailored approach.

o Sufficiency. Work and documentation is limited to only that which is necessary. o Submissions. The CM will prepare the Cabinet and Ministerial Submissions, and

there is a clear expectation of simple, readable, plain-English proposals which; ‘tell the story’, do not include excessive technical language, and are written for the final audience (NSC or Ministers). Cabinet and Ministerial Submissions must clearly link the effort to Government priorities, situate the proposal in relation to the six Capability Streams, and show support for Government’s broader whole-of-government (WoG) approaches. Proposals must be evidence-based, identify risks, and articulate if there are unknowns. Central Agencies are to be consulted early and Contestability Division must be included in briefs.

One Defence—A Collegiate Approach. One Defence requires an open, transparent and collegiate approach to all CLC activities, including at committees and Gate Reviews. The One Defence approach is critical to progressing the CLC and developing the Joint Force. Senior leadership emphasises the importance of a collaborative approach both within Defence and between Defence, Central Agencies, Industry and Academia. Engagement with Industry and Academia early in the CLC is also seen as critical to accurately ascertain capability risks and opportunities for capability acquisition, realisation and sustainment [12].

Deal with ambiguity, manage risk, and discourage risk aversion. A conscious risk reduction mindset is to be maintained throughout the CLC; risks are to be clearly identified; and associated risk mitigation efforts to be applied. Risk profiles are to be used to define work, including tailored approval authorities and pathways.

2.3.1 CLC Behaviours Add to Existing Values and Applicable Codes of Ethics

Decision making is not only conducted within a legal context but also must consider a range of additional factors including the ethical and values frameworks of the organisation. “Ethics are not simply about acting according to the law or in compliance with policy; they are also about acting with consideration for values, perspective, judgment and consequences” [13]. In Defence a particular set of


values is in place namely: Professionalism, Loyalty, Integrity, Courage, Innovation, and Teamwork, sometimes referred to as ‘PLICIT’. “Without diminishing the existing single-Service and Australian Public Service (APS) values, or their use, specific Defence values have been established to provide a common and unifying thread for all people working in Defence” [14].. Defence also recognises the importance of leadership as reflected in the One Defence Leadership Behaviours comprising: Contributor; Learner, Accountable, Risk Manager, Inclusive, Team Builder and Innovator (CLARITI). Consequently, desired CLC behaviours as addressed earlier do not exist in isolation but add to existing legal obligations and broader APS and Defence values, Codes of Conduct, and Behaviours.

Furthermore, it should be noted that specialist practitioners who support the CLC are also subject to Codes of Ethics. For example:

Project Management: AIPM Code of Ethics: Act with Integrity; Practice Competently; Demonstrate Leadership; Act with Responsibility. [15]

Engineering: Engineers Australia Code of Ethics: demonstrate integrity; practice competently; exercise leadership; promote sustainability. [16]

There are a number of common features of ethical frameworks relevant to implementing the CLC and what should be expected of CLC practitioners:

Professionalism: strive for excellence in every aspect. Integrity: act based on a well-informed conscience. Competence: maintain and develop knowledge and skills, represent areas of competence

objectively, and act based on adequate knowledge.

2.3.2 Summary of CLC Behaviours and Implications for Defence Managers

In summary, the following behaviours are expected to be demonstrated throughout the CLC:

consultation, innovation, and communication; focus on outcomes not process; simple language and evidence-based arguments; deal with ambiguity and manage risk; accountability and decision-making at lower levels; simplicity in approach, document sufficiency, tailoring of activities; and focus on core Defence business using others for different skills sets.

In relation to engaging external support in specialist (non-core) skills sets: Defence must assure that those employed have appropriate competencies and comply

with applicable codes of ethics. Noting that Defence is accountable to ensure value from non-core support.


Consequently, Defence managers must have a sound understanding of the CLC and knowledge of capability management so that they:

know what work is to be done; if appropriate, know how to do it themselves; know how to task others to do the necessary work; and are able to assess necessary competencies and assure outcomes and deliverables.

In order to implement the CLC, Sponsors, Managers, and Practitioners must also understand: Defence Frameworks, Roles, and management structures that are relevant to the CLC; how the CLC Process works; the CLC Documents and Artefacts that are to be produced; and how to apply a supporting ‘toolkit’ of Practices to define and execute the tailored

Activities. We discuss these issues in the remaining chapters. We begin in the next chapter by addressing the Defence Frameworks that are relevant to the CLC.


3 FRAMEWORKS RELEVANT TO THE CLC

3.1 INTRODUCTION

The CLC is a risk-based decision-making process comprising four-phases (see Figure 3-1): Strategy and Concepts: identifying capability needs that are informed by the Defence

missions. Risk Mitigation and Requirement Setting (Italics): developing and progressing capability

options. Acquisition: acquiring the capability and introducing it into service. In-service and Disposal: supporting the capability through its life and managing the

replacement and disposal of the capability.




Gate 0 Gate 2Gate 1 Figure 3-1. The four phases of the CLC Process and the three decision gates.

In the early phases, as illustrated in Figure 3-1, there are three decision gates: Gate 0 is the decision point to either progress to the next Gate, require more work or

reject the documentation. All projects go through Gate 0. Gate 1 is the Government decision to select a specific option(s) and progress to Gate 2. Gate 2 is the Government decision to acquire a fully defined and costed capability.

Before considering in detail the CLC Phases and the associated activities, documents and artefacts, it is important to understand a number of concepts and terms associated with frameworks, role, and management structures. This chapter provides a description of the Defence Frameworks that are relevant to the CLC. Governance roles are discussed in the next chapter.

3.2 FORCE DESIGN FRAMEWORK

Force Design provides the ‘front-end’ to the CLC and is the core function of the Strategy and Concepts phase. In particular, Force Design supports FPR Recommendation 1: ‘Establish a strong, strategic centre to strengthen accountability and top-level decision-making’. ‘Joint Force by Design’ is a key aspect of Force Design to enable realisation of an integrated and interoperable ADF.

Force Design Division (FDD) delivers capability investment and force structure options through a set of concurrent processes including:

analysis of the current integrated and joint force; development of force options to meet future operating environment; and prioritisation of options including timing.

The Force Design Cycle (FDC) consists of four phases: Assess, Understand, Design, and Decide. The Defence Capability Assessment Program (DCAP) is the largely annual program of activities supporting the FDC. DCAP outcomes consist of prioritised capability investment recommendations (derived from force options) that are traceable to strategic guidance; and are suitable for potential inclusion in the Integrated Investment Program (IIP). The DCAP has three modes of operation to address different time and scope imperatives:


Fundamental: conducted approximately every four years as the basis of the Force Design Update. The mode addresses gaps and opportunities in some depth and provides options for fundamental change to both force structure and Defence strategy. The Fundamental Mode is the basis for updates to the White Paper and inclusions in the investment program.

Annual: considers gaps and opportunities on an annual basis drawing on inputs from Force Design analyses and from CM.

Agile: rapid assessment and resolution of specific gaps and opportunities inside the annual cycle, such as those required for urgent operational requirements.

FDD uses a range of activities and techniques to support the DCAP including: Experimentation: trying out new ideas, methods, or activities which are conducted to

obtain a quantitative insight into the operation. War-gaming: a strategy game that deals with military operations of various types, real

or fictional. Simulation and modelling: the use of models—physical, mathematical, or otherwise

logical representations of a system—as a basis for simulations that can inform managerial or technical decision.

Operations analysis: the use of mathematical models, statistics and algorithms to analyze complex real-world systems, typically with the goal of improving or optimizing performance, or to aid in decision-making.

3.3 CONTESTABILITY FRAMEWORK

Contestability from a strong strategic centre is a key assurance activity conducted throughout the CLC. As part of the activities leading to Gate 2 (sometimes referred to as the ‘Investment Approval Pathway’) force design outputs and all Gate submissions are reviewed to ensure that they are aligned with strategic and resource guidance, and provide an acceptable basis for effective decision making.

The plans to proceed to the next gate are reviewed to ensure that they are feasible and can be executed. Risk assessments and treatment strategies are checked to confirm that they are valid, and cost and schedule estimates are also reviewed to confirm that they are well developed. Contestability Division also participates in independent assurance reviews and ‘deep dives’ and reviews cabinet submissions and engage central agencies and government.

The Contestability functions include assessing: whether the proposal is fundamentally the right thing to do; if the expected outcome is likely to be delivered; and has the problem space been adequately explored and the analysis been done correctly. The key benefits of Contestability include more robust submissions, improved decision making, and establishment and maintenance of trust with Government and the Central Agencies. Contestability occurs throughout the four phases of the CLC Process. While the current focus of Contestability is on the early phases of the CLC—that is, on assurance of Defence’s force design outputs and Gate considerations—in the future Contestability will be applied throughout the CLC such as the review of selected sustainment strategy changes and contract renewals.

In summary Contestability is applied across the CLC to assure the following: The Force Design process and outcomes will meet Government strategic intent. The capability need as captured in the Gate 0 proposal aligns with Government direction

and Force Design outcomes. The strategy developed, and options progressed to Gate 2 are sound and will meet the

need. At Gate 2 the proposal to commit public money is sound and the acquisition should be

progressed. At the conclusion of Acquisition, Introduction into Service will be achieved.


During the in-Service Phase the delivered capability continues to align to government direction and costs remain affordable.

3.4 SMART BUYER FRAMEWORK

As we have seen earlier, Force Design identifies an aspect of Defence capability which may be deficient (a capability gap or need) and may therefore require an investment to remedy. Delivering a solution to that capability need will inherently involve a range of risks, drivers and opportunities across many factors for example technical, commercial, financial and security risks. The Smart Buyer approach focusses on identifying these factors and then determining the most appropriate strategy to undertake and implement the investment.

The Smart Buyer Framework is an integral part of the CLC which supports two main outcomes: improving strategy development and outcomes through:

o tailoring of CLC strategies and proposals appropriate to the circumstances; and o explicitly defining, planning and managing projects and products based on identified

risk, drivers and opportunities; and enabling Defence to:

o be an informed and effective customer; o adopt industry best practice in acquisition and sustainment; o deliver better value for money across the CLC; and o effectively outsource functions that government does not need to perform.

In practice Smart Buyer [17] systematically addresses the identified risks, drivers, and opportunities associated with ‘solving' the capability need (as captured in the Joint Capability Needs Statement (JCNS)) to develop a tailored Project Execution Strategy (PES). Figure 3-2 illustrates.

Smart Buyer involves two basic steps: risks, drivers, and opportunities identification and analysis; and then tailored strategy development. These steps are undertaken with the support of facilitated Smart Buyer workshops at which experienced practitioners can assist in identifying relevant factors and how to address them in a strategy. Rather than a strict process, the Smart Buyer Decision Making Framework still expects professional judgement and experience to create execution strategies appropriate to the circumstances of the capability need.

The PES is actually made up of four perspectives or individual strategies: Approvals Strategy: who the approval authorities are, and through which Gates the

proposal will progress—for example, fast track from Gate 0 to Gate 2 or the use of all three gates.

Project Management Strategy: including how the Project will be managed and by whom including the role of project (for example, a Prime System Integrator).

Acquisition Strategy: including stages of acquisition, method for down-selection of options, type of approach to market.

Sustainment Strategy: including the way in which the capability will be sustained (such as an in-house/outsource hybrid or maximum outsourced support solution) and how this will be achieved.


Figure 3-2. Illustration of the Smart Buyer framework.

The Smart Buyer framework is based on identification of risks, drivers (including opportunities) for a range of categories applicable to acquisition and sustainment of defence capability—that is, across the whole life cycle of the capability. An understanding of these factors when developing the initial PES ensures that whole of life considerations including all FIC and Total Costs of Ownership (TCO) are properly addressed.

Importantly the Smart Buyer Framework is a flexible analysis and strategy development method which can be used across the CLC. Not only can it be applied to the early definition of a Project resulting in the PES, it can also be used during the In-Service and Disposal Phase for example when considering changes to sustainment activities or to identify the best way forward for upgrade projects within the In-Service Phase.

3.5 INTEGRATION AND INTEROPERABILITY FRAMEWORK (I2F)

Modern warfare demands a more integrated and interoperable ADF which can operate with coalition, allied, and civilian entities. The Defence White Paper 2016 emphasised the importance of joint force in the delivery of an ADF which can meet and surpass current and future threats. Commitment to a joint force as a force multiplier is reinforced by VCDF’s vision that the ADF will move towards a single warfighting domain, which integrates traditional warfighting domains of land, maritime, air and space, and the emerging domain of cyber. Further, as we saw earlier, a fundamental objective of FPR is to deliberately design an integrated ADF from the earliest stages of capability development sometimes referred to as ‘joint force by design’.

VCDF, as the Joint Force Authority (JFA), is accountable for the integration and interoperability of all ADF Capability throughout the CLC and has established the Integration and Interoperability Framework or I2F to enable joint force outcomes. The following discussion reflects the current thinking on a support environment for joint force by design. While some elements are in place, Defence continues to mature this area.

Essentially, the integration and interoperability outcomes can be achieved using an information-centric approach based on four core actions:

use of a common I2 Reference Set which is an authoritative, comprehensive and up-to-date source of Defence I2 requirements and guidance;

definition of tailored I2 requirements for each Program, Project, and Product drawing from the I2 Reference Set;

formal assurance of tailored I2 requirements with focus on Gates 0 to 2; and


progressive demonstration and formal assurance of joint force achievement over the CLC.

The I2F represents a decision support environment which is a fundamentally different approach to past stove-piped and process-driven capability development and management practices. The I2F is intended to design and deliver the joint force through guided yet autonomous actions across Defence and throughout the capability life cycle using common practices and information; supported by appropriate assurance mechanisms.

Perhaps the most important element of the I2F is the I2 Reference Set which is an authoritative information source to be used by all Program, Projects, and Product to determine their individual I2 requirements. The I2 Reference Set while authoritative will never be static because the interdependencies between elements of capability will generally always be changing. Therefore, the I2 Reference Set is a dynamic information source within which constituent areas of I2 reference information will change at different tempos. Accordingly, it should be managed through a data repository that enables a common yet dynamic source of information to be readily accessible to Program, Project, and Product Managers and Sponsors.

Figure 3-3. Integration and Interoperability Framework (I2F).

Authorities for each area of the I2 Reference Set should be assigned and are expected to ensure currency of the reference set and compliance with higher-level I2 requirements such as joint force outcomes. The currency of the I2 Reference Set content is then maintained through a system of authorities who are responsible for:

providing advice to Programs, Projects, and Product Managers and Sponsors on their respective areas of the I2 Reference Set;

approving I2 requirements for their area of authority at appropriate points of the CLC; and

approving and assuring that Programs, Projects, and Products are compliant at appropriate points of the CLC.

I2 requirements must be met and managed throughout the CLC by Sponsors and Delivery Groups for Programs, Projects, and Products who should engage with the Directorate of Joint Integration Concepts and Assurance (JICA) early and throughout the life cycle. This engagement is expected to confirm I2 requirements, access reusable I2 resources, and demonstrate that I2 requirements have been met. The main guiding I2 question across the CLC is “does the proposal meet applicable Joint Force Outcomes and Supporting Joint Concepts?”.


In practice, the I2 considerations are captured in a range of CLC documents and artefacts at the Program-level including Capability Program Narrative (CPN), Program Strategy (PS), Program Integrating Operational Concept (PIOC), Program Architecture, and at the Project or Product level through the Joint Capability Narrative (JCN), JCNS, PES, and Capability Definition Documentation (CDD) suite which includes the Operational Concept Document (OCD), Function and Performance Specification (FPS), and the Test and Evaluation Master Plan (TEMP).

I2 activities including requirements definition and assurance should be conducted throughout the CLC for individual proposals as shown in Figure 3-4.

Figure 3-4. Implementation of the I2F across the CLC.


4 CLC GOVERNANCE AND MANAGEMENT

4.1 INTRODUCTION

This chapter provides a description of the relationship between Government and Defence, with a focus on the governance of the CLC process. We then provide a description of the Defence roles and relationships that are relevant to the CLC.

The CLC operates within the Government’s decision-making framework and processes (Figure 4-1 illustrates). Consistent with the requirements of FPR, a key objective of the CLC design is building and maintaining relationships and establishing trust with key stakeholders. The most important stakeholders in this regard are the Minister, the National Security Committee of Cabinet, and the central agencies (Department of Prime Minister and Cabinet, The Treasury and Department of Finance).

There are multiple types of engagement with these stakeholders relevant to the CLC including: planning and budgeting activities (including approval of the IIP); approval of individual capability development proposals (including approval to contract with preferred suppliers); and reporting of progress both routine and by exception (such as Defence Quarterly Performance Reports and Defence Annual Reports and Projects of Concern where the Defence Annual Report is the principal form of accountability between Defence and Parliament).

Under the CLC there is an expectation of earlier and more active engagement with key stakeholders (such as the Central Agencies who are members of the Investment Committee) which is further complemented by the formal biannual updates to the Minister (copied to Central Agencies), thereby providing a review mechanism that is linked with the budget cycle.

As part of the Defence decision-making framework, Defence Committees provide a vital governance role through which they monitor and manage performance, set priorities, provide assistance, and provide advice to Government on whether Defence is meeting Government objectives and making the most effective and efficient use of resources. The key committees are:

The Defence Committee (DC) which is the primary decision-making committee in the Department of Defence. Its focus is on major capability and resource trade-offs and the shared accountabilities of the Secretary and the Chief of the Defence Force. The DC is chaired by the Secretary and is able to delegate authority to its subsidiary committees, the IC and the Enterprise Business Committee (EBC).

The EBC which is a subsidiary of the DC. It is responsible for ensuring the effective running of the Defence organisation including corporate planning, performance monitoring and reporting, enterprise risk management, information management and service delivery reform. The EBC is chaired by the Associate Secretary, and is also responsible for in-year sustainment allocations for capability systems that are in-service.

The IC which is also a subsidiary of the DC responsible for overseeing the management and delivery of the Defence Investment Portfolio. Its focus is on bringing the future force and supporting enablers into being. The IC is chaired by the VCDF, which is responsible for supporting the DC by overseeing the implementation and integrity of the IIP, monitoring Defence’s performance in delivering it, as well as considering CLC proposals (for Programs or Projects). We discuss the IC in more detail later.

The DC and the EBC monitor performance against the Defence Business Plan which then becomes an input to the Defence Annual Report.


Figure 4-1. Relationship between Government and Defence.

4.2 CLC MANAGEMENT LAYERS

A key feature of CLC governance and management is the establishment of CLC Management Layers which provide the foundation for much of the CLC design. This structured set of Management Layers enables the FPR and CLC principles to be achieved by providing:

traceability between the building blocks of Defence capability—that is, the traceability among the capability systems and to the whole-of-ADF capability;

clear assignment of accountabilities and responsibilities; visibility of the value of a proposed investment against the whole Defence capability

investment landscape; improve coordination and prioritisation of CLC activities at both the strategic and

tactical levels; and better visibility of interdependencies and accountability for implementing joint force

integration. Implementation of the CLC relies on four layers of management for which there are clear benefits:

The Portfolio level provides a comprehensive whole-of-Defence view of capability investment covering capital investment and operating costs including a holistic perspective which is essential for prioritisation and timing of investment.

The Capability Stream level aggregates capability to better represent the key force elements across environmental domains to enable prioritisation and traceability to government priorities.

The Program level is essential for understanding and managing groups of capability systems which have a relationship including delivery of joint force capability.

The Project level is well understood as providing a discrete bounded element of work which delivers capability to the customer. The Product view—essentially the whole life cycle—has been introduced to drive clearer recognition of the in-service capability as the goal of project activities.

The following sections address each of these levels in more detail.


4.3 PORTFOLIO LEVEL

The Portfolio approach provides comprehensive visibility of Defence investment as it relates to capability. This is important so as to:

Ensure as a whole, the investments will achieve Defence’s strategic goals. Optimize the use of allocated resources. Be able to manage risks at a portfolio level. Adjust investment actions as necessary.

Given the focus on investment there are a couple of key concepts introduced as part of the CLC:

the Investment Portfolio which constitutes all approved and non-approved proposals and concepts, and

the IIP which is how these are actioned and realised. Changes in the external environment, emerging technology trends, or evolving capability needs will result in new proposals being considered as part of the ongoing continuum of Investment Portfolio activities. The Investment Portfolio therefore creates a pipeline of Programs or proposals for consideration that may eventually enter the Integrated Investment Program. So, these mechanisms not only allow a Portfolio management view to be made on currently approved investment, it provides visibility and decision-making benefit for what may potentially be acquired in the future.

Given its comprehensive nature, the Portfolio view of capability investment is considered crucial to engaging with Government, including discussing options and risks, and the value of proposed investments. This is because it helps Defence to situate investment proposals in terms of their relationships to other investments and intended capability outcomes across the Portfolio, and therefore how it will meet Government guidance. There is a regular, structured approach and established mechanisms to engaging with government on capability investment.

At the heart of this engagement is the introduction of the IIP, which is the key means of communicating the entirety of investment activities. The IIP provides the Portfolio view and is structured into six Capability Streams (discussed in the next section) comprising some 40 Programs:

The IIP is a rolling ten-year expenditure plan approved annually by Government. It is managed through the IC and the DC, and includes activities and projects approved in accordance with:

Defence White Paper, Program update, or Gate 1.

The IIP spans all investment activities, including Major Capital Equipment, Enterprise ICT, and Estate initiatives, over the entire CLC.

In addition to continuous engagement with Central Agencies and the Minister, the IIP operates on an annual cycle with the IIP approved annually as part of Budget considerations and with a bi-annual IIP performance update to the Minister.

Significant project funding is provided once in the IIP which may happen at Gate 1, if not before. There are processes, however, for resourcing these proposals before they enter the IIP in order to conduct risk reduction and develop needs and requirements work.

4.4 CAPABILITY STREAM LEVEL

During the 2015 Force Structure Review, Defence developed a framework based on six Capability Streams to address the breadth, complexity and interrelated nature of all Defence capabilities. The new framework provided an improved way of describing the link between strategy and capability which helped define a balanced and prioritised future force that was also affordable. It also helped definition and understanding of the links between war-fighting capabilities, systems and their enablers including how they are typically employed. The six Capability Streams are:

Intelligence, Surveillance, Reconnaissance, Electronic Warfare, Space and Cyber.


Air and Sea Lift. Land combat and Amphibious Warfare. Strike and Air Combat. Maritime and Anti-Submarine Warfare. Key Enablers.

The Capability Stream construct was also intended to enable better communication with Government and others of Defence’s higher-level priorities. Since then Capability Streams have been used in a number of contexts: for structuring the IIP; for seeking innovation proposals in support of the Defence Innovation Hub; as well as to structure implementation of the first Defence Industrial Capability Plan. With regard to the latter, the Government is expected to release Australian industrial strategies for each of the six Integrated Investment Program Capability Streams.

4.5 PROGRAM LEVEL

A significant change arising from the establishing the four CLC Management Layers is the greater focus on Programs rather than individual Projects to manage capability development. Essentially Programs are groupings of related efforts that benefit from being managed together. As illustrated in Figure 4-2, a Program is defined as a group of related Projects, existing Products, and activities that are managed together in order to optimise capability outcomes within allocated resources. (See next section for a description of Projects and Products).

Figure 4-2. A Program made up of Projects, Products and activities.

A Program is viewed as an enduring capability outcome, such as that which is delivered by a constituent group of related Projects, Products, and activities noting that these constituent elements can change over time. Management of capability groupings through Programs provides a more strategic view of capability development and management rather than individual Projects and Products.

The introduction of Programs as a management layer is particularly valuable for realising integration and interoperability outcomes in support of the Joint Force. The Program construct enables clear recognition of relationships and interdependencies between capability systems and provides the governance and management environment to deliberately manage these aspects across CLC activities from force design to requirements definition, acquisition, integration, acceptance into service, and sustainment.

As part of the CLC design, Programs are generally defined by capability outcomes—such as Sea Lift—and are managed by Program Sponsors on behalf of the CM. However, another perspective of Program Management applies to the Supplier or Delivery Group who will manage groups of related Projects and Products so as to take advantage of possible efficiencies and make delivery more effective. Whether being conducted by the CM’s organisation or the Delivery Group, Program Management can be viewed as coordination of a group of efforts and, in particular, management of


interdependencies between these efforts. For ADF Capability Programs there are at least four areas of interdependency between Projects, Products and Programs:

Operational needs and requirements for relevant FIC elements (such as mission and support systems).

Function and Performance requirements for constituent systems. Technical requirements, incorporating system requirements, system interface

requirements (including standards and their versions) and tailoring. Implementation management, including planning, assignment, contracting, and

assurance across all FIC. The Program construct also provides an improved strategic view of capability development for both Defence and Government. Defence currently has 40 Programs which generally reflect areas of:

joint capability—that is, capability systems that are used together by the ADF (such as Sea Lift); and

groups of similar Projects and Products for which there are benefits (such as efficiencies) from being managed under a single Program for the whole of Defence (such as Fuels).

Together these 40 Programs make up the Defence capability Portfolio and are mapped t to the six Capability Streams we discussed earlier via a matrix. It should be noted that, although 40 Programs are currently defined, this number could change in the future.

The Vertical Stream reflects capability outcomes—Capability Streams—and is used to provide a prioritisation view under the stewardship of the Capability Stream Leads (such as Air and Sea Lift under the Chief of Air Force). This provides a clearer picture of the link between capabilities, systems and their supporting enablers in creating key Defence outputs. The Horizontal Stream reflects the management of capability Programs for the different environmental domains as allocated to the respective CMs.

The Capability Stream to Program matrix supports the FPR requirement for clear authorities and accountabilities that align with resources. Furthermore, this holistic view of the Portfolio showing the contribution of individual Programs to capability outcomes is vital to making Defence efforts more visible and providing a strong basis for communicating with Government.

4.6 PROJECT AND PRODUCT LEVEL

The final management layer introduced as part of the CLC comprises Products and Projects. While Projects are generally very well-understood, the term Product in the Defence context is new and can be viewed in two ways:

A Product is a capability system (inclusive of its FIC) that delivers a capability effect. Product lines can be formed along platform, equipment or commodity lines.

The benefit of the Product view is that it reflects the principles of Asset Management which addresses capability development and delivery as a ‘whole-of-life’ endeavour requiring ‘end-to-end’ management from initiation through to disposal. It ensures that whole life-cycle aspects and all FIC elements are considered when making decisions particularly in the Strategy and Concepts and Risk Mitigation and Requirements Setting Phases of the CLC.

Under the CLC a Project is the finite activity which delivers the Product inclusive of all FIC. Figure 4-3 shows the Product and Project life cycles in relation to the CLC.

AcquisitionStrategy and Concepts Risk Mitigation and Requirements Setting


Project life cycle

Product life cycle

Figure 4-3. Product and Project life cycles in relation to the CLC.


4.7 Relationship Among CLC Management Layers

As illustrated in Figure 4-4, in combination the CLC Management layers of Portfolio, Capability Streams, Programs, Products, and Projects do create a logical structure for the CLC that:

allows clear assignment of accountability, responsibility and management; shows how individual investment contributes to the agreed Portfolio capability

outcomes; and shows how individual investments support joint force integration.

4.8 GOVERNANCE OF THE CLC

One of the ten CLC principles identified in Chapter 1 is that CLC responsibilities and accountabilities are to be formalized and clear. This section describes these responsibilities and accountabilities providing an important basis for understanding implementation of the CLC. The following discussion addresses two types of CLC roles:

governance of the CLC Policy and Process, and accountabilities and roles for implementing the CLC.

Figure 4-4. Relationship among CLC Management Layers.

4.8.1 Governance of CLC Policy and the CLC Process

The CLC is owned by the Secretary and CDF on behalf of the Commonwealth. There are three key positions that provide governance for CLC Policy and the CLC Process.


VCDF: VCDF, as the chair of the IC, operates the CLC on behalf of the Secretary and CDF, and is also the senior officer accountable for the future force structure and integration of the joint force. VCDF plays a pivotal role both as the policy lead for the CLC and plays an active role in CLC activities. Overall VCDF has the following roles in relation to the CLC: o IC: Chair of the IC (see discussion of the IC below). o IIP: oversight of the development of the annual IIP delivery plan and biannual

update, performance reporting, and IIP updates for government approval. o CLC policy: oversight of the CLC policy (including the CLC Manual), CLC

development and management, and operation of the CLC. o JFA: a portfolio level role that promotes the ADF as an integrated and interoperable

force. o C4ISR Design Authority: in pursuit of a joint force, VCDF is responsible for the

design of the ADF in terms of Command, Control, Communications, Computers, Intelligence, Surveillance Reconnaissance (C4ISR) attributes which is pivotal to an information-based integrated and networked capability.

Associate Secretary: As we have seen earlier, Contestability is an independent assurance function. Policy oversight and implementation is provided by the Associate Secretary of the organisation within which Contestability Division is located.

Capability Acquisition and Sustainment Group (CASG): Governance, policy oversight and significant implementation support of the Smart Buyer framework is provided by CASG, Director Smart Buyer.

4.8.2 Investment Committee (IC)

As we have seen at Section 4.1, there are three Defence committees which are pivotal to the CLC operation. The IC is a subsidiary of the DC and plays an important role by ensuring that, from a Portfolio perspective, resourcing including capital investment and operating costs are consistent with Defence priorities and resourcing strategy. Also, from a Portfolio viewpoint, the IC oversees the implementation of the IIP and ensures that its integrity is maintained. The membership of the IC is VCDF (Chair), Assoc Sec, DEPSEC SP&I, CFO, CN, CA, CAF, DEPSEC CAS, CDS, Department of Finance, PM&C, FAS Contestability.

The IC makes decisions about individual investments through its decision-making role at Gate 0, approving proposals to proceed through the CLC for Major Capital Equipment, major ICT, and infrastructure procurements. The IC gives further consideration of proposals at Gates 1 and 2 (and any interim gates for significant proposals).

From a practical perspective the IC meets approximately for one day each month and considers many proposals in that day. The limited number of times the IC meets and the constraints on its time are important factors to remember when planning and preparing documentation for their consideration.

4.9 ACCOUNTABILITIES AND ROLES FOR IMPLEMENTING THE CLC

The preceding discussion has highlighted that a core FPR expectation is transition to a One Defence model which aims to operate Defence as a more unified and integrated organization. The CLC outcomes also recognise that trust, transparency and an integrated approach across Defence are crucial to making the CLC work. As a result, the CLC Accountability Model has been established which is fundamentally reliant on building and maintaining partnerships between the Customer (as generally represented by the CM) and the Supplier (as represented by the Delivery Group/s). As illustrated in the CLC Accountability Model in Figure 4-5, CLC roles and relationships have been structured and clearly defined to achieve these outcomes.


The CLC Accountability Model is based on two vertical streams of accountability—on the left the Customer as led by the CM (and lower level representatives of Program, Project, and Product Sponsors) while on the right-hand side are the entities that deliver the capability through acquisition and sustainment. What is also important to note is the Integrated Project/Product Team (IPT) structure which includes representatives from all CLC related stakeholders thereby ensuring a collaborative and collegiate approach to achieving shared objectives.

As illustrated in Figure 4-5, the CLC Accountability Model enables partnerships between CM (customer) and Delivery Group (supplier) counterparts at each of the CLC Management layers. This structure supports the necessity that sound capability development is inherently a collaborative process achieved through trusted relationships ranging from formal partnerships through to acknowledged interdependencies. Furthermore, given the overarching vision of a joint force, this integrated approach based on consultation and cooperation between stakeholders is more important than ever. The CLC Accountability Model therefore supports:

consideration of the full range of factors and influences on decisions; and all stakeholders to be properly engaged appropriate to their level of accountability.

Defence Committee

Investment Committee

Capability Manager

Program Sponsor

Project/Product Sponsor

Government

Delivery Group Head

Program Manager

Integrated Project/Product

Manager

Industry Representative FIC SME

Acquisition or Asset Mgt Specialist

Government Submission

SME

Requirements SME

Contestability

IPT

IPT: Integrated Project/Product TeamSME: Subject Matter Expert FIC: Fundamental Input to Capability

Joint Team Enablers Delivery Group

Strategy Policy Intelligence

Sponsor

Partnership

Partnership

Figure 4-5. The CLC Accountability Model.

As we have seen earlier, the CLC operates within the Government’s decision-making framework of which the critical stakeholders are: Ministers, the National Security Committee of Cabinet, and the Central Agencies (Prime Minister and Cabinet, Treasury and Finance). CLC-related matters, including proposals are developed within Defence which then progress through senior committees and/or the Secretary and CDF to the Minister/s for Defence, then onto the National Security Committee of Cabinet or Prime Minster for consideration. The particular pathway is dependent on the process, the type of matter being considered, and the level of risk and complexity. The National Security Committee of Cabinet is key to both; approving the Integrated Investment Plan and proposals and setting the higher level strategic guidance and the resource envelope that informs Defence capability planning.

The following sections provide an overview of the supporting Defence roles in the Accountability Model.


4.9.1 ‘Customer’ Side of the Accountability Model

4.9.1.1 Capability Manager (CM)

CMs are often described as customers in the context of capability development who in turn employ subordinate Program Sponsors and Project/Product Sponsors to represent customer interests and manage capability. As seen in the Accountability Model in Figure 4-, the CM partners with their counterpart in the Delivery Group to realise the capability. Enabler and Delivery Groups are expected to work closely with, and responsively to the CM to execute Programs and Projects.

CMs are accountable to raise, train, and sustain capabilities as directed by the Secretary and CDF. In Defence CMs have been established to cover all capability domains and enablers resulting in the following assignment:

Chief Joint Capabilities: Joint Integration. DEPSEC Strategic Policy and Intelligence: Intelligence and Cyber. Chief of Navy: Maritime. Chief of Army: Land. Chief of Air Force: Air and Space. Chief Joint Capabilities/ Associate Secretary: Key Enablers.

Some of the key roles of the CM are: develop the JCNS as tasked by the VCDF; prepare and present the Gate submissions to the IC; chair the Program Steering Group; declare Initial and Final Operating Capability at the conclusion of acquisition; coordinate capability transition into service and withdrawal of capability; and submit bids to the EBC for in-year sustainment budget and make funding available to

the Delivery Group;

4.9.1.2 Program Sponsor

The Program Sponsor is the representative of the CM and is accountable to the CM for ensuring that the outcomes of all Program activities are achieved and that they remain aligned with Defence strategic objectives. Consistent with the CLC Management layers discussion above, the Program Sponsor has oversight of a group of related Projects, Products, and activities which is pivotal to managing:

related capability systems that deliver joint force outcomes; and related projects and products to secure efficiencies.

The key internal relationship at the heart of the CLC is between the CM’s Program Sponsor and the Program Manager in the Delivery Group. CLC outcomes are also reliant on the Enabler and Delivery Groups working in support of the Program Sponsor, who remains accountable for Program outcomes.

The Program Sponsor represents the CM and is accountable and responsible for a range of functions and outputs such as:

developing a Program Strategy ensuring that all integration and interoperability requirements are identified and

managed; coordinating transition of capability into service, in-service management and withdrawal

of capability; leading test and evaluation activities in coordination with the Delivery Group;


conducting analysis with Force Design Division, to identify gaps and opportunities within the Program;

conducting investigations to identify potential innovations which may affect future sustainment or development of Program capabilities; and

ensuring compliance with extant legislation, policy and standards across the Program.

4.9.1.3 Project/Product Sponsor

As seen in Section 4.6, the relationship between Projects and Products reflects the different stages of capability development. In both cases the Project or Product Sponsor is the primary (and working level) representative of the CM and the Program Sponsor liaises directly with the Delivery Group’s Integrated Project or Product Manager.

In the Project stage of capability development, the Project Sponsor sets direction for the Project and ensures that activities and outputs are consistent with the capability needs and priorities of the capability user. Once the Project transitions into Product sustainment, the Product Sponsor is accountable to the CM and Program Sponsor for Product outcomes and preparedness levels in alignment with strategic priorities.

4.9.2 ‘Supplier’ Side of Accountability Model

4.9.2.1 Delivery Groups

The Delivery Group is on the supplier side of the CLC Accountability Model and supports the CM across the CLC from the early stages. A ‘Lead’ Delivery Group (such as CASG or CIOG) is typically assigned for a proposal. The Lead Delivery Group generally:

nominates the delivery managers—that is, the Program Manager and Integrated Project and Product Managers;

supports the CM in developing Business Case and Program Strategies; develops the PES; conducts Independent Assurance Reviews (IAR); coordinates early industry involvement; executes IPMP for CM; sustains the capability as directed and resourced by CM; and disposes of capability and provides advice to CM on sustainment obsolescence and

disposal. The Program Manager, Integrated Project Manager (IPM), and Integrated Product Manager (IPdM) are the key representatives for the ‘supplier’ role. Under the CLC, the IPM has an expanded part to play—to not only deliver FIC for which it is wholly responsible but also to integrate and coordinate delivery of all FIC. Similarly, the assigned IPdM conducts Integrated Product Management of all applicable FIC. The next sections describe the key roles of those on the ‘supplier’ side.

4.9.2.2 Program Manager

The Program Manager is appointed within the Delivery Group or Enabler Group to conduct Program Management for acquisition and sustainment activities. Success is dependent on the partnership between the Program Sponsor (customer) and the Program Manager (supplier). The policies and practices associated with the Program Manager role have yet to be fully developed in the Delivery Groups. Nonetheless, as with the Program Sponsor role, the Program Manager role is pivotal to managing related capability systems that deliver joint force outcomes and managing related Projects and Products to secure efficiencies. Importantly, the Program Manager also provides the primary source of expertise for engagement with industry.


While assignment of and specific functions to be performed by Program Managers is still to be defined, the Interim CLC Manual details a range of roles and functions for Program Manager across the CLC. Some of these include:

ensuring the PES is developed based upon Smart Buyer principles and an asset management approach;

conducting industry engagement in support of the Program Strategy; sustaining capability to the level as directed and resourced by the CM; directing Delivery Group activity in accordance with the Program Sponsor’s priorities; seeking opportunities to optimise sustainment outcomes; establishing and overseeing Integrated Project Management and Product Teams in

support of the Program; facilitating a capability’s introduction to service, on the CM’s behalf; and fostering relationships between Project/Product Managers and Project/Product Sponsors.

4.9.2.3 Integrated Project Manager (IPM)

On behalf of the Project Sponsor the IPM has a pivotal leadership role as leader of the Integrated Project Management Team (IPMT) which comprises project stakeholders including representatives from: Customer and Supplier organisations; FIC providers including industry; Subject Matter Experts; and enabler organisations. The IPM is subsequently accountable for Project delivery against the delivery agreement established with the CM. Specific activities for which the IPM is responsible includes:

establish and lead the IPMT prior to Gate 0; manage Project activities from pre-Gate 0 to Gate 2 including:

o developing strategies and plans including PES and the Integrated Project Management Plan (IPMP);

o risk reduction activities and requirements development; o tendering and contracting; and

deliver FIC allocated to the Lead delivery Group (such as CASG) and coordinate delivery and integration of all FIC.

It is important that the IPM recognises that maximum ability to influence Project outcomes is in the early phases of the CLC when critical decisions on project planning and implementation are being made and important relationships established. Furthermore, the partnership established between Project Sponsor and IPM during this time is vital creating a strong linkage for acquisition and delivery efforts. Therefore, IPM leadership during these phases is vital to set up the Project for success.

4.9.2.4 Integrated Product Manager (IPdM)

As seen in the discussion on CLC management layers, Products are generally brought into being through a Project. While Product management activities extend over the Product life cycle including as part of Project efforts, the establishment of a formal IPdM role commences as early as it needs to, given the features of the Project and Product in the CLC. Therefore, depending on a range of factors such as risk, complexity, and scale, the IPdM can be appointed as early as the Risk Mitigation and Requirements Setting Phase but should be appointed no later than during the Acquisition Phase so that sustainment arrangements are properly established in advance of the In-Service Phase.

The IPdM is appointed by the Delivery Group and supported by an Integrated Product Team (IPdMT). As with the IPM, a strong relationship between Product Sponsor (as representing the CM) and IPdM is essential. The IPdM is responsible for assessing and confirming resource requirements, seeking approval for a proposed budget and then managing the procurement and provision of sustainment services within the approved budget and in cooperation with the CM.


In the case of CASG the SPO Director assigns IPdMs for each Product and is the single Point of Contact for Program Sponsors across multiple Products. In this situation, the SPO Director is responsible for leading, directing, oversighting and supervising the SPO organisation and assigned CASG IPdT personnel including:

managing multiple integrated Project and Product teams to delivery capability; managing the provision of sustainment services to support capability operating intent;

and providing shared services.

The IPdM is therefore the Product Management appointment responsible to the CASG SPO Director. Essentially the IPdM has responsibility to plan and deliver the industry support, and coordinate the agreed FIC elements, necessary to sustain the Product to the meet performance levels specified in the applicable delivery agreement and associated Product Schedule (PdS) within the assigned resources. The IPdM is responsible to SPO Director and Product Sponsor to undertake a range of activities including:

establish and lead IPdMT; ensure all FIC identified and available to sustain Product; deliver FIC for which it is responsible; coordinate inputs from FIC providers; coordinate development and management of delivery agreement including Product

Schedule; and report to Product Sponsor on status, risks and issues.

4.9.2.5 Integrated Project/Product Management Teams (IPMT/IPdMT)

The IPMT and IPdMT are established within the Lead Delivery Group to undertake Project and Product management and delivery functions:

The IPMT is the organisational entity established within the assigned Delivery Group to perform project functions from: supporting development of the PES and Gate 0 submission; to risk reduction work; requirements development; and tendering and contracting; culminating in acquisition and transition into service.

The IPdMT is established before the end of the Acquisition Phase and conducts asset management activities for a Product including sustainment. The IPdMT is required to deliver Product performance, availability, readiness, and preparedness outcomes in accordance with the Product Delivery Agreement.

Under the leadership of the IPM/IPdM, the teams are made up of representatives from all relevant stakeholders including: the Project and/or Product Sponsor as the CM representative; functional subject matter experts (such as Requirements SMEs), and representatives from all FIC-provider Groups including industry, Estate and Infrastructure Group (E&IG) and Chief Information Officer Group (CIOG). Other Groups, such as Defence Science and Technology Group (DSTG), Chief Finance Officer Group (CFOG) and Defence People Group (DPG) provide specialist enabling support services and may also be represented as required. Defence FIC-providers are accountable to the Secretary and CDF for providing assets and resources to the IPMT or IPdMT for the delivery and/or sustainment of capability.

4.9.3 Contestability

The Contestability function provides independent assurance to VCDF (as Chair of the IC), Secretary and CDF, Central Agencies, Ministers and Government that Defence’s capability needs and requirements are aligned with strategy and resources and can be delivered in accordance with government direction. As depicted in the CLC Accountability Model, Contestability can be applied to provide independent assurance at each of the management layers.


5 PHASES OF THE CLC

5.1 INTRODUCTION

As we saw earlier, the CLC is a risk-based decision-making process comprising four-phases (see Figure 5-1):

Strategy and Concepts: identifying capability needs that are informed by the Defence missions.

Risk Mitigation and Requirement Setting: developing and progressing capability options.

Acquisition: acquiring the capability (inclusive of all FIC) and introducing it into service, then

In-service and Disposal: supporting the capability through its life and managing the replacement and retirement/disposal of the capability.

In the early phases, there are three decision gates: Gate 0 is the decision point to either progress to the next Gate, require more work or

reject the documentation. All projects go through Gate 0. Gate 1 is the Government decision to select a specific option(s) and progress to Gate 2. Gate 2 is the Government decision to acquire a fully defined and costed capability.


Risk Mitigation and Requirements

Setting

In‐Service and Disposal

Gate 0 Gate 2Gate 1

Investment Approval Pathway

Figure 5-1. CLC highlighting the two phases and three gates of the ‘Investment Approval

Pathway.

From the post-FPR perspective, most CLC initiatives affect what is sometimes referred to as the Investment Approval Pathway—that is, the set of CLC activities up to Gate 2. The Strategy and Concepts Phase focuses on Force Design and development of a ‘business case’ to be presented at Gate 0 proposing investment in capability. Based on approval of the proposed investment, the Risk Mitigation and Requirements Setting Phase develops sufficient definition and reduces risk to an acceptable level for decision makers at Gate 1 and 2 to commit the Commonwealth to actually undertake that investment.

5.2 STRATEGY AND CONCEPTS

As we have seen earlier, the Force Design process represents the ‘front end’ of the CLC and the Strategy and Concepts Phase in particular. Force Design Division uses a combination of activities including experimentation, war-gaming, simulation and modelling, operations analysis, options development, and analysis. We have also seen that for a particular capability need or gap, a key output of the Force Design process is the JCN which provides a conceptual starting point for a defined gap or opportunity and ensures joint needs are clearly aligned with strategic guidance. The production of the JCN really represents the ‘trigger’ for a series of actions to take place.


Most immediately the JCN is the basis for assigning and tasking a CM to develop a JCNS. While still high level, the JCNS describes the CM’s approach to meeting the problem posed by the JCN by defining and bounding the capability need and available option sets.

The JCN and JCNS provide the basis to identify a Lead Delivery Group who is most appropriate given the nature of the potential acquisition—for example, CASG is usually chosen for materiel investment. The Lead Delivery Group is tasked to develop a PES in close consultation with the CM representatives using the Smart Buyer Framework as discussed earlier. Accordingly, the Lead Delivery Group will initiate a Project including assignment of an IPM and an initial IPMT comprising Sponsor, FIC, and expert representatives.

The resulting early assignment and resulting engagement between CM and Lead Delivery Group is deliberately intended to establish a strong and enduring partnership between the CM representatives (Program and Project Sponsors) and Delivery Group representatives (including the IPM). It also ensures that a proposal presented for Gate 0 approval represents an agreed way forward by the both customer and supplier/s—that is, the CM and the Lead Delivery Group in consultation with other FIC providers.

At this point the Smart Buyer framework is instrumental to comprehensively defining the Project’s environmental context and risk profile and developing the necessary set of implementation strategies that are captured in the PES. In accordance with the CLC policy, a key expectation is that the resulting PES is scaled and tailored with sufficient information to act and make informed decisions. This includes tailored approval pathway and acquisition, sustainment and project management strategies appropriate to the project characteristics and risk profile identified though the Smart Buyer activities.

The proposal presented at Gate 0 will not only provide a strategy for the entire Project and Product life cycle but, consistent with the rolling wave approach to project management, includes more immediate plans to progress to the next Gate. The Gate 0 Proposal therefore defines the activities, timeline and necessary resourcing to progress to the next consideration of the Project.

When developing the JCNS and PES, the CM representatives and IPM should engage with Contestability Division early to ensure that both of these documents align with strategic and resource guidance and represents a sound way forward across proposed implementation strategies, supporting plans, risk assessments and treatment strategies, and cost and schedule estimates. Ultimately Contestability Division will develop an assurance statement which addresses the extent to which the submission, JCNS (what) and the PES (how) satisfy the basic requirements of a sound investment proposal and project including is it aligned with strategic and resource guidance and are the plans properly developed and feasible.

5.2.1 Tailoring

Consistent with the CLC principles, a key expectation is that every capability development proposal and its implementation must be tailored to the circumstances. Tailoring means that the proposal must be ‘fit for purpose’, sufficient, and cognisant of unique factors including risk, complexity, scale, environmental context and cost. Tailoring is expected to allow simpler capability investments to be expedited, freeing up capacity to ensure that sufficient scrutiny, resources and work is applied to more complex initiatives.

The Smart Buyer analysis and profile addressed earlier is useful to inform a number of tailoring decisions. This includes:

1. Investment Approval Pathway: a. Approval Authorities: such as National Security Committee (NSC); Two Ministers;

One Minister; or Internal to Defence. b. Approval Pathway: such as fast track from Gate 0 to Gate 2, or significant risk

reduction studies Gate 0 to Gate 1. 2. Acquisition Strategy—for example, procurement using open tender, approach to the

market based on RFT, Project Delivery Model based on third party Prime System Integrator (PSI).


3. Sustainment Strategy based on Prime support ‘agent’ for all subsystem elements of an integrated system of various vendor systems.

4. Level of Contestability: incorporating ‘deep dives’ in the Contestability efforts. 5. Project Classification and Categorisation: CASG classifies and categorises its Projects

which helps them tailor the Project in terms of internal CASG approvals, IPM competencies, governance, management and assurance arrangements, contracting templates and risk management.

6. Risk Reduction efforts: provide the basis on which to define and prioritise the risk reduction activities in the next CLC phase.

5.2.2 Gate 0

Gate 0 provides an internal Defence decision point, meaning that approval for the proposal to proceed is made within Defence rather than Government. The IC considers the capability need, possible options, risk, and strategy; confirms that the proposed investment aligns with approved strategic direction; and that the proposed implementation (adjusted if necessary) can be progressed. The Gate 0 proposal is based on a Business Case which is to evolve (refined and be more specific as more is understood and decided) for later presentation at Gate 1 and/or Gate 2. The outcome of Gate 0 is a formal and documented decision which provides direction on next steps.

At Gate 0 the IC agrees to further development of a range of options with agreed requirements, timeframes, and funding to Gate 1, or agreement to proceed directly to Gate 2. Gate 0 approval is given by the VCDF. Alternatively, at Gate 0 the IC may recommend that the proposal not proceed or be improved to be resubmitted at a later date.

The Gate 0 proposal is prepared and presented to the IC by the CM. It is prepared with support from Delivery Group(s) and FIC providers. The proposal identifies a set of feasible and achievable options and provides sufficient argument in terms of investment rationale and implementation strategy to enable an informed investment decision. Consistent with CLC principles the proposal provides a level of detail appropriate to the risk, complexity, scope, cost and other relevant factors. The proposal generally comprises:

Sponsor Paper: o Business argument. o Contestability Statement. o Total Cost of Ownership (TCO). o Industry considerations.

JCNS. PES.

Once given by the VCDF, Gate 0 approval constitutes formal endorsement of the JCNS, PES and funding (including any adjustments as necessary). Approval endorses activities and defines expected outcomes for next Gate. VCDF approval and necessary adjustments are captured in a statement called Project Direction which is recorded in the relevant Defence information repository. There is also an expectation that a Project Delivery Agreement (PDA) between the sponsor—that is, the CM and the delivery Groups will be formally established. Approval of the proposal creates a Project in the Investment Portfolio, or if government agrees, a Project in the IIP for a direct to Gate 2 proposal.

So as to be able to implement Project activities after Gate 0 approval, the IPM will have drafted the IPMP which is derived from the PES and provides more implementation detail than the PES. The IPMP also evolves over subsequent CLC phases in a rolling wave approach—that is, more detail is added as the timeline progresses.

5.3 RISK MITIGATION AND REQUIREMENTS SETTING

The activities conducted in the Risk Mitigation and Requirements Setting Phase must follow the Project Direction and documents (particularly the JCNS and PES) as considered, approved and/or


adjusted at Gate 0 by the IC and VCDF. It is also intended that in the future a Project Delivery Agreement (PDA) be formally established after Gate 0 approval. Note that if Gate 1 is included as an approval point during this Phase (as per the approved Investment Approval Pathway), then updated Project Direction and approved documents would be the basis for subsequent Project activities. Therefore, during this phase, the CM representative, IPM, and FIC providers are all expected to use the extant Project Direction, PDA (if in place), approved JCNS, PES and resulting IPMP (which incorporates and Integrated Master Schedule (IMS)) as the collective basis for their work.

The PGPA Act seeks to improve the high-level accountability of all Commonwealth entities through focusing on their duties, internal controls and the way they engage with, and manage, risk. Therefore making capability investment decisions using public monies demands that the risks are well known, accounted for and properly managed. As the name suggests, this phase is focused on providing an appropriate level of certainty or confidence for the government to approve the capability investment by reducing the associated risks of this action to an acceptable level, while also adequately defining the capability requirement so there is confidence that the capability need will be met.

As we have seen from the Smart Buyer categories, risk can come from many sources, including technical, commercial, schedule, financial and strategic. But importantly this phase should also capitalise on opportunities such as leveraging off other acquisition efforts, so that certainty of a good outcome is increased. At the end of the day it is about achieving value for Commonwealth resources while limiting the risk of adverse outcomes with regard to financial commitment and government-directed defence outcomes.

The main goal of the Risk Mitigation and Requirements Setting Phase is therefore to provide: a sound basis for a government decision to approve acquisition of the capability; and establish a firm contractable position to proceed with the acquisition.

While it can be argued that the whole Phase is essentially mitigating risk, in practical terms it is centred around the following interrelated activities:

undertaking targeted risk reduction activities as defined in the approved PES; developing requirements (for all FIC) sufficient for solicitation and capability

acceptance; undertaking solicitation (conducting tendering and contracting activities); and planning and preparing for the Acquisition Phase.

As illustrated in Figure 5-2 it is useful to visualize risk as being reduced over this phase while at the same time requirements become better defined. Requirements definition based on structured derivation and evidence-based decision-making is key to reducing uncertainty and therefore risk. Progress is achieved through the related actions of risk reduction, requirements definition, and making decisions which narrow the options and determine the way forward so that increasingly definitive proposals are presented at each decision point (Gates 0, 1 and 2).

Furthermore, this phase can be seen to be structured so that the level of risk and certainty corresponds to the level of commitment being made by Defence. That is, at Gate 0 higher risk is acceptable when less funding is being committed (perhaps just for risk reduction activities) while at Gate 2 risk must low enough so that the Commonwealth can confidently enter into a major contract or contracts.

We now look at the activities which are conducted through this phase culminating in Gate 2 consideration.

5.3.1 Risk Reduction Activities

The risk reduction activities that are conducted during this phase correspond to the risk profile as captured during the Smart Buyer analysis and as reflected in the PES and funded through Gate 0 approval (and subsequently Gate 1, if appropriate). Essentially this work focusses on applying a range of techniques to driving down the risks and uncertainty to achieving project and capability outcomes. The techniques and activities depend on the category and nature of the risk.


AcquisitionStrategy and Concepts Risk Mitigation and Requirements Setting


Risk Reduction

Risk ReductionForce

Design

Figure 5-2. Reducing uncertainty with better defined requirements.

So, as an example, a Project may be intending to install new equipment on an existing platform. The technical complexity and resulting cost will be impacted by a range of practical factors such as structural integrity and configuration, power, space and weight availability, and the condition of the platform. Should understanding of these factors be poor this can represent a significant risk to the feasibility of installing the new equipment and the associated cost and schedule. Therefore, the sensible thing to do is to conduct analysis, modelling, and studies to know more and then remedy any deficiencies and factor remaining risks into the risk profile, future work plans and resulting cost, schedule estimates.

Likewise, there may be a risk associated with commercial aspects of the Project namely the need to involve multiple vendors in a joint effort which could potentially result in unforeseen costs and delays within the acquisition phase. Risk reduction work in this case could involve conducting Requests for Information (RFIs) and workshops to secure clear understanding of potential or actual commercial issues before acquisition is underway. Again, these actions can prevent or control adverse outcomes or account for the risks and issues and their management in Project strategies, plans and costings.

It is important to note that risks and issues can be discovered throughout this CLC phase, so the risk profile identified through Smart Buyer activities will likely evolve over the phase.

Figure 5-3 illustrates more broadly possible risk reduction work that can be undertaken to reduce the risk profile before Gate 2 consideration.

5.3.2 Requirements Development

Requirements development refers to the process of converting high level needs originating from strategic guidance and Force Design efforts into a more detailed statement of capability requirements that is sufficiently specific to be used to conduct tendering and contracting for acquisition, and ultimately, acceptance of the systems into service. Requirements development is essentially another form of risk reduction as it provides greater certainty that the acquisition will be conducted against a well-defined specification that, if followed, will satisfy the government-approved capability needs from which it was derived. “Requirements need to be developed to a sufficient level of specificity to support industry engagements, capability acceptance, and detailed analysis (particularly of implications for the FIC to understand the full scope and broad feasibility and risks of the proposal.” [16].


Risk Reduction Studies(technical and

implementation risks) Further Requirements Definition

RFT + ODA(commercial risk)

Modelling and Simulation

Eg RFI(commercial risk)

System Reviews

Smart Buyer Risk

Profile

System Engineering Activities

Trade‐off studies

Trade‐off studies

AcquisitionStrategy and Concepts

Risk Mitigation andRequirements Setting

In‐Service andDisposal

Gate 0 Gate 2Gate 1

PES

Risk Reduction Activities

Risk Reduction Activities

Figure 5-3. Driving down risk and uncertainty during the Risk Mitigation and Requirements

Setting Phase.

Figure 5-4. Key requirements documents.

In accordance with the CLC principles, requirements are to be derived and defined to the level that is sufficient to provide adequate certainty for decision-makers. Furthermore, the scope of requirements development must account for:

all FIC (as the capability use and performance is reliant on all FIC); both the mission and support systems; whole of life-cycle factors such as transition into service, sustainment; and disposal; integration and interoperability (joint force requirements); and legislative and regulatory requirements such as WHS Act, EPBC Act, and technical

‘worthiness’.


The scope of requirements considerations for a platform or ‘mission’ system element of the capability can be extensive and include requirements covering: operational, function, and performance aspects of the capability; interfaces and interoperability; materiel safety (including WHS); security; human factors; reliability, maintainability, obsolescence, and supportability; software; electromagnetic environmental effects; and environmental factors.

The ‘support system’ to be delivered as part of capability is as important as the platform or ‘mission’ system. The scope of requirements considerations for the corresponding support system can also be extensive including: configuration management requirements; sovereign capability constraints; technical data requirements; location constraints; component packaging; transportability; deployability, fault isolation and maintainability; and disposal requirements.

As illustrated in Figure 5-4, requirements are derived from the needs documents (JCN and JCNS) and then captured in the requirements suite of documents namely Operational Concept Document (OCD), Function and Performance Specification (FPS), and the Test and Evaluation Master Plan (TEMP).

Requirements are developed using structured systems engineering and requirements engineering methods which enable precise derivation and traceability which is pivotal to ensuring that acquired systems are consistent with higher-level and government-endorsed needs. The practices of Systems Engineering and ILS are also essential to defining the content of requirements for all FIC but particularly the mission and support systems to be acquired. Expertise in these fields is vital to developing sound requirements. For this reason, as part of the CLC and the CLC Accountability Model, provision is made to engage specialist practitioners within the IPT as required.

5.3.3 Gate 1

As part of the CLC process, Gate 1 consideration and approval may be required for complex and high-risk proposals or when a government decision is necessary to narrow the field of options. Gate 1 is the Government decision to select a specific option or options and to proceed with agreed timeframes, technical requirements and financial commitments to Gate 2. Gate 1 approval is not a commitment to acquire a new capability; it only gives approval to conduct the necessary work to progress to Gate 2.

The CM is responsible for the Gate 1 Proposal which describes the results of risk reduction activities since Gate 0; progress in reducing options; progress in requirements definition, cost estimation; and plans (including risk mitigation activities) to proceed to Gate 2; and Industry engagement outcomes. The proposal incorporates the updated PES, and the draft Submission to Government.

If not already in the IPP, on completion of Gate 1, the approved Project enters the IIP with the following defined:

options to Gate 2; plan to Gate 2; and permission to engage industry.

5.3.4 Solicitation and Source Selection—Tendering and Contracting

Although not explicitly described as a sub-phase in the Interim CLC Manual, a key aspect of the Risk Mitigation and Requirements Setting Phase is the work of solicitation and source selection. This part of the CLC Process takes the approved requirements set and engages with industry with the view to establishing a contractable position at Gate 2.

To enable Gate 2 approval to acquire a suitable solution Defence is required to have engaged industry to ‘test the market’ in order to select the best possible solution to the defined requirements. Sometimes this process is termed solicitation and source selection which generally involves tendering activities which lead to the ability to contract for the preferred solution (see Figure 5-5). The procurement practices involved in this process are driven by and must be compliant with the PGPA


Act and subordinate policies as introduced in Section 1. The procurement practices are described in more detail in Section 7.




Gate 0 Gate 1 Gate 2

Solicitation &Source Selection

Contract Management

Contract Established

Contracting

Figure 5-5. Solicitation and Source Selection at the end of the Risk Mitigation &

Requirements Setting Phase.

The Commonwealth and Defence procurement policies require that the outcomes of procurement efforts such as Solicitation and Source Selection represent proper use of public resources including importantly providing Value for Money (VFM). There a number of key activities and decisions to be made when determining the best way to proceed with tendering and subsequent contracting effort:

Method of Procurement—for example, open or limited tender. Approach to Market—for example, which tendering documents and activities to apply,

such as Request for Tender (RFT), Competitive Evaluation, or the use of Offer Definition Activities (ODA).

Delivery Model—the type of contract arrangement with supplier—for example, prime contract, managing contractor, or alliance contract.

Type of tendering and contracting templates to use (ASDEFCON, for example). Solicitation (or tendering and contracting) combines the outcomes of a range of technical, management, financial, and other activities undertaken up to this point in the CLC. For example, decisions on the way to conduct solicitation are heavily impacted by the outcomes of Smart Buyer such as risk, complexity, scale and industry context of the acquisition. Furthermore, sound requirements developed are key to successful solicitation because they accurately define what is to be acquired and the quality, performance and other attributes to be demonstrated when delivered. The OCD, FPS, and TEMP as discussed above are generally referenced and/or attached to the suite of tendering and contracting documents used in solicitation.

The role of an artefact called the Work Breakdown Structure (WBS) is also core to providing a basis for not only Project definition but also to help scope what is to be acquired through a contract or contracts which are progressed through solicitation activities. Accurately determining the work to be done through WBS methods is key to solicitation as it helps bound the Statement of Work (SOW) and therefore cost and schedule tendered and eventually agreed at contract signature.

Following the receipt of tender responses from industry, a formal process of tender evaluation is undertaken by the Defence IPT (and any necessary support) culminating in a Source Evaluation Report (SER) which recommends a preferred solution. The SER provides a critical basis for the Gate 2 decision to proceed with the acquisition and with a preferred supplier therefore must be robust and fully defendable.

Solicitation and Source Selection is where many of the preceding CLC efforts come together. This includes:

Updating the PES. Risk Management. Requirements Definition.


Options Refinement. Cost Estimation. Industry Solicitation and Evaluation. Source Selection Report development. Initial negotiations (if appropriate). Project Management and Sustainment Planning.

The quality and integration of this work across the activities and practices provides the basis for government decision at Gate 2 and drives the success of Acquisition Phase outcomes after Gate 2.

5.3.5 Gate 2

As described above, the primary output of the Risk Mitigation and Requirements Setting phase is a firm contractable proposition to acquire and sustain the Product which is then approved by Government. To reach this point the IPT will have evaluated the offers or tenders provided, make a selection based on clear criteria, and drafted a SER which is to be robust and defendable.

The resulting recommendations from the Source Selection activity are presented to the Investment Committee initially and then to Government at the appropriate level to enable acquisition to commence. There is flexibility around the pre-Gate 2 effort including some pre-contract negotiations to iron out any issues and secure more certainty about the contracting proposition.

The components of the Gate 2 Proposal include the Final PES for implementation post-Gate 2 as well as nomination of the preferred tenderer, a draft Government Submission, and a Contestability Statement to provide independent assurance that the recommended approach is sound.

At Gate 2 the Investment Committee considers the Submission after which, if acceptable, it is progressed through to Government which may be a Minister, two Ministers, or the National Security Committee (NSC) chaired by the Prime Minister. Gate 2 culminates in the Government decision to acquire a fully defined and costed capability including: acceptance of risks; Defence authority to conduct acquisition, sustainment, and assignment of budget; schedule; and scope. Government approval allows commencement of the Acquisition Phase and signals the ability of the IPT to commence the Acquisition Phase.

Figure 5-6. Information/artefacts presented to Government and IC at each of the three gates.


5.4 ACQUISITION

The objective of the Acquisition Phase is to acquire the capability solution inclusive of FIC elements and then introduce it into service. The Delivery Group progressively and formally transitions the systems to the CM who receives a system which satisfies the requirements previously agreed.

The CLC Acquisition Phase is centred on the IPM executing the Project on behalf of the CM in accordance with:

Gate 2 outcomes (adjustments approved by Government). Approved PES. Approved Product Delivery agreement (PDA) (sometimes still referred to as the

Materiel Acquisition Agreement (MAA)). Approved IPMP and Integrated Master Schedule (IMS). Contracts including requirements (OCD, FPS, TEMP). Other approved agreements such as strategic partnership agreements.

CLC Projects are expected to be much more integrated than in the past with all key stakeholders across CMs, Delivery Groups, Enabler Groups, and specialist expertise engaged through the IPT. This integrated approach extends to ensuring all aspects of FIC are delivered and integrated and that Whole of Life considerations for the Product’s life cycle are properly addressed in Project activities and decisions.

To ensure realisation and integration of all capability elements the following is expected in relation to FIC during the Acquisition Phase:

IPM is responsible for delivery of FIC for which the Lead Delivery Group is responsible;

other delivery groups are responsible for delivering their elements of FIC as agreed in the key planning documents and agreements (IPMP, IMS and PDA); and

IPM is responsible for coordination and integration of all FIC. As we saw from the CLC Accountability Model, the integrated nature of Project effort is enhanced through the management partnership between the Project Sponsor and the Integrated Project Manager. Furthermore, consistent with Asset Management Principles and PMBOK, Project Management is viewed as the integrating practice which draws on and integrates supporting practices to execute the acquisition activities. We discuss these Practices at Section 7.

From a Defence CoE perspective, Project Management is supported by the Program Management (CoE) and in turn supported by Project Controls and the specialist disciplines of the Engineering and Technical, Materiel Logistics and Commercial CoE, which are all enabled by support from the Corporate Performance and Decision Support CoE.

5.4.1 Transition into Service

One of the most important areas of effort during the Acquisition Phase is preparation for the capability (inclusive of all FIC) to be transitioned to the In-Service and Disposal Phase. Transition of the deliverables to the CM—transition into-service—and transition to the IPdM are critical activities that the IPM must manage carefully. This requires close working relationships with the CM and IPdM and development of clearly documented transition and closure plans namely the Project Transition Plan, Business Case Closure Plan, and Project Closure Plan.

If not already in place, the IPdM needs to be assigned during the Acquisition Phase and the IPdMT established to the extent necessary. During the Acquisition Phase the IPM, IPdM and CM work together to coordinate transition in Service. In particular the IPM and IPdM will develop transition plans and sustainment arrangements including sustainment contracts. The IPMP evolves into an IPdMP as the capability approaches introduction into service and transitions into product management.


Defence has established a means to reflect progressive transition from Acquisition to In-Service and Disposal Phase. When a new capability is introduced into Service, it must first go through a series of stages to ensure extensive testing and operational evaluation before it can be declared a capability. These stages are known as Initial Operational Capability (IOC) and Final Operational Capability (FOC). These milestones also support the reality that capability systems to be introduced into service will generally not be provided in one ‘delivery’. For example, Defence will often acquire multiple units of the same system that are delivered over time or alternatively different parts of one system might be delivered progressively.

The IOC milestone is ‘declared’ when one or more subsets of the capability can be deployed on operations. IOC considers the FIC elements required to deliver the subset of capability required. As illustrated in Figure 5-7, there can also be multiple IOC milestones.

FOC is ‘declared’ by the CM supported by results of OT&E and confirmation by the Delivery Group that all of the FIC have been delivered as agreed.

At FOC, the Project is closed and the Integrated Project Management Team stood down. The IPdM assumes responsibility, for the In Service and Disposal Phase. It should be noted that in the Acquisition Phase, sustainment of the capability is carried out during ‘Acceptance’ activities and between IOC and FOC. Sustainment therefore is a key activity during the Acquisition Phase until FOC and the official transition to the In-Service and Disposal Phase.

Transitioning a Product from the Acquisition to the In-Service and Disposal phase is complex and requires a purposeful, methodical and consultative approach between stakeholders. The Product Transition Plan describes how the Support System will provide the required support from the first Mission System being delivered to the end user through to delivery of the FOC including:

arrangements for scheduling and execution of transition milestones, funding triggers and arrangements, assurance strategies, and key stakeholders and authorities for acceptance and stand-up of support.

Development of the Transition Plan should commence as early as practicable after Gate 2 and be refined during the Acquisition Phase.

Figure 5-7. Transition from IOC and FOC.

5.5 IN-SERVICE AND DISPOSAL

The In-Service and Disposal phase commences when the Product or set of Products are accepted by the CM from the Delivery Group ie it commences just prior to declaration of IOC and concludes with Product retirement and/or disposal and transition to the replacement capability (if one is required).

Acceptance of the capability system by the CM from the Delivery Group is based on a range of factors including:

compliance with legislative requirements (such as environment and safety); and regulatory requirements drawn from Defence seaworthiness, airworthiness, and technical regulatory frameworks;


appropriate transition into service activities; and acceptable sustainment arrangements.

The In-Service and Disposal Phase sustains Products that form the capability throughout their operational life and subsequently withdraws the Products from service before they are disposed of or sold. It is important to note that because of the transition period, Product acquisition (through a Project/s) and sustainment occur concurrently for the period between IOC and FOC. Figure 5-8 shows the relationship between Acquisition, Sustainment, and Disposal, and the typical points at which IOC and FOC occur.

Figure 5-8. Relationship between Acquisition, Sustainment, and Disposal effort.

Product sustainment is led by the IPdM with support from the IPdMT both of which have been assigned or established during the Acquisition Phase. The basis on which the IPdM and IPdMT conducts the In-Service Phase support of capability is documented through:

PDA and MSA and associated PdS; and IPdPM (evolved from IPMP during the Acquisition Phase) which must remain

consistent with the PDA/MSA. Product Delivery Agreements (such as Materiel Sustainment Agreements (MSA)) are established between the Sponsor and Lead Delivery Group to define the agreed scope, resourcing, priorities, performance and preparedness requirements for support of a Product throughout its life. The PDA provides a formal record of agreed and shared in-service performance targets, assumptions, priorities, dependencies, resources, constraints and key performance indicators (KPIs) which provides the baseline for budget allocations and sustainment performance management and reporting. The PDA is generally supplemented by PdS which provide the basis for agreeing the inputs and outputs expected of the CM and the sustainment group.

The IPdMP is in turn developed on the basis of a Sustainment Work Breakdown Structure (SWBS) developed by CASG to provide a consistent approach to product planning throughout CASG; greater consistency in sustainment terminology and management approach; and clarification of sustainment roles, responsibilities, relationships, functions and tasks. An initial suitable SWBS should be developed as part of the acquisition process to inform early product planning and be continually revised in service as requirements and circumstances change.

CASG as the primary sustainment organisation is required to do the following: sustains capability to the level as directed and resourced by the CM; seeks opportunities to optimise sustainment outcomes for the CM; and disposes of materiel elements of the capability.

5.5.1 In-Service Business Cycle

The focus for Product Management during the In-Service and Disposal Phase is on sustainment of the capability. Therefore, the focus of planning, budgeting, and reporting during the In-Service Phase is on delivering against sustainment commitments as captured in the PDA/MSA. In contrast to previous


CLC Phases, performance in-service is not based on scheduled milestones rather it is largely based on capability performance levels as indicated through a number of metrics. The context for the sustainment effort is an annual Business Cycle built on the annual Defence budget cycle. Post transition, the Product enters a recurring annual update cycle aligned with the Defence Management Financial Plan (DMFP) budget processes. Product agreements are typically established prior to the acceptance into service of the first new platform or mission system (such as aircraft, ship, vehicle or radar), and must be in place to support the CM declaration of IOC and FOC. To ensure alignment between allocated resources and agreed performance levels, the delivery agreement (PDA/MSA) is reviewed and updated at least annually, in alignment with the DMFP cycle. Urgent amendments to product delivery agreements may also be processed throughout the year in response to environmental changes, and to manage emergent risks.

Product managers, in consultation with their SPO Directors and CM sponsors, are responsible for managing the annual updates to their respective delivery agreements and budget estimates. This includes developing sustainment plans, work schedules and cost estimates, managing risks and emergent changes that may impact sustainment costs or performance; communicating impacts and opportunities to stakeholders; and where necessary, working with the product sponsor to recommend optimal cost-capability trade-offs.

In-service planning is focused on those activities associated with meeting specified preparedness requirements throughout the planned life of the materiel system at minimised life-cycle cost. As a result, through-life support planning focuses on supportability as an asset ages e.g. physical deterioration effects, supportability impacts, purchase of long-lead items, equipment obsolescence, and even mid-life upgrades – all of which impact on capability and cost.

The context, considerations and outcome of this planning should be recorded in an Integrated Product Management Plan (IPdMP) (sometimes referred to as the Sustainment Product Asset Management Plan (SPAMP)). The IPdMP is a Product-level document that describes the activities required to sustain a Product. It is developed by the IPdM in close consultation with the Product Sponsor. It describes the means by which the sustainment group continues to deliver the FIC during the in-service phase, to meet capability requirements and Product Management processes.

5.5.2 Projects during the In-Service Phase

As depicted in Figure 5-5 the In-Service and Disposal Phase may require a project activity, a new Product phase, to conduct a major system upgrade or refit. In this event the Project construct and Project Management principles we have discussed earlier can be applied tailored to the circumstances including:

Project Sponsor appointed; IPM appointed; IPMT established; and development of such artefacts as requirements, plans, and procurement documents.

Figure 5-5. A Project to upgrade a Product.


6 CLC DOCUMENTS AND ARTEFACTS

6.1 INTRODUCTION

Earlier we discussed the frameworks that enable the CLC process to operate—Force Design, Contestability, Smart Buyer, the CLC Management Layers, and the Accountability Model. For reasons of good governance and management it is vital that analyses, designs, proposals, decisions are captured and recorded in a structured and rigorous manner. Therefore, also key to making the CLC process work are the CLC Artefacts and Documents. We make the point of using the term artefacts because information may be captured in ways that are not document-based such as system architectures captured in a data environment and systems descriptions captured in functional flow block diagrams.

Figure 6-1 provides a view of the relationships among CLC documents and artefacts which describe what is to be acquired and why (left-hand side of diagram) and the documents and artefacts which drive and describe how the capability is to be acquired (right-hand side of the diagram).

DWP

FOE FJOC

AMS

AJOC

What and Why How

PGPA Act

CPRsForce Design

CPN

JCN

IIP

DIP

DPPM

Raised within Force Design as Program-level direction

PIOCProgram Strategy

PESJCNS

Smart Buyer

OCD

FPS

IPMPProjectWBS

IMS

Tender and Contract Documents

Selected ASDEFCON Suite

DPG

JCFConcepts

Strategic Guidance

Proposal = Sponsor’s Paper+JCNS+PES

Portfolio

Program

Project

Figure 6-1. CLC documents and artefacts.

An important principle in the development of CLC documents and artefacts is that there must be clear evidence of traceability to government direction on the use of public resources. Therefore, as each approval and decision is made through the CLC, subsequent CLC efforts must be clearly consistent with that direction. Should there be a need to deviate from that direction, formal approval must be sought. In summary, CLC documents and artefacts provide: a basis for decision making, a basis for agreement; and evidence for management and assurance (including traceability to government approvals).

This chapter focuses on the key documents and artefacts that have been introduced as part of the CLC. These documents and artefacts can be divided into two broad categories corresponding to the CLC management layers: Program and Project/Product.

The following assumes that the Project/Product-level documents and artefacts will be used for an individual proposal progressing through the CLC process. In the future, there is an expectation that


Programs will also be able to progress through the CLC for approval however the following discussion assumes that the Program-level is largely used as an important linkage between strategic guidance and CLC proposals and as a management construct for related Projects and Products.

6.2 PROGRAM-LEVEL DOCUMENTS AND ARTEFACTS

We discussed earlier the value of Programs to supporting efficiencies and the achievement of joint or integrated and interoperable capability. Essentially the Program layer helps define the relationships between capability systems (in Project and Product terms) which enables understanding of their operational, technical and managerial interdependencies. As a result, Program documents and artefacts provide an essential common reference for the Projects and Products within a Program. As illustrated in Figure 6-3, the key Program documents and artefacts are: CPN, PIOC, and Program Strategy.

DWP

FOE FJOC

AMS

AJOC

What and Why How

PGPA Act

CPRsForce Design

CPN

JCN

IIP

DIP

DPPM



PESJCNS

Smart Buyer

OCD

FPS

IPMPProjectWBS

IMS



DPG

JCFConcepts

Strategic Guidance


Portfolio

Program

Project

Figure 6-2. CLC documents and artefacts.

Before we look at each of these in detail, it is useful to consider their role in relation to the Project and Product documents and artefacts, as illustrated in Figure 6-3.

As discussed in Chapter 4 on Management Layers, Defence has currently divided the capability Investment Portfolio into 40 Programs. A Programs is made up of a group of Projects and Products which have a relationship and benefit from being managed under a single authority—the Program Sponsor. As depicted in Figure 6-3, three key Program-level documents and artefacts—CPN, Program Strategy, and PIOC provide an overarching reference for constituent Projects and Products.

The common reference information contained in these Program documents spans a number of dimensions: operational interdependencies between the relevant capability systems; technical requirements and design aspects to realise these operational interdependencies; and implementation or management relationships such as information to be exchanged between Projects and coordination and scheduling requirements as Projects progress.


Defence Strategic and Operational GuidanceDWP, DPG, AMS, AJOC, FJOC

Program 1

Program Integrating Operational Concept (PIOC)Program Strategy

Capability Program Narrative (CPN)

Project 1

FPSs

TCD

PES1/IPMP1

JCN1/JCNS 1

PES2/IPMP2

JCN2/JCNS 2

PES3/IPMP3

JCN3/JCNS 3

Project 2 Product 3

FPSs

TCD

OCD 3

FPSs

TCD

OCD 1 OCD 2

Figure 6-3. Program-level documents and artefacts

This approach has two important benefits from a document and artefacts perspective: Efficiency: Each subordinate artefact (for a Project or Product) leverages the parent

artefact so that only the essential ‘delta’ is developed. Alignment: Related Projects and Products reference common program information to

enable aligned and, where required, joint force outcomes. A documented common reference provides a strong basis for the Program Sponsor to undertake oversight, monitoring, and decision-making including reconciliation of issues between constituent Projects, Product and activities. Using the CPN, the Program Sponsor can clearly define shared objectives across Projects/Products and identifies and manage risks relevant to Program objectives. Through the CLC Accountability Model, the Program Sponsor has the authority to establish and mandate the use of and adherence to this common reference information applicable to all constituent systems.

6.2.1 Capability Program Narrative (CPN)

The CPN is raised by Force Design Division and made available to the relevant CM and Program Sponsors. CPNs have been developed for all Programs in the IIP matrix. As mentioned earlier the Program represents an enduring ADF operational capability that will be present in the ADF into the future. However, the way in which this is delivered can change as technology and capability solutions improve and current systems are retired resulting in the constituent elements of the Program being replaced. For this reason, the CPN explains ‘what’ and ‘why’ but not the ‘how’ because the ‘how’ will actually change over time. Rather than specifying the systems within the Program it will generally provide concepts, requirements, and rationale. So, the CPN will describe the operational outcomes and the operational concepts that are expected to be delivered through the combined effects of the constituent capability systems without identifying the constituent capability systems.

The CPN is raised by Force Design to provide Program-level direction. The CPN distils concepts and requirements to provide the CM and Program sponsor with a synopsis of:

the operational environment, joint force needs, constraints, governance, and sustainment arrangements and priorities where relevant.


Since the introduction of the Program layer as part of the CLC, the CPN is a key element providing traceability from strategic guidance through to individual Projects and Products. In effect the CPN distils strategic guidance to define what actually has to be achieved by the capability so as to provide a clear reference from which to derive further detail for constituent Projects and Products. Therefore, the CPN should be expressed in a way that clearly indicates the resulting capability effect in actionable deliverable terms that the Program Sponsor can progress. The CPN should also specify the Program’s governance arrangements and priorities. Finally, Contestability Division will review CPNs for strategic fit—that is, to confirm that the distillation of strategic guidance has been sound.

6.2.2 Program Integrating Operational Concept (PIOC)

The purpose of the PIOC is to detail operational and technical interdependencies among the group of capability systems so as to enable joint force outcomes. The PIOC provides a common reference for Sponsors and Managers of constituent Projects and Products to ensure that their efforts and the attributes of the systems are consistent and aligned. The PIOC will be developed and controlled by the Program Sponsor and requires endorsement from the JFA. The intent of the PIOC is to:

provide a primary co-ordination document to manage intra and inter-Program linkages; provide uniform design guidance to constituent and related Programs, Projects, and

Products; and reduce the level of detail required in documentation.

The PIOC uses the CPN and a range of integration and interoperability information drawn from the I2F (as discussed in Chapter 3) to detail capability integrating concepts, needs and objectives and to specify design direction for constituent Projects and Products. This includes compliance with a Defence document called the Integrating Operational Concept and any joint force directives issued by the Joint Force Authority.

PIOCs also draw on and can include content from what is referred to as architectures which are typically a computer-based tool capture of the different features and perspectives of a complex design. Architectures in Defence have been developed using the appropriate standard of architecture format such as the Defence Architecture Frameworks (DAF). In Defence, the C4ISR Design Authority and CIOG are responsible for defining architectural content in the form of Operational and Technical Design Patterns (ODPs and TDPs). These design patterns represent a common reference to be used by capability systems developers across Defence to specify their I2 requirements as included in the CLC requirements documents. Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance aspects of the architecture are pivotal to designing a joint force based on information-based integrated and networked capability.

PIOCs are very much a Program design artefact for related Programs, Products and Projects which in large part is expected to enable the definition and delivery of joint force outcomes. PIOCs should provide design guidance in the form of:

the Program's needs derived from relevant operational scenarios; Program-level operational architectures, as derived from joint war fighting architectures

developed by the C4ISR Design Authority; relevant non-materiel standards to be adopted across the Program; and detail on capability integrating concepts, needs and objectives.

In pursuit of greater efficiencies (both in time and cost), the CLC re-design also looked to improvements in developing documentation. Program-level documentation not only provides common reference information which enables alignment between Project and Product efforts, but it also enables significant efficiencies through less development effort for Project and Product documentation. The efficiency benefits of using Program-level artefacts and documents are particularly evident arising from the PIOC. For example, in that past individual yet related Projects have typically developed their own (and frequently different) view of the operational and technical context, needs and requirements. As illustrated in Figure 6-4, by providing a common reference of


operational and technical needs and requirements at the Program-level, individual Projects can readily use this information rather than create their own. By leveraging off the PIOC, all that is expected is the Projects conduct the necessary analysis and develop the content that applies specifically to their Project (the necessary delta). As represented in Figure 6-4, savings are made particularly in requirements development namely in relation to drafting the OCD and FPS.

6.2.3 Program Strategy (PS)

The Program Strategy (PS) is developed by the Program Sponsor to describe how the Program outcomes as articulated in the CPN will be achieved. It is the primary document that defines the intent for leading, managing and developing capabilities to satisfy Program outcomes. The PS also helps the Program Sponsor coordinate the activities of the CM, Delivery and Enabling Groups for Proposals, Projects and Products that make up the Program.

Because of the changing circumstances inherent in capability development (such as delays in Projects or changing threats) the Program Sponsor must maintain awareness of risks and issues that may impact the Program. PS are therefore to be periodically reviewed by the Program Sponsor to identify and mitigate risk while Contestability Division may be directed to conduct a Program review if necessary. Through such awareness of changing risks and issues, capability gaps and opportunities can be recognised and then provided to Force Design Division for inclusion in their analysis.

Defence Strategic and Operational GuidanceDWP, DPG, AMS, AJOC, FJOC, etc

Program 1 Program 2 Program n

PIOC PIOC

Program StrategyProgram Sponsor

PIOC

Capability Stream 1 Capability Stream 6Capability Manager

ProjectProject Sponsor

Integrated Project Manager (IPM) uses Requirements SME from Engineering COE with support from IPT

OCD(min)

FPS(min)

TEMP(min)

IPMP

Program Strategy Program Strategy

…

All artefacts shall satisfy the CLC expectation of sufficiency.

That is, each subordinate artefact leverages the parent artefact and other information so that only the essential ‘delta’ is developed.

…

Figure 6-4. Program-level requirements aid efficiency.

PS are expected to contain a wide range of information equivalent in many ways to managing a Project including:

How the Program is aligned to CPN, Capability Stream requirements and Defence strategic direction.

An integrated planning view of the Projects and Products within the Program, including FIC.

How the Program will develop, deliver, transition and sustain agreed capabilities. Coordination of sustainment for all Products to maximise the aggregate of capability

output across the Program. Program-level industry opportunities and constraints. Governance, Assurance, Risk Management, and Performance Management

arrangements and forums.


The PS is expected to identify all constituent Proposals, Projects, Products and activities and their relationships/dependencies across operational, technical and programmatic aspects including:

schedule and delivery milestones; activities (e.g. interface definition); resourcing including budget and workforce; FIC elements; and linkages and critical dependencies with other Programs (including enablers) across all

FIC elements. [18]

6.3 PROPOSAL ARTEFACTS

This section will describe the key CLC documents that would typically be submitted as part of a CLC Proposal presented to each of the CLC Gates and then used as the basis for Project implementation. The relevant documents are the JCN, JNCS, PES, and the IPMP as shown in Figure 6-5.

DWP

FOE FJOC

AMS

AJOC

What and Why How

PGPA Act

CPRsForce Design

CPN

JCN

IIP

DIP

DPPM



PESJCNS

Smart Buyer

OCD

FPS

IPMPProjectWBS

IMS



DPG

JCFConcepts

Strategic Guidance


Portfolio

Program

Project

Figure 6-5. Proposal-level artefacts.

6.3.1 Joint Capability Narrative (JCN)

The JCN is developed by Force Design Division when, through their analysis and/or as indicated from a CM, a capability need or enabling gap or opportunity is identified for which a capability investment may be required. As illustrated in Figure 6-6, the primary uses of the JCN is to task the appropriate CM to develop a more detailed statement of the capability need, and provide the rationale for an investment proposal.


The JCN is expected to contain the following information: a conceptual framework for a defined gap or opportunity; defined gaps, risks, issues or opportunities; joint force needs; time, resource constraints and strategic considerations; and may also propose broad options.

While the JCN may be provided directly to the CM for development into a JCNS, if risk, cost or complexity is of concern then it may be presented to the Joint Warfare Council (JWC) for consideration.

Figure 6-6. JCN Pathway.

6.3.2 Joint Capability Need Statement (JCNS)

Following referral of the JCN to the appropriate CM, a more detailed statement of capability need or enabling gap or opportunity is developed in the form of a JCNS. The JCNS is generally developed by the Program Sponsor nominated by the assigned CM. The JCNS includes the following information:

a high-level statement of an identified and bounded capability need: o linked to strategic guidance (usually the JCN); o linked to Program objectives (using the CPN); o described as a hierarchical structure of objectives including FIC;

available option sets which could satisfy the capability gap; CM’s approach to meeting the problem posed by the JCN; scheduling factors including IOC and FOC; contribution to joint capability with FIC integration issues highlighted and

interdependencies defined; and risk and issues.

To ensure understanding of the complex context (such as joint integration factors) and to provide reliable traceability with strategic guidance (including the initiating JCN where provided), a structured systems approach should be used to ensure:

clear traceability to the JCN and CPN, structured and rigorous derivation and prioritisation of needs, recognition of interdependencies (such as use of SoS), and clear bounding of the solution space to reflect the capability gap or opportunity.

6.3.3 Project Execution Strategy (PES)

The PES is a high-level, risk based tailored strategy which informs capability investment decisions at each CLC Gate and, when approved, provides the basis for more detailed implementation planning and Project execution (including as a common reference for FIC providers).


As we have seen in Chapter 3, the PES is developed by the Lead Delivery Group in close consultation with the CM using Smart Buyer principles and development approach including a series of Smart Buyer workshops. The PES is tailored in accordance with key risks, complexity, context and other factors affecting the whole Product life cycle(including acquisition and sustainment). At the working level, the PES is developed by the IPM in close consultation with the Project Sponsor and members of the IPMT.

The PES is first developed prior to Gate 0 and evolves after that, remaining relevant until Project closure. Gate 0 approval constitutes formal endorsement of the PES and the elements contained within it after which it is reviewed and revalidated at each subsequent CLC approval.

Also, as seen in Chapter 3, the PES is made up of four individual strategies reflecting critical areas of Project implementation. Although it is not to adhere to a specific template, key discussion areas for the PES could include the following:

Project Summary: background including relationship between this proposal and other Projects or Products.

Project Factors: key risks, drivers and other factors that shape the PES such as Planned Withdrawal Date (PWD) of current assets and Defence workforce.

Approval Strategy: with respect to Gates and Government approvals. Acquisition Strategy: describes the alternatives and rationale for the preferred strategy

including considerations such as system development factors; costs of tendering for industry and Commonwealth; extant source selection outcomes for similar systems; Australian industry participation; and competitive environment and leverage for the Commonwealth.

Sustainment Strategy: describes the Sustainment Strategy alternatives and areas of consideration such as: industry and sovereign capability factors; preparedness requirements; cost and budget limitations; engineering support; maintenance support; supply support; and training support.

Project Management Strategy: includes: o Key information gathering activities (including risk mitigation activities). o Resources (including enabling budget for delivery groups). o FIC integration approach o Governance bodies (such as Project Board), roles and responsibilities. and o IPMT and Project Office arrangements

6.3.4 Integrated Project Management Plan (IPMP)

The IPMP is derived from the PES and represents the detailed plan to introduce the capability into service. The IPMP is first drafted by the IPM and IPMT before Gate 0 evolving into the IPdMP as the capability approaches introduction into service and transitions to Product Management.

The IPMP provides a description of activities (including sequencing and dependencies) and resources needed to implement the PES. Importantly it is valuable common reference which enables shared understanding and coordination by stakeholders including:

Sponsor and representatives. FIC Providers. CASG Line Management. Project Office staff.

The IPMP details activities and resources needed to satisfy the selected strategy documented in the PES. By doing so the IPMP helps demonstrate that the PES can be implemented within budget, schedule, quality and risk and that the risks are manageable and acceptable. An important part of the IPMP is the Integrated Master Schedule (IMS) which lays out the schedule for all FIC. The IPMP also provides the basis for subordinate plans such as the Systems Engineering Management Plan (SEMP).


Content expected to be documented in the IPMP includes but is not limited to the following: IPMT arrangements including tempo of meetings and governance and escalation

provisions; clear identification of FIC providers; dependencies between these providers and their activities; clear definition of milestones reflected in the IMS against which each FIC provider can

report; reporting requirements; and planning guidance for each of the specialist areas including: Project Management,

Engineering, Sustainment, Commercial, Transition into Service, and Project Office Management


7 CAPABILITY MANAGEMENT PRACTICES

7.1 INTRODUCTION

This chapter provides an introduction to capability management practices required as a part of the underpinning ‘toolkit’ for undertaking activities and developing artefacts across the CLC. Understanding capability management practices will enable Sponsors and Managers to properly analyse and appropriately tailor their activities. The principal practices we review in this chapter are:

Program, Product and Project Management. Systems Engineering. Integrated Logistics Support (ILS). Procurement and Contracting. Risk Management and Assurance.

Applied throughout the CLC at different levels of intensity and

depth depending on the phase and the nature of the effortAssurance and Risk Management

ILS

Procurement and Contracting

Systems Engineering

Program, Product and Project Management

Practices (‘Toolkit’)



In‐Service and Disposal

Figure 7-1. Key Capability Management Practices which support the CLC.

When understanding how each of these Practices are applied during the development of Defence capability it is important to recognise that they are each often described in terms of their respective life cycles. Whilst this can be confusing the life-cycle view depends on the ‘lens’ used by each of the practitioners to complete the work they will need to do—for example, Project Management and Systems Engineering and Procurement each has a slightly different perspective in the same life cycle.

Viewing system or capability development as comprising a number of stages helps to break up a generally long-term undertaking into discrete ‘chunks’ which enables recognisable progression towards realisation of the system or capability. Breaking up the overall activity in this way also helps to understand the purpose and expected outcomes of each stage (which defines the actions to be performed and managed) and then to be able to recognise when the stage is complete with a possible change in responsibility.

With these benefits in mind, the remainder of this introduction to Chapter 7 addresses the generic life cycle view of a number of the Practices (see Figure 7-2) and how they generally relate to the CLC before we look at each of the Practices themselves.

If we start with the CLC construct we have seen that there are four phases that reflect Defence capability management: from recognition that a capability need exists (at the point of a JCN being issued to a CM) through to its retirement or disposal. In accordance with the CLC construct, a Project is the finite activity which delivers that system, or in the language of the CLC, the Product. Defence


uses the PMBOK view of a Project life cycle which comprises its own set of project management stages.

Although not specified in terms of phases the Defence Product life cycle follows Asset Management principles, which adopts a whole-of-life view of the Product for which the acquisition or Project realises the Product. This perspective helps recognise that Product Management effort extends from the earliest stages of the CLC and does not just start at introduction of a Product into service at which sustainment effort is initiated

As the Defence CLC and capability is largely based on the production and use of engineered systems, it is appropriate to reflect the Systems Engineering life cycle in relation to the CLC to guide practitioners in the systems engineering effort which extends to system retirement. This view helps understand the SE activities which need to take place.

Finally, Defence has defined the Procurement life cycle which is a useful view of the required sequence of procurement activity which can be applied to the CLC’s main Project activity as well as within the phases of the CLC.

AcquisitionStrategy and Concepts



Capability Life Cycle

Acquisition Utilization RetirementPre-acquisition

System Engineering Life Cycle

Procurement Life Cycle

Project Lifecycle

Sustainment Disposal Te

rmin

ate

Product Life Cycle

Sourcing Planning Managing

ImplementDevelopConceive

Figure 7-2. Life-cycle views of CLC Practices.

7.2 PROGRAM MANAGEMENT

The primary goal of the CLC is to deliver capability that enables the ADF to conduct its operations. Increasingly these operations rely on capability systems that work together to deliver improved military outcomes. This means that the capability of each system and their exchange of information and other resources must be deliberately ‘designed’ to achieve the best warfighting effect. Indeed, a key expectation arising from the FPR and CLC is to create a ‘joint force by design’—that is, identifying systems and how they operate together early in the CLC so that as a group they can be defined, designed, developed, delivered and supported to achieve the operational outcomes. Defence now conducts capability development that explicitly recognises joint force outcomes involving early and ongoing efforts to deliver interdependent systems. Programs provide the management and governance environment to support this.

A Program can be defined as “a group of related projects managed in a coordinated manner to obtain benefits not available from managing them individually” [19]. In the CLC, a Program is a group of related Projects, Products and activities which contribute to an overarching Defence objective managed as a group to benefit Defence capability outcomes. Program objectives in the Defence context generally support two types of outcomes: operational outcomes, such as joint capability; or efficiency and effectiveness outcomes through resource commonality—that is, common systems or resources such as fuels which benefit from being acquired, sustained or managed


collectively. While managed as a group to pursue these Program objectives, constituent Products, Projects and activities will generally also be managed individually. Furthermore it is mostly the case that they will each be at different phases of the CLC—for example, some in Strategy and Concepts Phase, others in Risk Mitigation and Requirements Setting Phase while others are in-service Products.

The Practice of Program Management is the “application of knowledge, skills, tools and techniques to meet program requirements” [20]. Application of Program Management is important in the CLC for the following reasons:

managing appropriate groupings of Projects, Products, and activities is often the only feasible way to identify and achieve shared objectives;

it is how Defence joint capability will be achieved; and it enables significant efficiencies in a resource constrained environment.

As discussed in Chapter 3, CLC Programs are generally defined by capability outcomes and are managed by Program Sponsors on behalf of the CM. However, the practice of Program Management also applies to the Supplier or Delivery Group who manages groups of related Projects and Products for reasons of efficiency or effectiveness. For the purposes of this discussion we will distinguish between ‘Capability Programs’ as managed by a Program Sponsor and ‘Delivery Programs’ as managed by a Program Manager in the Delivery Group/s. As we have seen, the Capability Programs provide benefit through coordinating related Projects, Products, and activities which deliver joint capability outcomes. ‘Delivery Programs’ provide benefit through coordinating Projects and Products which share common technologies or deliver efficiencies through aligned or shared acquisition and sustainment. It is important to recognise that in Defence that while Capability Programs and Delivery Programs may be the same groupings of Projects, Products, and activities, in many cases they will not be the same. The key is to define those that are related and apply Program Management practices as appropriate. Whether Program Management is being applied in Customer or Supplier organisation it is essentially coordination and management of related efforts and their interdependencies. Although Program Management as a practice is yet to fully developed in Defence, the following discussion may be helpful in either context.

To facilitate Defence Program Management, Program relationships can be viewed as comprising four layers of interdependency and therefore aspects that require deliberate management: Operational, Function and Performance, Technical, and Management.

The rationale for constructing interdependencies in these layers is as follows. The key benefit of the joint force is that it can deliver operational outcomes that are greater than the individual systems operating separately. So, for example joint warfare relies on sensors (such as radars) communicating with systems that can process the target information (such as battle management system (BMS)) to provide information inputs (such as target coordinates), to an “effector” (such as a missile). For a joint capability this is achieved by defining the operational interactions between the constituent systems (radar, BMS and missile). This is sometimes called the Concept of Operations (CONOPS), which can then be analysed to identify the operational interdependencies between these systems and then the specific functions that each system performs and associated performance of each system so that the required interaction can take place.

These functional and performance attributes provide the basis to define the technical attributes of each system that enables the CONOPS and therefore joint force outcomes to be achieved. In this example and indeed many Programs, the technical features of the constituent systems must support integration and interoperability which is only possible through carefully defined and designed interfaces and system functionality. With this understanding, the interdependencies between CLC activities and decisions that define, design, acquire and sustain the individual constituent systems becomes clear.

To ensure the necessary integration and interoperability to meet operational outcomes, the technical details of systems must be shared and decided at specific times in each of the systems’ life cycles so that the interfaces can be agreed and designed at the appropriate time. These technical details includes system requirements and system interface requirements including standards their versions and tailoring. It is important to recognise that achieving integration after systems have been delivered is always costly and not always possible.


As a result of the above, each of the Project Sponsors and Managers (responsible for delivering related systems) and the Product Sponsors and Managers (who manage these systems while in-service) must coordinate and synchronise their efforts. Program Management must ensure:

oversight of the timing and coordination of Project and Product activities ; ensuring the exchange of critical information on interdependencies; Program-level decisions about:

o synchronising efforts o design attributes including interface definition

providing authority, escalation and arbitration arrangements to reconcile issues between constituent Projects, Product and activities where there is conflict.

Program Management must not only address planning, contracting, and assurance across the systems which deliver Program outcomes this includes management of all FIC for each of the systems. An understanding of Program Management is required by those responsible for Programs (Program Sponsors and Managers) and those who are part of a Program (Project and Product Managers).

The CLC Program construct provides the important management and governance structure that enables these actions.

The principal Program Management functions therefore include: defining shared objectives applicable to constituent Projects, Product and activities; providing appropriate governance arrangements including, clear decision-making and

escalation structures; establishing common business and technical requirements and processes applicable to

all constituents of the Program; and identifying and manage risks relevant to achieving Program objectives.

Key Program Management actions are to: Define: Intra- and inter- Program interdependencies including operational; function

performance and verification; technical requirements; and programmatic. Plan: Coordinate decisions (including design and acquisition decisions), milestones, and

schedules. Govern and Assure: Set up appropriate management arrangements (eg Program Steering

Group, interface control working groups) to monitor, adjust and report. Manage Risk: Identify, assess and mitigate risks (and identify opportunities) for

Programs across Projects and Products. Manage Resources: Manage resources across the constituent Projects, Products, and

activities. As part of the CLC Program construct, key enablers for Program Management include:

CPN and JCN: narratives on the expected operational effects of the group of capability systems.

PIOC: more detailed description of operational relationships between capability systems both within the Program and with other Programs.

PS: description of the activities, management arrangements, including integrated schedule across Projects and Products.

Program Architectures: detailed representations of Program features using Defence Architecture Framework (DAF) conventions.

I2F including I2 Reference Set: I2-focused guidance and requirements to achieve Joint Force outcomes.

Program and Materiel Standards Governance Fora: Intra and inter-Program governance bodies—such as Project Management Stakeholder Group (PMSG) and working groups.


7.2.1 System-of-Systems (SoS) Engineering

There are three types of ways in which systems can be grouped [21]: Portfolio-of-systems (PoS). A PoS is a collection of systems managed jointly with a unified

budget to fulfil one or more missions (that may not be related). Member systems interact to share (compete for) resources.

System-of-systems (SoS). A SoS is a collection of independent systems that interact for a common purpose. The constituent systems of an SoS are loosely coupled and, since they are independent and can join or leave the SoS over time, have been optimised for their own purpose before joining the SoS. An individual system may be a member of more than one SoS.

Family-of-systems (FoS). A collection of systems (also commonly called a called a product line) that are grouped because they are jointly designed, developed, and manufactured even though they may not interact in operations.

The above example for Program Management is for a SoS in which several systems operate together to deliver a capability outcome which is more effective than if each system had operated individually. This type of networked capability is increasingly important for the ADF to maintain a capability edge. Indeed, in the Defence context there are very situations where systems operate in a standalone sense—that is, there is an increasing level of interdependency between systems either in terms of exchange of information or exchange of other resources example logistics support. While Defence has previously focused on Projects which deliver the individual capability systems, there is increasing recognition that these systems are in fact components of larger systems comprising multiple systems—that is, SoS.

With the focus on the engineering aspects of capability development, Systems Engineering is an established practice for system definition, design, development and realisation. In relation to the SoS situation above, SoS Engineering is an emerging practice to provide a structured engineering approach to the complex challenges of defining, designing and developing systems with significant interdependencies.

It is apparent that both Program Management and SoS Engineering are concerned with addressing the same context of multiple related systems which have a common objective such as joint capability. For this reason, just as Systems Engineering is central to the engineering aspects of Defence Projects, SoS Engineering can provide a structured engineering approach to aspects of Program Management where the objective is to:

optimise the outcomes delivered through the new systems (Projects) and legacy (Products) which together satisfy the Program objectives;

provide a deliberately managed approach to the definition, design and delivery of systems in a Program across Projects and Products; and

enable decision-makers to make informed decisions on Program design, such as architectural solutions, conduct trade-off analyses for system parameters and costs.

The US DOD has been pivotal in developing SoS Engineering as a Practice. There is a view that failure to recognize a SoS situation early in capability development and throughout the capability life cycle will compromise the successful fielding of integrated military systems. Indeed the SoS VEE model developed out of US DoD work provides a more structured approach to what is referred to as the socio-technical aspects of integrating people, processes, and products associated with the related systems. Deliberately recognizing and managing the requirements, design, and delivery of related capability systems will support more informed decision-making in an inherently complex environment. A key aspect of applying SoS Engineering is to recognise the particular type of SoS which is involved and then adapting the SoS approach to suit. A generally held taxonomy for SoS is based on four categories: Directed, Acknowledged, Collaborative, and Virtual. The Systems Engineering BOK and US DoD publications on the US DOD acquisition website are good places to start to become more acquainted with the use of SoS and using it in the Defence context.


7.2.2 SoS Architectures

Also useful for a Program or SoS situation are ‘architectures’ which define “… the structure of components, their relationships, and the principles and guidelines governing their design evolution over time” [22]. The application of architectures for SoS is directly applicable to CLC Programs since SoS (and therefore Program) architectures provide:

details on how constituent systems will be used (CONOPS); internal and external operational, functional and technical relationships and

dependencies among the constituent systems; and end-to-end functionality and flows of information and data (and other resources). [23]

In the Defence Program context architectures can provide a common and enduring reference for not only the Program Sponsor and Manager but also those that need to use the Program as the umbrella reference for constituent activities. Similarly as changes are made to constituent system features these can be made accessible to those that are affected because of the interdependencies. The Program management layer introduced through the CLC provides the basis for the necessary governance structures to configuration manage such architectures and engage effectively across stakeholders.

Numerous references on enterprise architecture practice are available as well as Defence guidance on the application of Defence Architecture Practice as applied in the Australian Defence organisation.

7.3 PRODUCT MANAGEMENT

As we have seen in Chapter 4, a Product is a platform, equipment or commodity inclusive of all FIC that delivers a capability effect or is a Product line that contributes to Defence capability. A key feature of a Product it that its management reflects Asset Management principles in which capability development and delivery is conducted as a ‘whole of life’ endeavour requiring ‘end to end’ management from initiation through to disposal. The Product life cycle defines, delivers and uses all necessary FIC. Adopting a Product life cycle view ensures that whole life cycle aspects and all FIC elements are considered when making decisions particularly in the Strategy and Concepts and Risk Mitigation and Requirements Setting Phases of the CLC. In accordance with the Defence CLC management layers, Product Management is the ‘end to end’ management of the Product inclusive of the Project which delivers the Product. The Product Management efforts across the Product life cycle starting before Gate 0 are conducted with the purpose of achieving optimal capability outcomes which includes required sustainment outcomes during the In-Service Phase.

Product Management practice in Defence is primarily informed by ISO 55000/1/2 Asset Management [24] which defines an asset as “an item, thing or entity that has potential or actual value to an organisation”. The Asset Management Body of Knowledge (Asset Management Council) defines asset management as: “The life cycle management of physical assets to achieve the stated outputs of the enterprise”. Both are highly relevant to the Defence in which capability assets or Products deliver military capability.

The international standard on Asset Management AS ISO 55002: 2014 states that its implementation is based on four fundamentals: value; alignment; leadership; and compliance and Assurance.

The application of these principles to Product Management as part of the CLC is proposed as follows:

1. Value is focused on optimising the value of assets through actions including clearly tying asset management objectives to organisational objectives across the life cycle. Consistent with this view and in order to achieve Defence objectives, Product Management seeks to optimise the balancing of through-life costs, opportunities and risks against Product performance. Therefore, to optimise the value of an asset to Defence, there must be a clear outcome focus ie the focus of all asset management actions is to satisfy Defence organisational objectives as captured in Defence strategy, policy and planning documents including the Defence White Paper, IIP, Defence Industry Policy.


2. Alignment ensures that decisions, plans and activities enable achievement of organisational objectives. The CLC adopts an end-to-end whole-of-life view in which planning, delivery, sustainment and disposal functions for a Product follow a process which progressively develops a capability solution that meets defined Defence organisational outcomes. Consistent with the Asset Management fundamental of Alignment, all Product life cycle activities must be focused on and traceable to delivering the best value for these Defence outcomes.

3. Leadership ISO55000 states that leadership and workplace culture are determinants in realising value. It also states that leadership and commitment from all managerial levels is essential for successfully establishing, operating and improving asset management within the organisation. Leadership and commitment is to be based on: clear roles, responsibilities and accountability; practitioners that are aware, competent and empowered; and consultation with stakeholders and practitioners. So consistent with Asset Management principles, Defence has established the CLC Accountability Model which is structured in terms of CLC management layers, clear roles and responsibilities, and partnerships between counterparts.

4. Compliance and Assurance A fundamental aspect of Asset Management and therefore Product Management is assurance that assets will fulfil their required purpose and supports organisational objectives—that is, confirmation that the assets deliver the value required from them. Sound Product Management therefore requires assurance of: CLC progress and outcomes across the Product life cycle, and purpose and performance of the Product meets Defence needs and requirements,

As we have seen earlier the CLC Product life cycle commences before Gate 0. Prior to Gate 0 a Project comprising leadership and elements of a Project team are established which then concludes with delivery of the Product/s at the end of the CLC Acquisition Phase. The Project is the focus of most effort prior to conclusion of the Acquisition Phase. The Product is then introduced into service and sustained then retired or disposed.

Prior to FPR and the CLC re-design, it is likely that many considered the focus of asset management was in-service sustainment effort. One of the most important changes as a result of the post-FPR CLC, is that asset management and therefore Product Management effort is expected to be applied across the Product life cycle starting prior to Gate 0 and throughout the Product life cycle. The significance of this change is clear consideration of whole of life factors from the earliest stages of the CLC.

While Product Management roles are applied across the CLC, Product Management leadership and influence is particularly impactful in the early phases when key decisions on Project and Product strategies and plans are being made and important relationships established. The close cooperation of the Product Sponsor, the Project Manager and Product Management representative is integral to the decisions made and decision support artefacts produced. This also requires appropriate asset, Product, and sustainment management expertise to be consulted to support Project activities including application of the Smart Buyer framework and development of the Sustainment Strategy as part of the PES.

7.3.1 CASG Application of Product Management

Consistent with the Asset Management principles, CASG views Product Management as an integrating discipline. Accordingly, all Product Management functions and activities are to be integrated throughout the Product life cycle. The CASG view of Product Management functions is as follows:

Customer Engagement. Industry Engagement. Financial Management. Resource Management Performance Management.


Support to ADF operation. Support to Capability Development. Integration Management. Enabling Functions. Workforce management. Risk Management. Quality Management.

As we have seen earlier, Smart Buyer enables and understanding of the risk and drivers associated with sustainment effort that shapes the Sustainment Strategy in the PES. CASG also implements a Sustainment Categories Framework (SCAT) methodology for classifying the complexity of Product sustainment during the In-Service Phase. SCAT is a measure of the relative degree of complexity of a CASG sustainment product. This classification can be used to facilitate sustainment management performance reporting, gate reviews, etc, as well as its future workforce planning and professionalisation requirements. This allows appropriate management focus on CASG’s sustainment products in line with their respective levels of complexity. Sustainment Products are assessed and classified based on six sustainment attributes:

Sustainment Budget. Management Complexity. Technical Difficulty. Life Cycle Stage. Demand and Availability. Commercial.

There are four levels of complexity (SCAT I, II, II, and IV), for Sustainment Products within CASG. For new Sustainment Products the Project Manager responsible for the acquisition activity is required to propose a suitable SCAT for the Product.

7.3.2 In-Service Product Management—Sustainment

Product management covers all activities across the Product life cycle (including Project activities) which lead to and include sustainment efforts. Therefore the ‘upstream’ Product Management efforts are vital to good sustainment management later in the Product life cycle. Sustainment Management is generally viewed as the work conducted following IOC (that is, later stages of Acquisition and within the In-Service Phase) which sustains the asset or Product.

Product sustainment is led by the IPdM with support from the IPdMT both of which have been assigned or established during the Acquisition Phase. The basis on which the IPdM and IPdMT conducts the In-Service Phase support of capability is documented through:

PDA (such as MSA and associated PdS); and IPdMP (evolved from IPMP during the Acquisition Phase) which must remain

consistent with the PDA/MSA The PDA defines the agreed scope, assumptions, constraints, priorities, resources and requirements for support of a Product throughout its life. PDA are typically established prior to the acceptance into service of the first new platform or mission system (such as aircraft, ship, vehicle or radar), and must be in place to support the CM declaration of IOC and FOC.

During the In-Service Phase the PDA can be in the form of a MSA. The PDA is: established between the Sponsor and Delivery Group; supplemented by a PdS; provides the baseline for budget allocations and sustainment performance management

and reporting; and provides a formal record of:


o agreed performance targets (such as KPIs, KHIs); and o shared in-service performance targets.

When the Project is in place, performance is generally based on achieving scheduled milestones. In contrast sustainment performance levels are assessed through several metrics which are built around the annual Defence budget cycle. Therefore, after transition into Service, the Product enters a recurring annual update cycle to ensure alignment between allocated resources and agreed performance levels. The PDA/MSA is therefore reviewed and updated at least annually although urgent amendments to PDAs may also be processed throughout the year in response to environmental changes, and to manage emergent risks.

The IPdMP is in turn developed based on the SWBS established by CASG to provide: a consistent approach to Product planning; greater consistency in sustainment terminology and management approach; and clarity in sustainment roles, responsibilities, relationships, functions and tasks.

An initial suitable SWBS should be developed as part of the acquisition process to inform early product planning and be continually revised in service as requirements and circumstances change.

7.4 PROJECT MANAGEMENT

A Project is a “temporary endeavour undertaken to create a unique product, service or result” [25]. As depicted in Figure 7-3, to assist in managing projects we normally break the activities up into several phases which correspond to different types and levels of effort and produce different deliverables. The number and purpose of each of phases in a Project are tailorable to suit specific Project circumstances.

Figure 7-3. Typical Project life cycle and corresponding level of effort.

While consistent with accepted Project Management practice, the definition of a CLC Project, has a particular meaning as follows:

unique, finite, multidisciplinary and organised endeavour; means by which a Product/s is delivered; includes all FIC; and addresses the whole of Product life cycle.

In the context of the CLC process, the Project life cycle generally commences before Gate 0 (leadership and team stood up and activities commenced) and concludes at the end of the CLC Acquisition Phase. While CLC Projects are commonly thought of as the major endeavour which starts early in the CLC before Gate 0 and concludes at the end of significant capability acquisition, Projects can be established for other reasons. Projects are a scalable construct that can be introduced at any point of the CLC, such as Risk Reduction activities during the Risk Mitigation and Requirements Setting Phase and Product upgrades during the In-Service phase.


Figure 7-4. Project Life Cycle in relation to CLC and Product life cycle.

The Practice of Project Management “the application of knowledge, skills, tools and techniques to project activities to meet project requirements” [26] As depicted in Figure 7-5, Project requirements are generally described in terms of the balance required to meet customer requirements in terms of time, cost, and scope. Project management is the management effort to deliver the best balance across these requirements.

SCOPE / QUALITY

CUSTOMERSATISFACTION

TIME COST

Figure 7-5. Trading off Project customer satisfaction for time, cost and scope.

The value of Project Management as a discipline is that it provides a structured and reliable means to realise a Product with which the customer will be satisfied—that is, it is on time, within cost, and meets the required quality attributes. CASG Project Management policy and guidance follows the principles from a number of standards namely PMBOK, AS21000, ISO55000 and Managing Successful Projects (MSP). CASG policy is heavily based on ten Project Management knowledge areas from the PMBOK and it is generally expected that Project Managers hold management oversight of all these areas to achieve successful Project outcomes [26]:

Integration Management; Scope Management; Schedule Management; Cost Management; Quality Management; Resource Management; Communications Management; Risk Management; Procurement Management; and Stakeholder Management.

Defence capability is possibly one of the most demanding contexts in which to apply Project Management as the resulting Product will often involve leading edge technologies, be developmental,


involve complex requirements, extend over many years and expect satisfaction of tough quality criteria. As we have seen from the discussion on Programs above, Defence Projects generally have significant interdependencies with other Projects and Products to deliver a ‘joint force by design’ and achieve efficiencies.

A CLC Project must also take account of all FIC appropriate to that capability. This includes the mission system such as the platform and supporting systems, and everything needed for the capability to be introduced into service, used in service, and sustained.

Furthermore because of the highly technical of the systems and the complex commercial context of Defence Projects, Project Managers must ensure that the practice of Project Management integrates with other Practices especially Systems Engineering and ILS that provide the critical technical backbone of the CLC.

Consistent with ISO 55000 and PMBOK, CASG views Project Management as an ‘integrating discipline’. In the Defence CLC context this therefore requires that IPMs and other Project Management practitioners perform critical integrating functions as follows:

FIC: delivery, coordination and integration of the FIC needed to achieve the capability. Related Projects and Products: support coordination and integration of activities across

related Projects and Products to achieve joint force and efficiency outcomes. CLC Practices: utilise and integrate all CLC practices as required throughout the Project

life cycle. The key project integration artefact is the IPMP and associated Integrated Master Schedule (IMS) which helps manage the relationships between these elements.

7.4.1 Scheduling Practices

Time (or Schedule) management is a key PMBOK knowledge area and Project activity that is pivotal to successful Project Management. To effectively manage a Project the IPM relies on an accurate and up-to-date project schedule which properly reflects all Projects’ activities, the interdependencies between these activities, and reliable schedule duration estimates. Sound schedule construction is vital to good Project Management.

Given that schedule management relies on clear definition of Project activities it is dependent on another PMBOK knowledge area called Scope Management. Scope Management is focused on defining and controlling the scope of the Project which is generally captured in the WBS which details the hierarchy of Products and services that deliver the Project scope.

In the CLC context this structured approach to scope definition is particularly necessary to capture the complexity of Defence CLC Projects. The approved Project scope as documented in the OCD, VCDF direction, and knowledge of domain relevant system and work elements (such as the knowledge of necessary integration and test and evaluation effort) are used to develop the WBS. The resulting WBS provides a critical basis for capturing all work to be done and by whom across all FIC elements and FIC providers. The IPM manages the scope of the Project based on WBS elements of work assigned to responsible Project Office representatives and FIC providers including Industry. It is important to note that the term Project Work Breakdown Structure (PWBS) is often used in Defence to distinguish it from subordinate contracted effort as defined through the Contract Work Breakdown Structure/s (CWBS).

Having established the scope of work into a structured hierarchy of work elements or packages, the sequence of these packages and their interdependencies can be defined and then an estimated duration assigned to each. This provides the ability to construct a Project schedule for the entire project or in the case of the Defence CLC, the IMS which is the primary tool that the IPM will use to manage the Project and communicate Project progress and performance.

Technical disciplines or Practices provide essential inputs when constructing the WBS and IMS. This is particularly the case for Defence CLC Projects which often involve large-scale and complex engineered systems. The activities for these systems must be performed in a particular sequence that is often dictated by the systems engineering aspects of the project. For example, the activity ‘hardware/software integration’ can only be performed following the activities ‘software test


and acceptance’ and ‘hardware test and acceptance’. Sound understanding of the engineering process across definition, design, development, integration and acceptance is therefore essential to Project Management efforts. The Project Manager is assisted with the time management function by a range of tools from very capable, automated software packages to a reliance on expert judgment to predict activity duration. [27]

7.4.2 Costing Practices

Project cost management is responsible for ensuring that the project is completed within the approved budget. The first task in determining the budget, called resource planning, determines the resources required to complete the project activities. Resources include personnel, materials and equipment. Based on the resources required for each activity, the project manager can determine an estimate of the costs associated with each activity and the total cost of the entire project. Changes in the project scope will invariably impact on the cost aspects of the project—these impacts need to be monitored and reported on an ongoing basis. Tools are available to assist with cost management but a great deal of the estimation and control effort relies on expert judgment and experience. Systems engineering is also very useful in providing the input for the development of the WBS but also to provide input to cost-benefit trade-offs. [28]

7.4.2.1 Total Cost of Ownership (TCO)

‘Costings’ are essential inputs for CLC considerations and Gate proposals and decisions both internal to Defence and by Government. Good costing practice is pivotal for assessing value for money (VFM), making cost-benefit tradeoffs, and for deciding between different options. The major purpose of developing a quality cost estimate is to provide Defence and Government decision makers with the required level of confidence that the Project is affordable and is within the provisions of the IIP. Good costing practices are also essential for setting Project budgets that are reasonable and can support expected Project outcomes.

In keeping with the asset management principles, Defence requires that cost estimates for CLC Projects cover the Product’s total cost of ownership (TCO). This includes cost estimates for each of:

Acquiring the asset; such as capability development costs (including risk reduction activities), project management, system integration, contingency.

Financing (if applicable); such as stamp duty, line of credit fees. Bringing the asset into service; such as test and trials, contingency. Operating the asset over its life; such as consider electricity, fuel, consumables, lease

costs, personnel. Sustaining the asset over its life; such as maintenance, overhauls, technology refreshes,

personnel. Disposing of the asset; such as remediation and safe disposal costs.

There are three key aspects of Defence costing practice that must be addressed. The first is the inclusion of costings which reflect the acquisition of goods and services from overseas. In this case the source and amount of foreign currency, sometimes referred to as Foreign Exchange (FOREX), and its fluctuations must be captured in the cost estimate model. This enables conversion to Australian dollars utilizing the latest approved (by the Department of Finance) exchange rates. For a Defence IIP project, this quantifies the FOREX mix of the cost estimate and is recorded as part of the Project approval. Should the Australian dollar change against the foreign currencies, the project approval will be adjusted accordingly at economic update milestones, as part of the FOREX “no-win, no-loss” mechanism operated by the Department of Finance (DoF).

The second aspect relates to ‘Phasings’ of the Project costs. All components of the cost estimates must be phased according to which year the expenditure is estimated to occur, across the CLC. Therefore, the WBS and the Project schedule discussed earlier will be sued to identify when


activities and associated milestone payments will be made across the Project life cycle. The accuracy of the schedule dictates the quality of the cost estimate phasings.

The third costing consideration is referred to as ‘out-turning’. All components of the cost estimates must first be captured in current year dollars. Out-turning is undertaken to ensure that enough cash is available in future years for the Project taking account for the effect of Contract Price Indexation (CPI). The DoF therefore expects that the costings for capital projects across government are presented as ‘out-turned’ estimates for each year across the life of the Project. Various indexation regimes are available for out-turning, depending on the nature of the industry. The parameters for out-turning can be different for each of the components, depending upon which phase of the CLC is applicable. Whilst a pre-Gate 0 estimate would usually utilize DoF parameters across all components, a pre-Gate 2 estimate may utilize several parameters; such as the preferred tenderer’s indices for each of the applicable elements in their offer, US FMS Then Year parameters for FMS case component, and DoF parameters.

7.4.2.2 Cost Estimation

There are two main approaches to cost estimating—top-down and bottom-up—and there are four main estimating techniques available:

Analogy; Parametric; Engineering (Build Up); and Extrapolation from Actuals.

These approaches and techniques can be mixed and matched to build a project cost estimate. They each have different strengths and weaknesses. The choice is usually driven by the availability of data, which changes across the CLC. The top down approach commonly utilizes the Parametric and/or Analogy techniques. More than one technique can be employed, such as a parametric estimate could provide a check for an engineering (build up) based estimate.

The parametric technique uses estimates of parameters (weight, power, speed, area etc) derived from top-level requirements to develop a cost estimate for an entire system, or sub-systems. Generally used in the earlier stages of a project’s life cycle, although it can continue to be used in later stages of the life cycle for developmental elements. It can be expected that the estimates will need to be adjusted to allow for differences between the existing systems (from which the cost data was obtained) and the project—else this can be a source of considerable errors.

The analogy technique refers to comparing the cost of an item to be estimated to that of a similar item. An analogy can be done at the system, subsystem, or component level. Multiple analogies can be used at the lower WBS levels to build up to a higher level estimate. It can be expected that the estimates will need to be modified in accordance with any differences between the existing systems (from which the cost data was obtained) and the project—otherwise this can be a source of considerable errors.

The engineering approach relies on a comprehensive WBS that details the Products to be delivered by the Project. This enables a cost breakdown structure (CBS) to be developed based on all the constituent tasks and work packages. This technique is time consuming and requires data sources at the commensurate level of detail.

The extrapolation from actuals technique utilises actual costs from current projects to estimate future costs for the same items. The trend of the current data is used to extrapolate cost beyond the current date. This approach is typically employed when much of the Project costs are known. Earned value management (EVM) systems can be a valuable source of data for this technique.


7.4.2.3 Costing Considerations Across the CLC

7.4.2.3.1 Cost Growth

It has been long documented that each generation of weapons costs more, in real terms, than their predecessors [29]. The cost growth is generally driven by the required increase in capability for each new generation of military systems, resulting in increased complexity and expense. Allowance for cost growth must be made when ‘tender quality’ data is not yet available.

7.4.2.3.2 Cost Estimate Quality and Data Sources

The quality of the cost estimate is dependent upon the quality of the data. For projects where tender quality data is not yet available, parametric or analogy techniques are to be employed. Tender quality information includes, but is not limited to [30]:

information sourced from a market provider of a good or service through an RFT or similar instrument;

a draft contract-type instrument that could deliver the capability supplied in response to a formal request from Defence;

existing contract arrangements with set costs for an existing capability or service which is to extend for a further number of items or duration; and

a draft Letter of Offer and Acceptance.

7.4.2.3.3 Contingency

All cost estimates contain errors and omissions and not all assumptions underpinning the estimates will be borne out. Allowances are made for these in the form of contingency. Setting the appropriate level of contingency for a project is conducted at increasing levels of detail as the project progresses through the CLC. It requires considerable knowledge and judgement to determine both the project risks and the commensurate level of contingency. However, the overall level of project risk can be used as a sanity check against the overall level of contingency in the cost estimate. Work to conduct risk reduction activities should be included in the project WBS and hence should not be included in contingency.

Further guidance on cost estimation in Defence is available from the following: Department of Finance (DoF) Estimates Memorandum (EM) 2017/55 titled “Defence

Specific Costing Requirements For Projects In The Defence Integrated Investment Program” dated 22 November 2017. This document outlines the requirements for estimating whole-of-life costs for DIIP projects.

The CASG Cost and Schedule Estimation—12 Steps Process (available on Defence intranet) contains comprehensive guidance on how to develop a phased cost estimate (that includes the Total Cost of Ownership). It also includes guidance on the quality standards applicable at the various milestones across the CLC.

The Commonwealth Property Management Framework Resource Management Guide No. 500 dated September 2017 which contains information applicable to facilities and infrastructure projects and capability projects with considerable facilities and infrastructure elements.

7.5 SYSTEMS ENGINEERING

Defence materiel or equipment is the result of a highly sophisticated engineering endeavour. These systems are defined, developed and supported through rigorous formalised methods. Capstone


Defence policy [31] acknowledges engineering analysis and decision making as fundamental to producing and sustaining Defence materiel. It states:

“In its purest sense, engineering is the application of technical analysis and decision making processes to efficiently produce and/or sustain materiel solutions that safely satisfy the user’s requirements. The technical knowledge or solution is articulated in technical documentation, which fully describes the item for subsequent construction/manufacture/production.”

Further, DEFLOGMAN states that

“Defence is reliant upon materiel engineering and maintenance to properly define, acquire and support materiel that is fit for purpose, legislatively compliant and effective. The appropriate application of materiel engineering and maintenance processes and procedures is to provide systems and equipment that can achieve a desired operational effect, in a nominated environment, within a specified time and to sustain that effect for a designated period.”

Essentially engineering activities are central to acquiring what is needed by the ADF and ensuring that it is maintained and available for use in a safe manner. The term Materiel Engineering is used to refer to a tailored approach appropriate to the needs of military systems in the challenging operational contexts that they will face.

Perhaps more than for commercial uses, materiel engineering emphasises certain aspects of a system’s performance (such as availability, redundancy, endurance, security, and safety) which is appropriate to military application. Materiel engineering practice has been defined in Defence to be applied to the phases of the Defence capability life cycle and to meet the unique requirements of Defence capability owners. For example, it takes account of the requirements of technical regulation in the development processes, authorization of engineering organisations, and acceptance activities.

Materiel engineering is fundamental to development of Defence capability and is involved in every phase of the CLC:

up-front development of user needs including operational, test and support concepts and higher level specifications;

solicitation and evaluation of proposed design solutions (including viability of solution); and

evaluation and oversight of the development, integration, verification and validation, ongoing support and if required modifications and ultimate disposal of a materiel system.

Defence policy on Engineering [32] states that Engineering Practice in Defence incorporates and integrates a range engineering disciplines including:

Mechanical. Civil. Electrical. Aerospace. Systems Engineering. Specialist disciplines including:

o Logistic Support Analysis, o Human Engineering, o Safety Risk Engineering, and o Reliability Engineering.

The range of engineering disciplines applicable to Defence is diverse and also can be very specialized and unique to the Defence need. For example, Naval Architecture applied to military applications has additional challenges compared to commercial maritime engineering such as the ability to withstand


battle damage or have low magnetic or radar signatures to evade detection and targeting. Furthermore, none of these disciplines are applied in isolation. Many if not all of them are brought together to deliver a balanced and functional military system.

The way in which Defence approaches the integration of these disciplines is through the technical management practices of Systems Engineering. Before we look at the meaning of Systems Engineering, we should look at the definition of a system. ISO/IEC 15288 defines a system as: “a combination of interacting elements organized to achieve one or more stated purposes” [33]

Systems include: hardware, software, organisation, personnel, collective training systems, facilities, data, support, and operating procedures and organisational policies. A system delivers an operational capability, not just products. In a practical sense a Defence system typically involves a combination of hardware, software, people, processes and information or data that delivers a military outcome. Many of the systems are expected to satisfy complex and challenging performance requirements for the military user while also being available as required and readily usable by the operators.

The INCOSE Fellows have defined systems engineering as: “An interdisciplinary collaborative approach to derive, evolve, and verify a life-cycle balanced system solution which satisfies customer expectations and meets public acceptability.” [34] So, Systems Engineering as a Practice not only integrates the disciplines but provides structured technical processes that ensure complex engineering tasks can be undertaken in a deliberate way that addresses all life cycle considerations. Systems engineering is an interdisciplinary field of engineering that focuses on how to design and manage complex systems over their life cycles. It uses system thinking principles to address the many dimensions of developing complex systems including requirements engineering, reliability, logistics, coordination of teams, testing and evaluation, maintainability.

Systems Engineering in the Defence context was first seen in the US Department of Defense in the late 1940s with the initial development of missiles and missile-defence systems. It could be argued that this was the beginning of the highly complex and cross-discipline engineering problem space that needed reliable and repeatable techniques to deliver solutions. System Engineering in the Australian Department of Defence was first consistently adopted in the 1990’s as the technical management framework to support the technical aspects of capability development from requirements definition through to design and then acceptance into Service. As currently practised in Defence Systems Engineering provides the technical management framework to:

integrate engineering disciplines; provide structured processes; enable development and control of a product including:

o requirements definition, o design, o verification and validation, o maintenance and modification of a Product, and o conduct of technical investigations, reviews, and the assessment of designs,

materiel, incidents and organisations. Systems Engineering is relevant to the CLC for several reasons:

Provides a method for deriving and defining Capability System Needs and Requirements that ensures traceability from Strategic Guidance to Capability Need through to delivered system.

Supports definition of the best system development life cycle for a capability need. Integrates contributions of disciplines and specialisations that deliver and support a

capability system across the life cycle. Underpins Defence’s established technical processes from requirements definition,

system development, integration, validation and verification, test and evaluation, certification, maintenance, and disposal.


Provides method for defining and implementing I2 requirements. Provides structured assurance approach (e.g. System Review process) of capability

development from requirements definition through to acceptance into service. Supports rigorous consideration of all feasible alternatives to select the best solution. Enables structured identification of system development and technical risks to target risk

reduction. Provides the basis for defining scope of all requirements and work across the life cycle

which is basis for defining Product and Project Management efforts (including cost and schedule).

7.6 INTEGRATED LOGISTICS SUPPORT (ILS)

“The mission of Defence logistics is to generate and sustain the operational preparedness of the ADF and to support the employment of those forces to achieve a designated outcome...” [35]. In Defence, logistic support is provided in two dimensions:

Capability Support: support needed to acquire and support capabilities in-service and to ensure that capabilities meet the preparedness requirements. This includes the definition of support requirements, acquisition of capability and in-service support systems and elements necessary to support Defence operations”.

Operations Support: support needed to deploy and sustain force elements for the duration of an operation using the logistics system established in the capability support dimension. [36]

The focus of CLC effort is to develop Capability Support elements which enable the necessary Operations Support at the required level of preparedness.

A key challenge for Defence is balancing how these preparedness requirements are met while optimising whole of life costs for the Product or what is often referred to by Logistics practitioners as Life-Cycle Costs (LCC). This challenge was recognised by the US DoD when faced with availability issues and escalating whole of life support costs. The US DOD developed the practice of Integrated Logistics Support or ILS to address these issues. As stated by Blanchard and Blyler:

“ILS is a management function that provides the initial planning, funding, and controls which help to assure that the ultimate consumer (or user) will receive a system that will not only meet performance requirements, but one that can be expeditiously and economically supported throughout its programmed life cycle.” [37]

The discipline of ILS is directly relevant to the Capability Support dimension discussed above; however, of course, the consequences of ineffective ILS will result in ineffective support to operations and therefore ineffective Operational Support. [38]

The benefits of ILS stems from the fact that in-service support considerations will be deliberately and systematically factored into the requirements definition and design of a system or equipment and that all elements of logistic support are defined, planned, and acquired long before the In-Service Phase [39]. This early consideration is essential as supportability and total life-cycle costs (LCC) are increasingly driven by engineering considerations which are decided during the early stages of requirements setting and system acquisition. Indeed the basic premise of ILS is to influence design for supportability. Through ILS practices it is possible to develop a balanced solution across system performance and acquisition costs and the support system effectiveness and running costs.

In the Defence FIC context, significant ILS-related analysis and decisions are applied to the major system comprising the:

Mission System (prime equipment); and Support System required for this equipment


For a new Capability System, Defence defines the Support System as comprising five constituent capabilities:

Operating Support Capability. This capability encompasses the support elements of: operating facilities system operators, support equipment, operator manuals and technical data, operating support procedures, and operating support information systems.

Engineering Support Capability. Engineering support encompasses the support elements of: engineering facilities, engineering personnel, engineering support and test equipment, engineering technical data, engineering processes, engineering information management system, and software support.

Maintenance Support Capability. Maintenance support is the capability which includes the support elements necessary to develop, establish and integrate a maintenance support system capable of sustaining a system throughout its life. The capability comprises the elements of: maintenance facilities, maintenance personnel, maintenance support and test equipment, maintenance technical data, maintenance processes, and maintenance information management system.

Supply Support Capability. Supply support encompasses the following support elements: supply facilities, supply personnel, supply support equipment, supply technical data, supply processes, supply information management system, spares, and packaging.

Training Support Capability. The training support capability includes the support elements: training facilities training personnel, training equipment, training materials and other technical data, training processes, and training information management system.

Successful ILS is heavily reliant on a range of analytical tools and techniques supported by necessary data. The primary analytical tool of ILS is Supportability Analysis (SA) which is a process that results in defined Supportability requirements. SA addresses the inter-related issues of Mission System design, Support System development and optimising resources through a structured approach to the interaction between the engineering and ILS processes [40]. Defence expects that the principles and practices of SA are applied during all phases of the CLC to ensure that the required Supportability outcomes will be achieved.

In turn, SA is facilitated through the use of Logistics Support Analysis or LSA which is a single comprehensive analytical approach for defining logistics requirements resulting in a balance between the operational capability, cost, and logistics support throughout the life-cycle of a Materiel System. LSA is used to optimise LCC and system performance (including reliability and availability) drawing on the related analyses of Reliability, Availability, and Maintainability (RAM) and Life Cycle Costing Analysis (LCCA) [41].

As stated in a recent ANAO Report on Defence sustainment “Defence spends similar amounts each year on sustainment and the acquisition of new equipment. In 2015–16, Defence spent $6.3 billion—21 per cent of its total departmental expenditure—on the sustainment of specialist military equipment” [42]. This figure is expected to continue to trend upwards over the next five years. Given a significant proportion of the cost of a capability can be realised during sustainment, there is increasingly awareness of the importance of adequate support-related processes such as ILS, analyses such as RAM, LSA, and LCCA and access to necessary data to support these analyses.

7.7 PROCUREMENT AND CONTRACTING

Defence spends in the order of $12 billion per annum on materiel acquisition and sustainment contracts [43]. Introduction and support of Defence capability is dependent on sound procurement and contracting practices which:

maximise benefits from capability investment, provide capability which meets requirements and is on time and within budget, and reduces costs of tendering and contract management.


This section outlines the Defence procurement and contracting policy context and practices and provides a brief discussion of the Defence engagement with Industry.

7.7.1 Defence Procurement and Contracting Policy Context

When engaged in Procurement and Contracting, Defence and its officials operate in a structured environment of Commonwealth, State and Territory Legislation and Commonwealth and Defence policy [44], as seen in Figure 7-6.

Public Governance, Performance and Accountability Act 2013 (PGPA Act 2013) (+ PGPA Rule 2014)

Commonwealth Procurement Rules (CPR)

Defence Accountable Authority Instructions (AII)

Mandatory Defence Policy

Defence Procurement Policy Manual (DPPM)

CPRs Defence Directives

Defence Complex Procurement Guide

Guides and Tools

Defence Simple Procurement Process

Better Practice Guides

Contracting Handbook

Templates, tools and resources

Figure 7-6. Defence Procurement and Contracting context [45].

The Commonwealth Resource Management Framework governs how Defence uses and manages public resources. It is a framework that consists of legislation and policy of which the cornerstone is the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The PGPA Act contains provisions dealing with several aspects of procurement and contracting including commitment of public money and entering into contracts. Amongst other things it places a legal obligation on Defence officials to use and manage public resources in an efficient, effective, economical and ethical manner. Sections 23 and 60 of the PGPA Act are key sections relating to Defence procurement.

Also part of the Commonwealth Resource Management Framework are the Commonwealth Procurement Rules (CPRs) which have effect under the PGPA Act 2013. The CPRs are the keystone of the Government’s procurement policy framework and set out the rules that officials must comply with when they procure goods and services of which achieving value for money is the core rule.

At the Defence level, Defence Procurement Policy is contained in the Defence Procurement Policy Manual which promotes responsible and accountable spending by Defence officials when procuring goods and services. The DPPM assists Defence officials to make proper use of public resources (also known as ‘public money’) with the expectation that the guidance is tailored to suit the circumstances. The DPPM incorporates specific CPRs and additional Defence Procurement Policy Directives which match the circumstances and needs of the Defence.

The PGPA Act, CPRs and the DPPM apply to all Defence officials. Officials are not permitted to depart from the mandatory requirements of the PGPA Act, CPRs and any related Accountable Authority Instructions (AII) and the Finance Manual FINMAN 2. Furthermore, if a Defence official departs from the DPPM in a way that results in a departure from the CPRs, then the official will have contravened the law.


Application of the DPPM may be extended to a Contractor through appropriate provisions in contracts, or a Contractor may be prescribed to be a Defence official in accordance with Defence’s AII as described in the CPRs.

7.7.2 CPR Core Principles

The CPRs are based on core principles that Defence officials must consider when planning and undertaking their procurement activities:

Value for Money; competition; non-discrimination; ethical behaviour (the balance between probity and industry engagement); and risk management.

Of most importance is understanding that Value for Money does not automatically mean the lowest price goods or services. Defence officials must consider the relevant financial and non-financial costs and benefits of each option, including:

the quality of the goods and services; fitness for purpose of the proposal; potential supplier’s relevant experience and performance history; flexibility of proposal (such as through innovation and adaptability over the life cycle); environmental sustainability (perhaps through energy efficiency and environmental

impact); and whole-of life costs.

Competition is a key element of the Australian Government’s procurement framework. Defence views competitive procurement as the best way to ensure it is receiving value for money as it is considered the most effective motivator for industry to reduce costs and improve performance. It is important to note that competition does not always mean open tender.

Non-discrimination addresses the requirements that, subject to CPRs, all potential suppliers to government are treated equitably. There are specific exemptions which may apply or can be sought including measures under para 2.6 of CPRs (such as protection of essential security interests), Australian Industry Capability (AIC) policy, and specific Government policy decisions.

Ethical behaviour is addressed in Section 6 of the CPRs and sets out the requirement for Defence officials to properly use and manage public resources. In this case ‘proper’ means:

Efficient: achievement of the maximum value for the resources used including selection of the procurement method.

Effective: extent to which intended outcomes or results are achieved including price, quality and quantity, and the degree to which these contribute to specified outcomes.

Economical: minimising cost, avoiding waste. Ethical: honesty, integrity, probity, diligence, fairness and consistency including

identifying and managing conflicts of interests, not making improper use of an individual’s position.

Officials undertaking procurement must act ethically throughout the procurement including always carefully considering the use of public resources. They must recognise and address actual, potential and perceived conflicts of interest and deal with potential suppliers, tenderers and suppliers equitably. Of significance this requires that officials seek appropriate internal or external advice when probity issues arise. Attention to probity [46] is integral to ensuring the defensibility, transparency and success of Defence procurements.


7.7.3 Method of Procurement, Approach to Market and Delivery Model

Central to deciding how to proceed with a procurement and contracting activity are three considerations: Method of Procurement; Approach to Market; and Delivery Model.

7.7.3.1 Method of Procurement—Open or Limited Tender

A decision must be made as to whether to procure through an Open Tender or a Limited Tender. Open Tender refers to the situation where Defence approaches and invites submissions from the open market while a Limited Tender (often called a ‘sole source’ procurement) is the case where Defence approaches only one or more potential suppliers to make submissions. Selection of a procurement method, either Open Tender or Limited Tender, is dependent on:

the nature and structure of the market; the extent of competition (that is, the number of genuinely competitive suppliers); and schedule, cost or other constraints (for example, intellectual property or security).

Under the CPRs, the default position is Open Tender. Under very limited circumstances will a Limited Tender be permitted [47]—for example, for reasons of extreme urgency; no real alternative; or where there are additional deliveries of compatible goods and services.

7.7.3.2 Approach to Market—Which Tendering Documents to Use

This is a decision concerning the type of tendering documents to use when approaching the market. The range of tendering documents can include:

request for tender (RFT); request for proposal (RFP); request for quote (RFQ) under a standing offer panel; competitive evaluation; some other form of iterative engagement process; or other form of documentation.

Categorisation of procurement as Open Tender or Limited Tender does not determine what approach to market is to be used. The appropriate approach to market strategy should be determined during the planning stage of the procurement. In the CLC process this could be proposed as early as the Gate 0 submission.

7.7.3.3 Delivery Model—Type of Contract Arrangement with Supplier

The Project Delivery Model describes the types of contracting structures and responsibilities that will be put in place when the contract is awarded. The Delivery Models can include prime contract, managing contractor, design and construct contract, and alliance contract. There are many considerations guiding which delivery model to use including: the type of activity, range and number of key stakeholders, industry structure, commercial relationships, appropriate incentive arrangements, and risk.

7.7.4 Procurement Life Cycle

Having decided three key aspects of the procurement and contracting approach, the procurement be planned. The Procurement life cycle [48] is a generic yet structured process that applies to any procurement and contracting activity. It is scalable and tailorable to suit circumstances and can be applied at any stage of the CLC. In its most general form it is divided into three phases and seven distinct but interrelated stages:

Planning


1. Plan the procurement. 2. Develop ‘Request documentation’ such as RFT.

Sourcing 3. Approach the market. 4. Evaluation. 5. Negotiation and contract signature.

Managing. 6. Contract management. 7. Disposal.

Against the CLC this may be applied as seen in Figure 7-7.

Figure 7-7. Simplified view of the Procurement Lifecyle in relation to a CLC Project.

As part of planning, the Request Documentation is developed which is what would be made available to prospective tenderers. Request Documentation normally includes the following:

Statement of Work (SOW): Requirements for work to be conducted by the contractor, including any essential requirements.

Conditions for Participation: minimum content and format. Evaluation Criteria: including methodology. Rules of the Process: rules for submission. Draft Contract.

The SOW is pivotal as it describes the nature, scope and quantity of goods and services to be acquired and includes all requirements including identification of those that are essential (which could potentially exclude tenderers from consideration). The SOW also nominates document or artefact deliverables and provides timeframes expected for the delivery of the required goods, works or services.

The Request Documentation also states the evaluation criteria which sets the foundation for a fair and equitable assessment of submissions as well as the rules of the process, such as the lodgement of submission via AusTender or other means.

A key Request Documentation inclusion is the Draft contract which contains the terms and conditions on which Defence is willing to enter into a contract for the requirement. Tenderers are expected to indicate their compliance or non-compliance. During evaluation Defence officials will


assess the risk associated with tenderers’ non-compliances with the draft contract so as to enable tenderers to be evaluated against a common baseline.

The Draft contract is generally based on a contracting template which has been selected as most appropriate to the procurements’ circumstances. Contracting templates have been developed by Commonwealth entities to meet the different types of procurement needs and profiles; and the size, complexity and nature of the procurement activity.

The range of templates that re available include: Commonwealth Contracting Suite. The Australian Standard for Defence Contracting (ASDEFCON). Defence Suite of Facilities Contracts.

The benefit of using Defence contracting templates is that they support efficiencies and VFM, capture best practice and are regularly updated to reflect applicable Commonwealth legislation and policy (including the CPR) and Defence policy. For CLC projects, the ASDEFCON suite of contracting templates is generally used. The Defence ASDEFCON suite is made up of five levels comprising 20 different templates for the spectrum of procurement types, complexity and risk as illustrated in Figure 7-8. Most ASDEFCON templates for tendering are structured to include:

a covering letter to tenderers, conditions of tender with response volumes, a draft contract and where appropriate, and a draft statement of work (SOW).

Handbooks and related training are available for some templates.

Figure 7-8. ASDEFCON Suite of Tendering and Contracting Templates.

7.7.5 Defence Engagement with Industry

Defence uses industry in a range of contexts including: as an element of FIC (and part of the IPT); support to Defence efforts ‘above the line’ for example through Major Support Providers; Subject Matter Experts; and as suppliers of Goods and Services (such as supply of platforms and systems; repair, maintenance and adaptation of platforms and systems in-service).

The Defence Industry Policy Statement 2016 promotes an internationally competitive and innovative Australian Defence industrial base and identifies several sovereign capabilities. The Centre for Defence Industry Capability (CDIC) is a cornerstone for promoting and engaging with Defence Industry. CDIC governance includes an advisory board co-led by industry and Defence to provide strategic leadership for the sector, helping to build Australian industry to support the ADF; and assist with identification of sovereign industrial capabilities. Innovation and commercialisation are also supported by Next Generation Technologies Fund; and the Defence Innovation Hub.


The Defence White Paper 2016 recognises Defence Industry as the ninth FIC. “The recognition of industry as a FIC will ensure Defence fully considers the industrial capabilities and the capacity of Australian businesses—micro, small, medium and large—to deliver Defence capability, including operational capabilities and the full spectrum of support functions”. [49]

As a result, Industry is engaged early in the CLC as a key partner in delivery of Defence capability and an Industry advisory representative as part of the Integrated Product (Project) Team. “Industry Engagement is the process of engaging industry to ascertain capabilities, capacity, risks and opportunities for capability acquisition, realisation and sustainment.” [5]

Early engagement with Industry has a range of benefits including insights into emerging technologies for Force Design analyses and activities, identifying technology options, and promoting innovation. Engagement with Industry during Smart Buyer activities enables consideration of industry constraints and opportunities relevant to the capability need. The Defence CoEs will also benefit from closer engagement with industry by providing a readily available pool of trusted experts from industry.

7.8 RISK MANAGEMENT

The PGPA Act seeks to improve the high-level accountability of all Commonwealth entities through focusing on their duties, internal controls and the way they engage with, and manage, risk. A key element of the PGPA Act related to the management of risk includes the “Duty to establish and maintain systems relating to risk and control”. [50] Officers of the Commonwealth must observe their obligations in relation to risk management and risk control. In support of this the accountable authority of a Commonwealth entity must establish and maintain: an appropriate system of risk oversight and management for the entity; and an appropriate system of internal control for the entity [50].

Risk Management in Defence operates in an environment of legislative, regulatory and policy obligation. The Commonwealth Risk Management Policy is to be observed by all Commonwealth entities. The goal of the Commonwealth Risk Management Policy is to embed risk management as part of the culture of Commonwealth entities where the shared understanding of risk leads to well informed decision making [51]. It sets out nine elements which non-corporate Commonwealth entities must comply with to establish an appropriate system of risk oversight and management.

In turn Defence requires compliance with its own risk management policies including the Joint Directive by CDF and the Secretary on the management of risk in Defence. It states that “Risk management is to be integrated into all planning, approval, review and implementation processes, at all levels, to ensure that risk is one of the major considerations in decision-making. Risk assessments are to be conducted in all new activities and functions.” [52] The Joint Directive also emphasises that a key principle applying to all decisions is to accept and treat individual risks based on evidence. Evidence-based risk management across the CLC requires a strong risk framework supported by proven methodologies.

There are several concepts surrounding risk management practice. Risk is defined as the ‘effect of uncertainty on objectives’ and Risk Management as the ‘coordinated activities to direct and control an organisation with regard to risk’. [53] Risk control is the means by which organisations take action to reduce or eliminate threats to their operations. It is a technique that uses findings from risk assessments of potential risk factors which can include technical and non-technical aspects of the business. [54]

There is also a standard approach to the risk management process as captured in AS/NZS ISO 31000:2009 and as illustrated in Figure 7-9. While you will see many different types of risk management systems, they should all be based on the same elements namely: understanding the context, assessing the risk through identification, analysis and evaluation, and treating those risks appropriately. Also risk management is not set and forget—it is fundamentally about ongoing monitoring and review of the risks and appropriate treatment where necessary.


Risk Assessment

Monitoring and Review

Communication and

Consultation

Establishing the Context

Risk Identification

Risk Analysis

Risk Evaluation

Risk Treatment

Figure 7-9. Risk Management Process [55].

Risk Management and the CLC. Managing risk is a crucial part of the redesigned CLC. In the past, risk management in relation to capability development was largely seen as recording risks in a risk register. However, reviews of projects have revealed risk registers did not generally contain the risks that became the biggest problems for those projects. Rather than simply ‘collect’ risks in a register, those involved in the CLC must adopt a deliberate approach to risk management appropriate to where they are in the CLC.

For example, Smart Buyer is all about risk profiling and responding to the discovered risks through appropriate strategies and planning. Also, during the Risk Mitigation and Requirements Setting Phase, risks are to be reduced so that there is sufficient certainty to make an investment decision. Indeed, throughout the CLC there is to be a conscious risk management mindset which is continuously identifying, assessing and treating risks to the realisation of capability. This is illustrated in Figure 7-10 which shows that Risk Reduction extends into the Acquisition Phase through Systems Engineering activities and reviews.

Figure 7-10. Risk Reduction throughout the CLC.

7.9 ASSURANCE

Assurance has a range of definitions dependent on the context. For example, Assurance is “A positive declaration intended to give confidence; a promise” [56]. Alternatively: “Part of corporate governance in which a management provides accurate and current information to the stakeholders about the


efficiency and effectiveness of its policies and operations, and the status of its compliance with the statutory obligations” [57], or “Grounds for justified confidence that a claim has been or will be achieved” [58]. Of relevance to the CLC, Technical Assurance is the “Process by which the technical integrity of a product, process, or system is monitored and maintained” [59].

7.9.1 Role of Assurance in Capability Management

An important element of risk-based decision-making across the CLC, is confidence that: arguments presented are sound and based on evidence; claimed status of capability management is accurate; and outcomes satisfy organisational objectives.

Assurance activities are conducted across the CLC and across various dimensions of capability management (such as technical, safety, financial, and seaworthiness) to provide confidence to decision-makers and managers. Assurance outcomes provides evidence-based arguments for action.

There are many types of assurance across the CLC which are applied to give confidence to different aspects of CLC activities. These include:

Contestability: Key assurance activity during Investment Approval Pathway that reviews force design outputs and all Gate submissions to ensure alignment with strategic resource and capability guidance; and checks that plans to proceed to next gate can be executed.

Gate Reviews: The CM or Program Sponsor and/or the Delivery Group initiate an independently chaired review panel before all gates and critical milestones.

In Depth Reviews. The Program Sponsor, VCDF or DepSec Strategic Policy and Intelligence or Delivery Group Head, initiates an independently chaired In Depth Review as a result of a significant trigger or particular concern.

Independent Assurance Reviews (IARs): Group level component of CASG’s assurance framework (Program/Project Quality Reviews) which provides advice regarding the continuing viability of capability investment decisions as well as the health and outlook of programs, acquisition projects and sustainment products.

Deep Dive Reviews: Led by Force Design Division and supported by the Program Sponsor and Contestability Division (as appropriate) which focuses on a Program, cross-Program or Capability Stream to revisit assumptions and analyse the status of existing, planned and future capabilities.

Program-level health checks: Responsibility of the Program Sponsor and are conducted on a regular basis to support progress reporting to the CM, members of the Program Steering Group and other key stakeholders, typically on a tri-annual basis.

Mandated System Reviews: Based on System Engineering reviews which provide assurance on achievement of progress for contracted work. Represents a form of Assurance Case for each logical step in system development, production and delivery. Includes Integrated Baseline Review (IBR); System Requirements Review (SRR); System Definition Review (SDR); Preliminary Design Review (PDR); Detailed Design Review (DDR) and Support System Detailed Design Review (SSDDR)

Test and Evaluation (T&E): Key assurance activities which provides evidence in support of system acceptance. Examples relevant to CLC are: Acceptance Test and Evaluation (AT&E) which is formal acceptance testing on behalf of customer; Operational Test and Evaluation (OT&E) which focuses on functional or operational testing of the system and is generally undertaken by users following acceptance.


7.9.2 Establishing the Assurance Program

It is important that Program, Product and Project Sponsors understand the range of assurance activities that they will be engaged in from initiation of Proposal through to realisation and in-service operation of a capability. This understanding not only enables appropriate planning and collection of evidence to support assurance cases it also provides the opportunity to leverage evidence gathered for multiple assurance requirements. It is advisable that an assurance program be included in the IPMP and appropriate subordinate plans so that the range of assurance activities can be anticipated and a planned approach adopted.

ENDNOTES

[1] First Principles Review: Creating One Defence, April 2015. [2] First Principles Review: Creating One Defence, April 2015, p. 12. [3] First Principles Review: Creating One Defence, April 2015, p. 5. [4] First Principles Review: Creating One Defence, April 2015, p. 4. [5] Updated Interim CLC Manual. [6] One Defence Leadership Behaviours, Nov 17. [7] http://www.defence.gov.au/AboutUs.asp [8] DPPM April 2017 Paragraph 21. [9] https://www.finance.gov.au/sites/default/files/commonwealth-procurement-rules.pdf [10] DPPM April 2017 Paragraph 34 and 35. [11] CLC Detailed Design Document, para 14.3.9. [12] Interim CLC Manual, p. 89. [13] Ethics Matters, Defence Inspector General DoD, 2002 [14] www.defence.gov.au/AboutUS.asp [15] www.aipm.com.au. [16] Engineers Australia Code of Practice. [17] Smart Buyer Kick-off Meeting Pack. [18] Defence Program Strategy Guide. [19] PMI website. [20] PMI website. [21] Maier, M.W., “Architecting a Portfolio of Systems”, Systems Engineering, 1(4), 1-13, 2019. [22] IEEE 610.12-1990. [23] SEBoK Architecting approaches for SoS. [24] ISO 55000/1/2 Asset Management. [25] A Guide to the Project Management Body of Knowledge (PMBOK® Guide), Project Management

Institute, Upper Darby, PA, 2017. [26] A Guide to the Project Management Body of Knowledge (PMBOK® Guide), Project Management

Institute, Upper Darby, PA, 2017. [27] Faulconbridge, R.I, and M.J. Ryan, Systems Engineering Practice, Argos Press, 2018. [28] Faulconbridge, R.I, and M.J. Ryan, Systems Engineering Practice, Argos Press, 2018. [29] Augustine, Norman R., Augustine’s Laws and major system development programs, New York: American

Institute of Aeronautics and Astronautics, 1983. [30] CFO Defence Costing Instruction 2017/01. [31] DEFLOGMAN Part 2, Vol 10, Chapter 2. [32] CASG Policy (E&T) 12-0-001 – Policy on Engineering, 2017. [33] ISO/IEC 15288-2015, Systems and Software Engineering—System Life Cycle Processes, 2015. [34] INCOSE Fellows, Systems Engineering and Systems Definitions, 2018.


[35] DEFLOGMAN Volume 2 Volume 10 Chapter 3. [36] DEFLOGMAN Volume 2 Volume 10 Chapter 3. [37] Blanchard, B.S. and J.E. Blyler, System Engineering Management, Wiley, 2016. [38] DEFLOGMAN Volume 2 Volume 10 Chapter 3. [39] https://www.mitre.org/publications/systems-engineering-guide/acquisition-systems-engineering/integrated-

logistics-support [40] DEFLOGMAN, Volume 2, Volume 10, Chapter 15. [41] DMH (LOG), 04-01-002. [42] ANAO Report No.2 2017–18, Performance Audit Defence’s Management of Materiel Sustainment. [43] Contract Template Selection and Tailoring Guide Version 2.1 April 2016. [44] DPPM April 2017. [45] DPPM April 2017. [46] DPPM para 66 and 67. [47] CPR 10.3. [48] DPPM April 2017 Paragraph 39. [49] Defence Industry Policy 2016. [50] PGPA Act Section 16. [51] DOF Website Commonwealth Risk Management Policy. [52] 30/2015 CDF/OUT/2015/682 - The Joint Directive by CDF and Secretary of Department of Defence on the

management of risk in Defence. [53] AS/NZS ISO 31000 Risk Management – Principles and Guidelines, p. 1-2. [54] http://www.investopedia.com/terms/r/risk-control.asp [55] AS/NZS ISO 31000:2009 Risk Management – Principles and Guidelines. [56] Oxford Dictionary. [57] http://www.businessdictionary.com/definition/assurance.html [58] ISO/IEC 15026-1:2013: Systems and software engineering -- Systems and software assurance -- Part 1:

Concepts and vocabulary. [59] http://www.businessdictionary.com/definition/technical-assurance.html

Acronyms and Abbreviations AAI Accountable Authority Instructions ABL Allocated Baseline ACAT Acquisition Category ACCS Australian Capability Context

Scenarios ADF Australian Defence Force ADFA Australian Defence Foce Academy ADO Australian Defence Organisation AFS Average Funded Strength AIC Australian Industry Capability AIOS Acceptance into Operational Service AIPM Australian Institute of Project

Management AJOC Australian Joint Operating Concept AMS Australian Military Strategy ANAO Australian National Audit Office ANSI American National Standards

Institute APS Australian Public Service ASDEFCON Australian Standard for Defence

Contracting AT&E Acceptance Test and Evaluation BBC Better Business Case BC Business Case BoE Basis of Estimates BNR Business Needs and Requirements C2 Command and Control C4 Command, Control, Communications

and Computers C4ISR Command, Control,

Communications, Computers, Intelligence, Surveillance and Reconnaissance

CabSub Cabinet Submission CAD Computer-aided design CAE Computer-aided engineering CAM Computer-aided manufacturing CASG Capability Acquisition and

Sustainment Group CASE Computer-aided Support

Environment CASSS Capability Acquisition and

Sustainment Support Services (Panel)

CCB Configuration Control Board CCP Contract Change Proposal CDD Capability Development Documents CDF Chief of the Defence Force CDIC Centre for Defence Industry

Capability CDMRT2 Capability Development

Management and Reporting Tool 2 CDR Critical Design Review CDRL Contract Data Requirements List CFO Chief Finance Officer CI Configuration Item CI Critical Issue CIOG Chief Information Officer Group CITE Capability Integration, Test and

Evaluation (Branch) CLC Capability Life Cycle CM Capability Manager CM Configuration Management CMGR Capability Manager Gate Review CMS Contract Master Schedule CNC Computer numerically controlled COD Concept of Operations Document COE Centre of Expertise COI Critical Operational Issue CONOPS Concept of Operations COTS Commercial-off-the-Shelf CPN Capability Program Narrative CPR Commonwealth Procurement Rules CPSG Capability Program Steering Group CSC Computer Software Component CSCI Computer Software Configuration

Item CSU Computer Software Unit CWBS Contract Work Breakdown Structure DA Design Authority DA Design Attribute DAF Defence Architecture Framework DASR Defence Aviation Safety Regulation DC Defence Committee DCAP Defence Capability Assessment

Program DDR Detailed Design Review DID Data Item Description DIP Defence Investment Plan DLOD Defence Lines of Development DMO Defence Materiel Organisation

(obsolete post FPR) DoD (U.S.) Department of Defense DOF Department of Finance DOR Description of Requirement DOTMLPF Doctrine, organization, training,

materiel, leadership, personnel, facilities

DPG Defence Planning Guidance DPG Defence People Group DPPM Defence Procurement Policy Manual DSwMS Defence Seaworthiness

Management System DT&E Developmental Test and Evaluation DWP Defence White Paper E&IG Estate & Infrastructure Group EBC Enterprise Business Committee ECP Engineering Change Proposal eFFBD Enhanced Functional Flow Block

Diagram EIA Electronics Industry Association EMC Electromagnetic Compatibility EMI Electromagnetic Interference EPBC Environment Protection and

Biodiversity Conservation Act 1999 EtP Endorsement to Proceed FACRR Facilities Readiness Review FBL Functional Baseline

Acronyms and Abbreviations FCA Functional Configuration Audit FDD Force Design Division FEA Finite element analysis FELSA Front-End Logistics Support Analysis FFBD Functional Flow Block Diagram FFBNW Fitted-for-but-not-with FIC Fundamental Inputs to Capability FJOC Future Joint Operating Concept FMECA Failure Modes, Effects and Criticality

Analysis FOC Final Operating Capability FOE Future Operating Environment FOREX Foreign Exchange FPC Fixed price contract FPR First Principles Review FPS Function and Performance

Specification FQR Formal Qualification Review FRACAS Failure reporting, analysis and

corrective action system FSR Force Structure Review FTE Full Time Equivalent G&S Goods and Services GOTS Government off the Shelf HMI Human Machine Interface HR Human Resources HWCI Hardware Configuration Item I2 Integration and Interoperability I2F Integration and Interoperability

Framework IA Independent Assurance IAR Independent Assurance Review IBR Integrated Baseline Review IC Investment Committee ICD Interface Control Document ICT Information and Communications

Technology ICWG Interface Control Working Group IEC International Electrotechnical

Commission IEEE Institute of Electrical and Electronics

Engineers IIP Integrated Investment Program ILS Integrated Logistics Support ILSM ILS Manager ILSP ILS Plan IMS Integrated Master Schedule INCOSE International Council on Systems

Engineering IOC Initial Operating Capability IOC Integrating Operational Concept IPM Integrated Project Manager IPMP Integrated Project Management Plan IPMT Integrated Project Management

Team IPT Integrated Project/Product Team IS Interim Standard ISC Integrated Support Contractor(s)

ISO International Standards Organisation ISREW Intelligence, Surveillance,

Reconnaissance and Electronic Warfare

ISREWCS ISREW Cyber Space ITR Invitation to Register Interest IV&V Independent Verification and

Validation JCA Joint Capability Authority JCF Joint Concepts Framework JCG Joint Capability Group JCN Joint Capability Narrative JCNS Joint Capability Needs Statement JD Joint Directive JFA Joint Force Authority JICA Joint Integration Concepts and

Assurance JP Joint Program JWC Joint Warfare Council LCC Life Cycle Cost LCCA Life Cycle Cost Analysis LCD Life-cycle Concepts Document LORA Level of Repair Analysis LSA Logistic Support Analysis LSAR Logistics Support Analysis Report MCE Major Capital Equipment MIL-HDBK (U.S.) Military Handbook MIL-STD (U.S.) Military Standard MINCE Minor Capital Equipment MinSub Ministerial Submission MOE Measure of Effectiveness MOP Measure of Performance MOS Measure of Suitability MOTS Military off the Shelf MRD Maintenance Requirements

Determination MSR Mandated System Review MYEFO Mid-Year Economic Fiscal Outlook NCOSE National Council on Systems

Engineering NDI Non-Developmental Item NJF Networked Joint Force NRE Non-Recurring engineering NSC National Security Committee (of

Cabinet) OCD Operational Concept Document ODA Offer Definition Activity OpsCon Operational Concept OT&E Operational Test and Evaluation OTS Off the Shelf PBL Product Baseline PCA Physical Configuration Audit PDR Preliminary Design Review PES Project Execution Strategy PGPA Public Governance Performance &

Accountability Act 2013

Acronyms and Abbreviations PHS&T Packaging, handling, storage and

transportation PIOC Program Integrating Operational

Concept PLCD Preliminary Life-cycle Concepts

Document PLICIT Professionalism, Loyalty, Integrity,

Courage, Innovation, Teamwork PM Project Management PM&C Prime Minister and Cabinet

(Department) PMBOK Project Management Body of

Knowledge PMI Project Management Institute PMP Project Management Plan PMSG Project Management Stakeholder

Group PO Project Office PRICIE Personnel, research and

development, infrastructure, concepts and doctrine, information technology, equipment

PRR Project Risk Register PS Program Strategy PT&E Preview Test and Evaluation PWBS Program/Project Work Breakdown

Structure PWD Planned Withdrawal Date QA Quality Assurance RAAF Royal Australian Air Force RAM Reliability, Availability, Maintainability RAN Royal Australian Navy RBS Requirements Breakdown Structure RFI Request for Information RFP Request for Proposal RFT Request for Tender RI Repairable Items RMP Risk Management Plan S&Q Survey and Quote SA Support Analysis SAA System Acceptance Audit SBS System Breakdown Structure SCRAM Schedule Compliance Risk

Assessment Methodology SDD System Design Document SDR System Design (Definition) Review SE Systems Engineering SEBoK Systems Engineering Body of

Knowledge SEDS Systems Engineering Detailed

Schedule SEI Software Engineering Institute SEMP Systems Engineering Management

Plan SEMS Systems Engineering Master

Schedule SLOC Source Lines of Code SME Small-to-Medium Enterprise

SME Subject Matter Expert SNR Stakeholder Needs and

Requirements SOI System of Interest SOP Standard Operating Procedure(s) SoS System of Systems SoSE SoS Engineering SOW Statement of Work SP&I Strategic Policy & Intelligence

(Group) SPPR Spares Provisioning Preparedness

Review SRD Stakeholder Requirement Document SRR Systems Requirements Review SS (Mission) System Specification SSCC Support System Constituent

Capabilities SSDDR Support System Detailed Design

Review SSSPEC Support System Specification STD Standard StRS Stakeholder Requirements

Specification SW Software SWEBOK Software Engineering Body of

Knowledge SyRS System Requirements Specification T&E Test and Evaluation TARR Task Analysis Requirements Review TCD Test Concept Document TCO Total Cost of Ownership TDRL Tender Data Requirement List TEMP Test and Evaluation Master Plan TEPPR Training Equipment Provisioning

Preparedness Review TIRA Technical Implementation Risk

Assessment TLS Through Life Support TNGRR Training Readiness Review TPM Technical Performance Measures TRAP Technical Review and Audit Plan TRA Technical Risk Assessment TRR Test Readiness Review TXRR Transition Requirements Review URD User Requirements Document URS User Requirements Specification V&V Verification and Validation VCDF Vice Chief of the Defence Force VCDFG VCDF Group VCRM Verification Cross Reference Matrix VFM Value for Money WBS Work Breakdown Structure WHS Workplace Health and Safety WHS Workplace Health and Safety Act

2013 WSOI Wider SOI

How to Engage with the Centre’s Services

The Capability Systems Centre is able to provide comprehensive assurance, research and education & training services to organisations in any domain in any stage of the capability life cycle. Our research and assurance effort is tailored to support decision making across the capability life cycle, whether in the initial exploratory phase, defining needs and requirements or development of the integrated logistic support plan.

The Centre’s services can be accessed by Defence, Government and industry to underpin capability decisions with robust research, assurance and education.

The first step is to contact the Centre so that the research question, assurance activities or education opportunities, and associated cost and schedule, can be developed.

Once the Services are agreed by both parties:

Defence stakeholders can engage the Centre directly through the Defence Agreements Manager at the Australian Defence Force Academy as a variation to the Defence/UNSW Canberra contract or via purchase order.

Government and Industry stakeholders can engage the Centre using a purchase order.

Further InformationFurther information about the Capability Systems Centre, and the services available, is available at:

capabilitysystems.unsw.adfa.edu.au

or by contacting us via:

02 6268 8960 or 02 6268 9566

[email protected]

Major Centre Events

Crafting and Implementing Project Execution Strategies3 April 2019 UNSW Canberra

Facilities Business Case Course2 April 2019 UNSW Canberra

Systems Modelling Conference4 October 2019 UNSW Canberra

STM Summer School25 - 29 November 2019 UNSW Canberra

MODSIM1 - 6 December 2019 UNSW Canberra

https://tinyurl.com/capabilitysystemscentre

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To register: https://www.unsw.adfa.edu.au/study/professional-education-courses/programs

Professional Education Courses 2020

School of Engineering and Information Technology Capability Management Capability Life Cycle (CLC) Management:

5-7 February 23-25 March 28-30 September Introduction to Systems Engineering (Canberra):

16-18 March; 21-23 September Systems Engineering Practice (Canberra): 16-20 March; 21-25 September Introduction to Systems Engineering (Melbourne):

11-13 May Systems Engineering Practice (Melbourne):

11-15 May Introduction to Systems Engineering (Adelaide):

2-4 June OCD & FPS:

26-27 March 1-2 October Cost Modelling:

30-31 March 12-13 October Business Case Development:

2-3 April 15-16 October Test & Evaluation:

6-8 April 7-9 October

Project Management Introduction to Project Management:

11-13 March 14-16 September

Communications Basic Communications:

18-20 May Introduction to Electronic Warfare:

25-27 May Satellite Communications—Overview:

30 November Satellite Communications—Intermediate:

30 November – 2 December Satellite Communications—Advanced:

30 November – 4 December

Systems Thinking and Problem Solving Addressing Complex Problems:

4-6 May; 24-26 August Systems Thinking & Modelling:

4-8 May; 24-28 August