Chapter 1Introduction
Referral of the bill
1.1On 10 May 2023, Senator the Honourable David Fawcett introduced a private senator's bill, the Defence Capability Assurance and Oversight Bill 2023 (the bill), into the Senate. On 11 May 2023, pursuant to the Senate Selection of Bills Report, the bill was referred to the Senate Foreign Affairs, Defence and Trade Legislation Committee (the Committee) for inquiry and report by 7September2023.
1.2On 7 September 2023, the Senate agreed to extend the reporting date to 19October 2023. On 19 October 2023, the Senate agreed to extend the reporting date to 7 December 2023.
Conduct of the inquiry
1.3The Committee advertised the inquiry on its website, calling for submissions by 14 August 2023. The Committee also wrote to a range of organisations and individuals, inviting them to make written submissions. Eleven submissions were received and are listed at Appendix 1.
1.4The Committee held two public hearings, in Canberra on 14September2023, and Adelaide on 28 September 2023. A list of witnesses who gave evidence at these hearings is available at Appendix 2. The Committee also received evidence in in-camera hearings.
Background to the bill
1.5The 2020 Defence Strategic Update (DSU), and the Defence Strategic Review (DSR) 2023, set the agenda for protecting Australia’s interests and implementing ambitious but necessary reform. The documents outline strategic global circumstances which require Australia to establish the military capability necessary for its national defence strategy.
1.6Meeting this objective in this decade and beyond will require the procurement of a range of advanced technology. To achieve its objectives, Australia must be able to take timely, risk-informed military capability decisions, and the Department of Defence (Defence) must have quality processes in place which provide suitable capability oversight and assurance. Decision-makers must have ‘confidence in the assessment of risks and be able to provide assurance to the war fighter, government and the Parliament that weapons systems will be available for use when required and effective against extant and emerging threats.’
1.7The First Principles Review was commissioned in 2014 ‘to ensure that Defence is fit for purpose and able to deliver against its strategy with the minimum resources necessary’. The review, completed in 2015, recommended a “smart buyer” approach to developing military capability; however, this recommendation was underpinned by the assumption that adequate Test and Evaluation (T&E) capability is in place.
1.8Defence has itself acknowledged that it has ‘sometimes failed’ to live up to its commitment to ensuring adequate T&E is performed in the context of capability acquisition and sustainment decisions.
1.9The perspectives of Australia’s AUKUS partners, the UnitedStates of America (U.S.) and the United Kingdom of Great Britain and Northern Ireland (U.K.), on capability assurance have evolved differently to those in Australia, with public accountability resulting in independent oversight of capability assurance mechanisms still lacking in Australia.
1.10The explanatory memorandum states that the bill seeks to ‘address the root cause of past failures’ and ensure that Defence acquisition and sustainment decisions are well-informed by T&E based on four core principles:
Independence. The risk identification function must be independent so that assessment is made without bias or influence (intended or unintended). Independence also ensures that the assessor of risk has a voice (NB not a veto) that is heard at each decision-making level of the capability life cycle.
Task-specific competence. Government must ensure staff with the right skills are employed to identify and manage risk. Competence is a matrix of qualifications and experience that are directly relevant to the task at hand.
Transparency. Previous inquiries highlight that risk assessors working within Defence face various barriers (individual or organisational) that influence whether decision-makers actually consider their assessments. Given the costs and national security implications, the taxpayer deserves to know that decisions are being made on the basis of accurate understanding of risk.
Accountability. The DCAA will be underpinned by an audited and enforceable requirement that Defence engages the Agency to evaluate risk across the capability life cycle. DCAA reports are to be specifically included in briefs provided to project managers, assurance bodies, Defence Investment Committee and the National Security Committee of Cabinet.
Key provisions of the bill
1.11A central component of the bill is the establishment of an independent statutory body, the Defence Capability Assurance Agency (DCAA), charged with responsibility for assessing the complex risk associated with materiel procurement and sustainment. Risk assessment would include but not be limited to technical risks pertaining to performance and certification. The explanatory memorandum states that this would ensure a high degree of confidence in the veracity and completeness of information relied upon to make risk-informed decisions.
1.12Further, the explanatory memorandum to the bill states the proposed measures would:
(a)expedite the procurement of defence capability by providing capability managers and the Australian Government a high degree of confidence in the veracity and completeness of the information they use to make timely, risk informed decisions,
(b)provide assurance to capability managers, the Australian Government and the Parliament that weapons systems will be available for use when required and effective against extant and emerging threats, and
(c)make existing defence procurement processes and requirements more effective and efficient by ensuring:
(i)that risk assessment throughout the capability life cycle is consistently conducted by people who have appropriate qualifications and relevant experience,
(ii)the assessment and reporting of risk is independent, free from overt or unintended bias or influence,
(iii)identified risk is transparent to decision makers, and
(iv)proposed risk mitigations are effective.
1.13If the bill is enacted, assurance and accountability will be provided through a program of audit which would be the domain of a small independent assurance office, to be known as the Inspector-General of Defence Capability Assurance (IGDCA). The office would be analogous to the Inspector-General of Intelligence and Security. IGDCA would be staffed by appropriately skilled and security-cleared personnel responsible for ensuring that the DCAA is engaged and resourced in a timely manner, and that the agency is responding transparently to the reporting of any identified risks at all levels of decision-making.
1.14The bill would also create a Parliamentary Joint Committee on Defence (PJCD), with responsibilities including oversight of the DCAA. Among other tasks, the explanatory memorandum states that the PJCD would have oversight over capability acquisition and be established along similar lines as the existing Parliamentary Joint Committee on Intelligence and Security (PJCIS), which is appointed under the Intelligence Services Act 2001. As discussed later in this report, however, that the government has already committed to establishing a new Joint Statutory Committee on Defence, which may render this proposal superfluous.
1.15Furthermore, the bill would require the newly established DCAA to engage an Australian industry partner. This partner would have four key functions:
(1)Regulatory: the industry partner would facilitate the regulation of the qualifications and professional standards of the Defence and other industry workforce, a function managed by an element of the proposed DCAA, the Defence Capability Assurance Regulator (DCAR).
(2)A T&E centre of excellence: the industry partner would provide a small but highly experienced workforce.
(3)Training: the industry partner would be responsible for the coordination and efficacy of T&E training.
(4)T&E infrastructure: the industry partner would facilitate analysis of T&E infrastructure needed as part of procurement or capability management.
Scrutiny by other committees
1.16On 14 June 2023, the Senate Standing Committee for the Scrutiny of Bills commented on several of the bill’s clauses:
Clause | Comment |
Clause 58 | The provision may raise scrutiny concerns under principle (i) in relation to procedural fairness. |
Clause 62 | The provision may raise scrutiny concerns under principle (v) in relation to documents not required to be tabled in the Parliament. |
Subclauses 85(1), 86(1), 86(4), 86(6), 88(1) and clause 87 | The provisions may raise scrutiny concerns under principle (i) in relation to significant penalties which have not been justified within the explanatory memorandum. |
Clause 105 | The provision may raise scrutiny concerns under principle (i) in relation to immunity from civil penalty. |
1.17 On 14 June 2023, the Parliamentary Joint Committee on Human Rights noted that the bill ‘appears to engage and may limit human rights. Should this bill proceed to further stages of debate, the committee may request further information from the senator as to the human rights compatibility of the bill.’
Structure of this report
1.18This chapter contains background information. Issues raised in evidence are set out in Chapter 2, which also contains the Committee's views and recommendation.
Acknowledgement
1.19The Committee wishes to express its gratitude to the individuals and organisations that contributed to this inquiry. Many of the witnesses who gave evidence to the Committee were well experienced and qualified in T&E in a defence context and the Committee acknowledges and commends them for their genuine commitment to improving T&E processes in the Department, a commitment no doubt derived from a desire to advance the national interest.