In the lead-up to the 2022 federal election, the Australian Labor Party (ALP) committed to creating an Advanced Strategic Research Agency (ASRA) within the Department of Defence. Modelled on the US Defense Advanced Research Projects Agency (DARPA), ASRA would seek to ‘boost Australia’s involvement in technology sharing and research and development through the new AUKUS partnership’ by working with the US DARPA and UK Advanced Research and Invention Agency (ARIA).

Details about the proposed ASRA are limited, including its relationship with the Defence Science and Technology Group (DSTG), whose role is to ‘deliver … valued scientific advice and innovative solutions for Defence and national security’. Organisationally DSTG sits within the Department of Defence, employs approximately 2200 staff and has an annual budget of over $400 million. If the ‘DARPA model’ is replicated for ASRA, it would require a set of arrangements that differ significantly from typical public sector practices. Broadly, it would challenge organisational structures, staffing, procurement and, most notably, the appetite for risk. This Flagpost provides a brief overview of the ‘DARPA model’ and its implications in an Australian context.

The creation of DARPA

The US Department of Defense (DoD) created DARPA in 1958 (originally known as ARPA), partly in response to the former Soviet Union’s first Sputnik satellite launch the previous year. Since then, DARPA’s mission has been to ‘make pivotal investments in breakthrough technologies for national security’, and in doing so ‘DARPA explicitly reaches for transformational change instead of incremental advances’.

As noted by the Congressional Research Service (CRS) ‘DARPA investments have resulted in a number of significant breakthroughs in military technology, including precision guided munitions, stealth technology, unmanned aerial vehicles, and infrared night vision technology’. Additionally, DARPA-sponsored research and development (R&D) resulted in notable commercial applications such as the internet, the Global Positioning System (GPS), the first weather satellite, personal electronics and automated voice recognition, which was acquired by Apple for ‘Siri’.

The ‘DARPA model’

DARPA is a relatively small agency with around 220 employees, including approximately 100 program managers overseeing about 250 programs. Its website notes that ‘DARPA benefits greatly from special statutory hiring authorities and alternative contracting vehicles’.

As the CRS notes, ‘DARPA does not directly perform research or operate any research laboratories, but rather executes its R&D programs mainly through contracts with industry, universities, non-profit organizations, and federal R&D laboratories’. DARPA’s high-risk, high-reward R&D funding approach inevitably results in many unsuccessful projects. Nonetheless, this approach is often cited as an ideal innovation model by other US agencies and foreign governments seeking to replicate DARPA. The factors contributing to DARPA’s innovation success and creative culture include:

• ‘Limited tenure and the urgency it promotes’ – where program managers and office directors only have four to five years ‘to achieve something new and important’
• an inspiring ‘sense of mission’
• ‘trust and autonomy’ to promote greater decision making and
• ‘risk taking and tolerance for failure’ allowing a culture of ‘openness to new ideas’.

As noted above, a key feature of the ‘DARPA model’ is that program managers are hired for a limited tenure. DARPA asserts that limited timeframes engender ‘the signature DARPA urgency to achieve success in less time than might be considered reasonable in a conventional setting’. Program managers are supported by experts in security, human resources, communications, finance, and legal and contracting issues.

The use of ‘Other Transactions’ and transparency

Crucially, DARPA does not have to comply with usual public sector procurement arrangements. In 1989, the US Congress granted DARPA ‘other transactions (OT) authority’, which ‘are a special type of agreement with industry and academia for a broad range of research and prototyping activities’. This status was made permanent in 1991 and extended to DoD broadly.

However, DoD’s use of OTs in procurement practices has been criticised for lacking necessary evaluation and oversight mechanisms. Most recently the DoD Inspector General warned:

[DoD’s] lack of policies and procedures [for tracking and awarding OTs] resulted in Congress receiving inaccurate information regarding the number of prototype OTs. It also resulted in DoD officials and Congress having limited information regarding what technological advancements the OTs are being used for and the costs associated with those OTs.

International comparison

In recent years other countries have emulated the ‘DARPA model’. However, a point of difference is that the UK’s ARIA, Germany’s Federal Agency for Disruptive Innovation (SPRIN-D) and Japan’s Moonshot R&D are not within their countries’ defence organisations.

Conclusion

The US experience suggests that exemption from usual public sector procurement arrangements could create challenges for measurement and assessment of program outcomes, and accountability to Parliament. The design, implementation and ultimate success of an Australian version of DARPA would depend on a number of factors. These factors would include the appetite for risk taking and tolerance for failure, and the balance struck between the potential advantages of speed and flexibility afforded by non-conventional hiring and procurement arrangements, and the procedural consistency, transparency and accountability that conventional hiring and procurement arrangements, such as the Commonwealth Procurement Rules, are designed to facilitate.