PODCAST: CDIC opens front door to Defence

Announcer:

Welcome to the Defence Connect Podcast, with your host Phil Tarrant.

Phil:

Hi everyone, it's Phil Tarrant here. I am the host of the Defence Connect Podcast. Thanks for tuning in.

Some great feedback coming through over the last week or so. It sounds as though we have really resonated with this new initiative for defence. Our second podcast that we did with Pete Mitchell, who heads up the Jericho programme, has got a lot of interesting comments and insights. We'll be following up shortly with some more information about that. I know Group Captain Pete Mitchell is very keen to come back on the podcast in the future to talk about industry engagement.

Today we have a very interesting podcast. We're recording live from Russell offices in Canberra, and I'm joined by Kate Louis, who is the First Assistant Secretary of the Defence Industry Policy Division, part of the DoD. How you going Kate?

Kate:

Hi there Phil. Really well thanks.

Phil:

Thanks for finding time to meet with us. I've been looking forward to catch up with you for quite some time. I cover a lot of ground in defence, whether it's on the phone, or the myriad networking functions that I seem to go to all the time, as I'm sure you do. Pretty much wherever I turn over the last couple of months or so, foremost on most people's agenda has been the CDIC. Which, the timing for this podcast is very good because we only just launched that in Monday of this week, wasn't it?

Kate:

Indeed we did. Monday it was launched by Minister Pyne, Monday the fifth of December.

Phil:

How was the feedback down there in Adelaide around it all?

Kate:

Fantastic. There's just a huge buzz around it. We're really excited. We've been working for months building up to it and launching it. It's just a terrific achievement.

Phil:

It's good to get some runs on the board, I think, post the delivery of the White Paper and the other relevant documentation around it. The buzz around the industry was good?

Kate:

Absolutely. We're really looking forward to it opening and, as you say, actually getting the doors open and business support and innovation flying. Fantastic.

Phil:

The whole concept of improving our defence capabilities through championing both the SME sector and the prime sector, is going to be fundamental to how we grow as a defence force and all the benefits that provides to us. I think a lot of our audience, in particular the SME sector, might ... Often it's hard to get your head around exactly the way the world works, and Defence is quite a large behemoth with many moving parts. Might be a really good way to start this podcast with you just giving us a bit of background on your role and what you do, and how that fits within the wider connectivity with CASG and also the services.

Kate:

Sure, absolutely. No, I'm happy to do that. I worked on the White Paper, building up to the February 2016 release. I guess a lot of the feedback that we had from industry was that Defence is really large and complex. It's sometimes difficult to get into the business. With innovation, it's hard to get in and then sometimes hard to progress. So what we wanted to do was bring together a huge myriad of programmes, if you like. Really bring them together and give people a front door to go in through, which is really the Centre for Defence Industry Capability.

Phil:

Interesting. So, your role .... We had a real quick chat off-air beforehand. You're about to come out to 20 years in Defence?

Kate:

That's exactly right. So I started almost 20 years ago in Defence. It's hard to believe now. I was one of those people who, I was just going to start and see how it went, and of course 20 years later, here I am. I've got probably one of the best jobs in Australia, it really is. It's a fantastic opportunity to drive the partnership between Defence and industry I think. We've got all the right elements in place. We've got terrific support right from the top, from government, from the senior Defence leaders, and we've got terrific funding, resources and initiatives, and now the Centre for Defence Industry Capability as well.

Phil:

There's a couple of things I'd like to tick off in this podcast. One is that I'd really like to have a bit of a discussion around the Industry Capability Plan that you're working on right now. I know that's a key part of work for you. I'd also like to have a bit of a chat around the evolving culture within Defence, and how its connecting, or the proactivity of connecting more effectively with the industry and what the outcomes of that are. I think also, if we can cover off some of the practical dynamics around CDIC and how businesses, whether primes or SMEs can use that as a gateway or a front door into defence industry, and how best they can position themselves to capitalise on that. If we can cover those things off I think we'll be doing pretty well.

Kate:

Absolutely.

Phil:

Over about half an hour or so.

Kate:

Yeah. No, no very happy to. It's my passion in life. Cat's pyjamas.

Phil:

I received a email, would have been this week sometime, with quite a detailed survey associated to it asking ... We're an SME ourselves, so asking about our business and our connectivity with Defence. Now, from what I understand, that's an initiative from your department in a way in which to try and map what our industry looks like, and then from that you're going to use it to help build and put some meat behind the plan that you're working on. Can you explain that a little bit for me?

Kate:

Sure. Not a problem Phil. I guess, starting from the top, the White Paper, released in early 2016, sets out what we really need our ADF to do. They have to be very agile, adaptive, powerful, forward leaning, engaged in the region and internationally. The White Paper and Defence Industry Policy Statement really recognises industry as a fundamental part of that, supporting the ADF and Australian industry as a fundamental import to capability to support the ADF to do that.

One of the things the Defence Industry Policy Statement really sets out, is the importance of looking at industry as a strategic asset and really building that capability. Not so much through just project by project or transaction by transaction, but strategically planning over the long term, over the next 10 to 15 years, what we need industry to do.

So we are embarking on this really seminal piece of work around building a Defence Industry Capability Plan, and embedding within that the sovereign capabilities we need to invest in, in the future. The Industry Capability Plan is a really important part of that, to allow us to look at what the industry capabilities look like now, in the country that we have serving the ADF, but also looking at our 195 billion dollar integrated investment programme and saying, "Okay, what are the capability streams in those? In that programme? What does our Australia industry need to look like in the next 10 to 15 years in order to support that?" So that's the purpose of the Industry Capability Plan. It's a huge piece of work and a real challenge, but a very exciting opportunity for us to look at ... Never really been done before, so I guess we're learning on this journey too, but it's got to be done in partnership with industry effectively.

Phil:

So industry can actually have a voice in terms of how you go about building this plan, so if they can respond to the survey and give some insights into their business and their intentions, that can actually help quite a lot, can't it?

Kate:

Absolutely. That will be fundamental. The Industry Capability Plan is going to be as good as the inputs that we get into it. A really critical part of that is the survey that we're doing. We're surveying and I know the reaction is, "Oh, no. Not another survey." I understand it takes time and it takes energy to do these things, and everybody's time is valuable, but it would certainly assist us if people would help us fill it in. Then we can use that data then to map the capabilities that we have now, and really look hard at what we need to invest in, in the future and put options to government around that. I really would encourage all of your listeners, on the industry side of things, to fill in the survey and help us out. It's open til the 31st of January, can be accessed a number of ways, but the simplest is through the CDIC website which is business.gov.au\cdic.

Phil:

I can contest to our listeners that ... I actually did it myself and it didn't take very long at all.

Kate:

I'm pleased.

Phil:

The good thing about it also is that it made me think about where our business fits within Defence and how Defence is actually framing capabilities, and the type of businesses that they're looking at. I'll pick up on that a little bit later on. So the Defence Industry Policy Statement, and to use the language from it, it was all about resetting and refocusing the Defence-industry partnership moving forward. Coupled with that is quite significant culture change, so things have been done in a particular way for many, many years, and the focus moving forward is just to really evolve the way in which industry and government or defence can work together. That cultural issue in terms of any change in any business, change of culture is often very difficult. You have incumbent players and they always do things the way they've always been done. What do you see as the biggest challenges that you're facing from the government side, to just really evolve your thinking and the way in which you run your teams here, and how you can better that culture, the connection, with industry. How's that going? Big question.

Kate:

Very good question. Very important question though. Thank you for asking it. I guess, as we're developing the Industry Policy Statement, and it's important really to have developed the policy statement and now be implementing it. I think that's a really important part of what we're doing here, is that the people involved in policy development didn't just throw it over the fence. We're now deeply involved in its implementation. We really did take an approach that I don't think had been taken in exactly this way before, where we involved industry in the development of the statement. Hats off and I always thank my industry partners. They were absolutely fantastic and very collegiate in the way that they all came together and assisted me in developing what is a very challenging thing to do, to pull a policy statement like that together, and of course under the government and Defence leadership.

I guess we started all the way back in the Policy Development Statement, where we involved industry in it. There was a sense of ownership on both parts, and a sense that we were already starting to build that partnership. I guess listening to Defence and defence industry, in terms of the big changes that we needed to make, it was really about resetting that partnership, as you say. Was really about driving and maximising Australian industry involvement in our projects and right throughout the capability lifecycle. There was an element there too, about rationalising and streamlining this vast number of programmes that we had, into something that was really accessible.

Those big policy shifts were also helping to drive structurally a change. I think moving my division out of CASG into the Strategic Centre to really drive the fact that industry is a strategic capability and is a strategic asset that we need to work in partnership with industry to develop and build, is really important part of that. I work hand in glove though with Deputy Secretary of CASG Kim Gillis, in driving change and in driving all the amazing things that he's doing in terms of CASG change is really fundamental as well.

Working very differently with government, providing them a lot of information in terms of the capability development process about Australian industry. The big initiatives, the Industry Capability Plan, I've also mentioned, but we're doing a lot of work around exports and an export strategy and how we can drive that. I guess the cornerstone of the partnership change is through the Centre for Defence Industry Capability. That's a really important part of that.

Phil:

When you're working with your team, trying to deliver your goals, in terms of the CDIC and the wider parameters that you work within, what are the frustrations that you find connecting with industry? Tell me the things that you think industry can change quite quickly to make that realignment of their relationship with government more effective. Is there any one or two things that we can change straight away?

Kate:

That's a good question. I have found in the industry policy process that industry have been fantastic in helping me. I guess really we'd be looking for them to lean into the things like the Centre for Defence Industry Capability, really lean in, in partnership with us, accessing the services, continuing to generate that dialogue, working in collaboration with the projects. Of course, I'm very, very excited and I hope we get to talk about the innovation system too. Working in partnership again with industry to make sure that we're both coming to the table to invest in that together. It's not just Defence funding and throwing money over the fence. This is something we've got to work together to build innovative capabilities in the country again, all for our war fighters.

Phil:

Absolutely. So the Defence Industry Policy Statement, there's four key pillars to that. Summarise them, just deliver capability, which is what we're talking about, so why are we doing this? Deliver capability.

Kate:

Exactly.

Phil:

A new approach to innovation. I think this is very important because the traditional defence businesses have always been focused on innovation, however, and this is something that I see coming through in my study of the CDIC, it's really identifying those businesses that aren't traditionally defence businesses. We can extract that information and work with them, particularly academic and researchers but also start-ups, to help in that process of delivering capability, drive competitiveness and export potential and cutting red tape. These are the four things which I think make a lot of sense. Industry is embracing them because obviously industry want to work more effectively with government.

With the CDIC itself, there's a number of different factors associated with it. You've got a number of major programmes like the Next Gen Technologies Fund, you also have the fund created to ... the Defence Innovation Hub, and I think you guys are channelling about 640 million over a period of 10 years there. The gateway into all these programmes, and the way in which you can deliver on these programmes, or these funds, is to get industry involvement. We spoke a little bit off-air, and you spoke about CDIC being the doorway into this. Should this be the first point of call for any business, SME or prime, into Defence?

Kate:

Yeah. As I said some of the feedback that we had in the Industry Policy Statement was it's hard to get into Defence. We're a big complex organisation right across the nation. There are many different groups doing fantastic things in innovation right across Defence, and indeed more broadly in the broader industrial landscape with the department of industry and all their innovation activity. So what we wanted to create is a front door and that is through the business.gov.au\cdic. Sorry, I'm going to keep saying that website because it is really critical to us.

As I mentioned, the CDIC is really the cornerstone for helping us reset that partnership. It's important for a couple of reasons. It's co-chaired by Defence, Mr Gillis as I mentioned, but also has an industry co-chair who has been very widely admired, in Mr Paul Johnson, and has a terrific range of prime and SME representatives. That advisory board Phil, was very important for us resetting that relationship and helping us drive some formal governance of the programmes, but also really driving that partnership between industry and Defence.

Headquartered in Adelaide has a national footprint importantly. Business advisors across the country who are able to assist, support, provide industry development competitiveness. There's an innovation facilitation piece there too. You mentioned, and you absolutely hit the nail on the head, we are looking at a diverse range of businesses to really drive into Australian capability. Maybe not just the traditional Australian defence companies, but people who may have technologies that are outside the traditional military sphere but might have applications for the military. We wanted to bring together the strength of the Department of Industry, they have a huge network of advisors which we can tap into as well. Then specifically the Centre for Defence Industry Capability advisors.

Essentially you're right. That's the front door, that website I keep mentioning is the front door in. Doesn't matter whether you have an innovation proposal, or you're seeking business support or advice, to get into a defence project. That's an initial front door to contact you with a business advisor who can contact then and connected ... It's a real connector into defence.

Phil:

I jumped online. I've checked the site out quite a lot and the portal. I found it quite intuitive.

Kate:

Great.

Phil:

It's quite easy to find information. Simplicity is often a key. If I'm an SME or even a larger SME or a prime, if this is my connectivity piece into CDIC, so I can go through a formal process of lodging some sort of notification of a particular technology or some capability that I may have. Will one of the business advisors proactively get back to me within my local state to connect and engage? How does that work?

Kate:

Yeah, right. So it depends obviously what sort of business, and where you are and what you're seeking, but there's a range of business advisors, so if you've needing industry support, for example, or growing your business or wanting to look at a particular part of defence business, then business advisors are there across the states and territories to support that. If you have an innovation proposal, importantly the innovation advisors within the CDIC can look at your proposals and say, "Phil, you know this is really great," or, "You might want to work on this a bit," or," have you thought about this?" Or indeed, refer you perhaps to the broader innovation system through the Department of Industry.

Once you have actually submitted your ... I'm very pleased that the website was working for you. It is something that we worked very hard to make accessible, but of course we're on a continuous improvement journey with that, so if there's feedback on that we would like to know. If you do have an innovation proposal and you submit it, it does actually come through into the Innovation Hub which, importantly, is actually run by Defence out of my division.

It then goes out of the innovation advisory context of the CDIC into Defence to be assessed. We've put a huge amount of effort into making that a very innovation friendly environment. We've really developed, importantly an intellectual property strategy, a whole contracting suite, and a governance and funding framework that we think is really particularly innovation friendly.

Again, some of the feedback that we had as we were developing that, was that we have little pockets of excellence in our innovation programmes. We're really trying to bring them together so that ... Phil has a fantastic idea, we can bring that through if it's an early concept stage, we can get into contract with Phil. If the technology develops we don't need to go out into another programme, we just keep progressing that idea through the same contact effectively. We think it's a really neat way to continue to nurture innovation proposals in an innovation friendly environment and hopefully through into defence capability.

Phil:

In terms of the size of businesses that you're looking to either attract into the CDIC or that might be traditional defence businesses, are there any parameters at all? Is it from one to a thousand?

Kate:

Look, the CDIC in terms of the business advisory services, is really focused on our small to medium enterprises. That's the real engine room and the businesses that would most likely seek support for capability improvement grants and so on, skilling. Whatever that might be. In terms of innovation we are looking across the board of industry and academia of course, I haven't mentioned our academic partners, but we're very interested and obviously wanting to nurture innovation proposals from right across the primes, SMEs, academic spectrum. Again, it depends a little bit what services you're seeking and what you have to offer defence and what we have to offer you.

Phil:

For our SME listeners, is there anything in particular they can do to best position themselves to be attractive to Defence? What are those key steps that you need to present to defence or have innate within your business that's going to make you stand out?

Kate:

I think it's an important question because Defence is not a particularly easy business to do business with in effect, because we do have complex capabilities. We do have sophisticated acquisition capability development programmes. I guess I would just encourage that, going through the Centre for Defence Industry Capability process is important, because they can help you identify exactly what Defence's business needs are, and what we're looking for in terms of quality, programmes or indeed, how your business is structured and the best way to get into a supply chain.

Phil:

For our academic listeners, and I know a bit part of the CDIC is to try and get some of the great research that's going on that not a lot of people know that's happening, and try and translate that into tangible capabilities for our armed forces. How are academics receiving the CDIC? Are they optimistic about the way in which they might be able to realise years and years and years of research into something that actually makes a difference?

Kate:

Look, I really hope so. Obviously this is a learning journey for all of us. All of our industry and academic partners, and us will be learning from that. I haven't yet mentioned the Next Generation Technology Fund, which is of course, if you think of it Phil as R&D, the Next Generation Technology Fund very generally is the R side of the R&D. The Innovation Hub tends to be more the D, slightly higher technology readiness levels through into capability. The Next Generation Technology Fund I think will be particularly attractive to academics in terms of partnership arrangements. We have such a fantastic academic and university sector here. Tapping into that and being able to use these funded initiatives to drive their capabilities into war fighting capabilities is something we're really, really attracted to obviously, and encourage.

Phil:

In terms of getting involved, it's about the idea or the capabilities which is going to most appeal to Defence, and then it'll just move on from there and it can be explored?

Kate:

Yeah, that's right. Again, the Innovation Portal which is part of the CDIC hub is one way in. The Next Generation Technologies Fund is under development and we'll continue to make announcements through next year in terms of the other partnership arrangements that they're going to have. I very much encourage our academic listeners to be watching out for those further announcements next year.

Phil:

Okay. One of the pillars around the Defence Industry Policy Statement is all about cutting red tape, so this is ongoing frustration. It's not just within defence, it's probably dealing with all government departments right across Australia, whether it's federal, state. What sort of steps are you taking to try and remove that red tape and make Defence easier to do business with?

Kate:

It's a good question and I guess there's a range of initiatives right across Defence. There's a huge amount of work going on in CASG itself, in terms of the acquisition sustainment procurement space that Mr Gillis is over-sighting in terms of their contracting and procurement and acquisition arrangements. We're really focused on making these big funded initiatives easy to access, easy to get into and certainly trying to cut overhead in terms of people's ability to get into the programmes. Again, the intellectual property and contracting strategies we're setting up, we really hope are part of that whole theme too.

Phil:

So this has been quite a heavy discussion. It's exciting and there's a lot of moving parts here and the funding across the Technologies Fund, or the Innovation Hub. The appetite of government to invest in this I think is a good thing. On a personal level, what do you enjoy most about your job?

Kate:

As I said, I've probably got one of the best jobs in Australia. It really is. It's just so meaningful in terms of both, not only driving ADF outcomes that are tangible in the next couple of years, particularly through that innovation capability space, but driving Australian industry, that is something where you actually do change lives. You change people's lives, people's families and communities to build and support things. The continuous shipbuilding is such an amazing commitment to something we haven't had in this country before, that will ... Really into the future, the next couple of decades, creating that shipbuilding industry in this country, is an extraordinary thing.

Phil:

I hope to catch up again in about a month or so with you, because I want to have a chat about sovereign capabilities.

Kate:

Absolutely.

Phil:

Sovereign industrial capabilities and I think that's going to be led in many ways by our shipbuilding capabilities and a lot of the work going on in that space.

For our listeners, whether they're currently defence orientated business, or they are new to defence, what's your recommendations or tips to best understand the type of business opportunities or contracts available in Defence? What's those couple of tips to help them on their way?

Kate:

I think just being aware of the opportunities. The investment in Defence is incredible at the moment. We've got our 195 billion dollar investment programme. Importantly of course, that's not just high end war fighting capabilities, as important as they are, that's right across infrastructure, IT, through the major capabilities. I guess it's being aware of those opportunities, being aware of how you might access it through the Centre for Defence Industry Capability, through the innovation programmes, getting that business advice and making those connections.

Defence is trying to be ... And the government, being very forward leaning in terms of the big programmes, so we're doing the roadshows around C5000 Future Frigates, LAND 400 and the Armoured Vehicles Programme is doing a lot of industry roadshows too. Of course the submarine programmes. It's really about being aware of the opportunities that are coming up. As you very rightly point out, understanding that diversification is really important. There might be markets there that hadn't thought about before, being aware of those opportunities. Then just educating around how do I get into it? The CDIC is a great place to start.

Phil:

If I was going to summarise this podcast then, and we're running out of time Kate, it would be-

Kate:

Okay, great.

Phil:

It's become very clear that the CDIC is the front door into connecting with government and connecting with Defence. For all of our listeners make sure you go and check that website out. It's business.gov.au\cdic. Jump online and spend some time exploring around there. There's plenty of information and also contact points for greater accessibility or if you have any questions.

Kate, I've really enjoyed the discussion. You've got a big job on your hands.

Kate:

Thank you. I certainly do. I certainly do, but it's a very exciting one and I must say a big thank you to my team and to my industry partners who have got us to this point.

Phil:

It's good. So let's get you back on the show in about a months time.

Kate:

Fantastic.

Phil:

We'll talk about how can can build up some good indigenous industrial capabilities. I think that'll be a very good conversation which will be relevant not only to our audience of primes, but also the SME space and academia and those people who might not even be looking at defence yet.

Kate:

I look forward to it.

Phil:

That's good. Thanks Kate. Just reminder to everyone to check out defenceconnect.com.au. We're on all of the social sites. Facebook, Twitter, LinkedIn. You can follow me if you like @philliptarrant on Twitter and remember to check out the business.gov.au\cdic site. Thanks for tuning in. We'll see you next week. Bye bye.