For the last 30 years – the time I’ve been in the part-time ADF and Defence Industry – the ambition to improve interoperability between Australia and its close allies (typically described as the Five Eyes [FVEY] nations) was enduring. It’s hard to recall an operation or acquisition where discussion of interoperability didn’t feature. Today, the phrase ‘interchangeability’ is used in those same sentences. What is the difference and what does this (seemingly simple and sensible) change mean for Defence Industry?

I argue it means greater speed and simplicity for our service headquarters, transformational change for CASG, and the end for Australian defence industry.

Interoperability versus Interchangeability

At a high level the difference seems obvious, interoperability is two organisations able to work together, share information through technology and systems, and operate effectively as a joint or combined team. The higher standard of interchangeability includes all that plus the ability to seamlessly exchange individual people, equipment, doctrine, and/or systems between trusted nation groups.

In reality we have strong definitions around what interoperability means, but when it comes to really nailing what interchangeability means experts aren’t yet clear[1]. Is interchangeability ‘even more interoperable’ or is it actually something different? Is it sameness?

Let’s explore an example. Australian Army armoured forces in an interoperable world have technically similar but different equipment, training systems, unit organisation differences, similar but not identical language – but on the battlefield key systems such as C3I and doctrine are aligned so that an Australian armoured force element (FE) can, with little friction, operate alongside a US/UK contemporary.

In an interchangeable world I argue there is no difference in the armoured vehicles – they are the same. The doctrine is the same, the training systems, the logistics regime, the language of the organisation – all the same. The benefit is that an Australian corporal can jump out of an Australian armoured vehicle, and into a US one and be just as effective the moment they join that crew. An engine can be drawn from the US supply system and dropped into an Australian vehicle, an encrypted fire mission message sent and actioned seamlessly.

There are big benefits in sameness, though many readers would say ‘but this is not really possible in the real world’ given cultural and historical differences between armies. But that’s my point. Interchangeable isn’t just ‘more interoperable’. It’s far harder. It’s a much higher standard of organisational collaboration. We’re using the term, but not appreciating its full meaning.

If you think interchangeable just means ‘even more interoperable’ you can stop reading. As you go, could you encourage the use of the phrase ‘more interoperable’ when this debate next arises in earshot. But if you suspect interchangeable actually means something more (as I describe above), where systems and their component technologies and organisation can be exchanged/substituted between nations, let’s together explore the implications of this new and different policy ambition – its opportunities and risks.

Requirements Setting in an Interchangeable World

There is plenty of new thinking going into how a Defence Force buys equipment. In Australia and the US our systems typically invest heavily in requirements setting. You start with an abstract sense of the threat and mission sets you’d like to be capable of conducting, and then you get into the heavy lifting of requirements writing – the point at which the military jargon pivots into industrial specifications that a manufacturer can decompose and design against.

Australia historically gets into lots of trouble when we impose our own unique requirements on an acquisition. ASPI has plenty of examples. We want a new helicopter, but rather than the one another nation has bought, we need ~50 small changes made to suit our unique Australian operating environment. From there all trouble ensues[2].

In an interchangeable world we don’t get ‘Australian unique requirements’. And that’s a big challenge for a small Defence Force that asks (compared to the US) for a wider range of missions from a small range of fleets. The ADF would get a seat at the table when requirements are set – but we’re one peripheral voice. If the ADF is to be heard we’d rely on being an early signatory to an acquisition (historically we aren’t) with a clear sense of what we want and when we want it (we rarely have an early, agreed position).

We also don’t get an ‘Australian way of warfighting’ – we conform to interchangeable norms.

Australian Defence Industry – Who is your Client Now?

If you’re an Australian business seeking to sell systems or platforms to the ADF you typically spend a lot of time in the various service headquarters influencing around requirements, or at CASG influencing around the interpretation and prioritisation of those requirements. Not in an interchangeable world.

The good news is you won’t need those expensive business development managers in this new regime. Requirements will be set in Washington (most of the time) and occasionally in London. There will be one submarine program, one tank program, one air lift program. Australia’s requirement setting will be to determine the decals – all else will be an exercise in influence. Influence of allies’ acquisition processes where they are buying orders of magnitude more of each item will be hard. Scale buyers enjoy the whip hand in requirements setting.

Personally, my sense is the Australian service headquarters will welcome this. Rather than complex negotiations with each other, CASG, CIOG, and other enabling functional groups they can fly to Washington for a month, do their level best to negotiate an outcome, then come home and say ‘we did our best but the answer is X. So, Australian Defence Organisation, you’ll just have to deal with it’.

CASG – A Radical Overhaul Possible

The most interesting consequence is where interchangeability could take CASG. All sorts of options open up – several of which may be attractive.

You could divide the entire CASG portfolio into 3 relatively simple groups.

Group 1 is ‘Interchangeable Acquisition’ whose job is to sign a contract presented to them by the US/UK as part of collective acquisitions. This is a different job (not easier) than is currently CASG’s experience, they still need to negotiate terms (in particular AIC into global supply chains) but there is little/no wrangling over specifications or difficult requirements. The most challenging part will be acting as the go-between for Australian industry, Australian politicians, and US/UK primes as each press for their interests to be met. A dynamic, no-less-difficult space than they currently occupy.

Group 2 is the ‘Bespoke Acquisitions’ team, which is for a rare set of policy-led buys we as Australia determine need to sit outside of the ‘interchangeable’ group. Frankly, that’s really only the surface fleet and joint ‘glueware’ systems – with the former already conveniently split from CASG. It’s a bigger headcount because it needs to do real engineering as well as commercials. You could happily put that in Adelaide and Perth too. Handy.

Group 3 is the ‘Innovation’ team. Regardless of any interchangeable agenda there will still be a place for leveraging new ideas that change the way our allies could fight and win. It would be plugged into the US innovation ecosystem – any ideas would need to be exploited through Group 1 – but it’s still a (small) area of focus that CASG and/or private equity could sponsor.

All this feels smaller than CASG as it currently stands. Simpler process, simpler skillsets to foster and faster – much faster – in its actions and outcomes. Minsters could be interested in that.

And for Australia’s defence industry, this is a world where you innovate locally, perhaps to Technology Readiness Level 5, then you either get into a global supply chain, diversify, or die. Maintenance will be the big employer of Australians – with occasional production contracts where Government was able to bully its way into a global production run.

It’s a ‘shared sovereignty’ world. Our sovereign choice is preserved in the alliance – not in our geography or any form of direct control. Maybe that’s no different to where we are now, everything we build/operate has some level of dependence on others. But interchangeability is a stark message to Defence and Australian industry around where your future lays. If those are the new rules of the game, best go practice now.