Well what could possibly go wrong having an Army aviator talking to a bunch of submariners? I do note last night the prize that was given for excellence in engineering came from a fellow aviator who also happened to be a test pilot. So perhaps there's a good precedence there. In fact, as I look through the history of Collins and a number of other maritime platforms, that aviation theme keeps reoccurring so perhaps there's a good nexus between these two complex areas of human endeavour being well above the water or well below it. As an aviator, I'm not going to try and tell you about boats. I'm assuming that most of you have Yule Woolner by your bedside, if indeed many of you don't feature in it in your lived experience and understanding of the Collins.
But my intent today is to talk about Collins and particularly the lessons learned from Collins, because as we look forward, not just in the submarine domain, not just in maritime, but in terms of the whole of defence capability, there are many lessons that we need to learn from the Collins experience. Let me caveat it right at the start: I think Collins has been an outstanding success despite all of the media, despite the various problems, as my military instructors at Duntroon would have said-despite the character building experiences along the way, it has in my opinion been a success that we as Australians should celebrate as opposed to denigrate.
I'm also going to talk briefly about the strategic context in which we find ourselves that has led to some of the decisions and investments the government has made and I'll finish with a few comments on the life of type extension for Collins.
So as I said, if you look back at the program, a fairly long gestation with a decision period of 1987, from a greenfield site, through to production in 1990, the scale and scope and eventually performance of what has been achieved is actually truly remarkable. It is something that we collectively should be making sure that the Australian people and the media are aware of the positives as opposed to just hanging the negative connotations on the Collins that we've seen for a long time. But we should also look at the program and say okay, there were problems, so what were they? How were they overcome? What were the root causes? And how can we avoid into the future? And as I look back at Collins, and again, I'm not going to tell you how to do boats because you know that better than I, but many of the design issues were compounded by the fact that there were underlying contractual and relationship issues between the partners in the program that meant that rather than having a performance and outcome-based approach where risk was appropriately shared, we saw stubborn interactions between partners leading to poor engineering practices, sometimes no engineering practices, and outcomes that then plagued the boat for a number of years into its life. In the words of John Coles who was commissioned to come and look at the Collins: there was inherently nothing wrong with the design. If you look around the world at first time developments and you look at the scale of problems, the time it takes to rectify, there was nothing inherent in Collins that wasn't to be expected if you had an open mind to look at how other programs ran. But during that construction phase, some of those contractual issues caused real issues and we need to understand what those were.
To give you an example of the sort of thing I'm talking about: when there were changes made to the boat and its design, where good engineering practice would have said we should put this in a tank and test it to look at the flow characteristics, to understand noise interaction with drive systems et cetera—you know these days it's relatively cheap to do - computational fluid dynamics et cetera— but they couldn't reach agreement on who would pay for that tank testing, so quite fundamental engineering processes around test evaluation, understanding risk before you finalise a design, weren't even carried out and that went on to bug the program for some time to come. An interesting aside - coming back to my aviation theme - I'm led to believe that the next door neighbour of the commander of HMAS Stirling was a certain Frank Smith(*) who was an aero engineer who out of pure interest ended up interacting with the DSTO people and others to suggest various forms of aerodynamic shapes and ways that could fix and ended up being part of the solution for the Collins in terms of that fluid dynamics. So aerospace plays another role in the Collins. It's a good part of the legacy we should never forget.
But I would argue that Coles and his report should be required reading not just for submariners but for anyone political, government department, service or industry who are involved in the procurement and the support or operation of complex military systems. Because what Coles clearly identified was that beyond those early issues around the contractual and commercial relationships and disputes around who would pay, who owned IP, the real problems that beset the Collins came about because of a lack of leadership, a lack of resource and a lack of a concept of what it means to be a joined up enterprise which is required if you're going to be the parent operator - the sovereign owner of a complex capability. And for those who haven't read his series of reports, it makes quite sobering reading to understand just how dysfunctional the relationships were between the Navy, DMO, ASC, and industry during many years of the Collins life.
To give you just an example of where those relationships could really bring things unstuck, the Department of Finance rules that drive Defence and their concept of budget cycles, meant that at times people held back orders for repairable items from the supply chain to slide it into a new budget cycle which then made it difficult for the supply chain to have the parts that were needed either in the West or by ASC, which had a flow on effect of meaning that boats were unavailable which then impacted on training; a whole raft of issues. And the work that Coles did was to say we need to take a whole of enterprise approach where those boundaries are broken down, both contractually but also in terms of relationship, so that the people working as part of the enterprise were engaged not just within their own organisation, not just those at the boundary, but also throughout the supply chain. At the peak of the recovery what we saw was people in uniform, people from ASC, people from industry and DMO, collaboratively working across the whole enterprise, so that each had a better appreciation of the pressures that applied to each part of that supply chain.
And as that understanding grew and as the rules that govern the interaction between the various groups were improved, we have seen a more joined-up whole of enterprise approach, which has enabled the best utilisation of the resource, the best planning available. We've also seen good Australian ingenuity come to fore, and I see Stuart (Wiley in the audience) and I see the work that ASC did in terms of optimising work practice within ASC. I've seen the confidence to say sovereign ownership means that we perhaps need to invest some money for better facilities so that there's leaner processes within ASC; to take a holistic look at the whole maintenance cycle of how do we shorten the time for full cycle dockings; and so things like regenerating the ability to do the hull cut to get equipment out to service it more effectively, to test their whole system before it's actually reinstalled. Those kinds of investments have actually led to savings as well as better outcomes in the longer term.
And so one of the key lessons there for government and for Defence and industry is that often to save money, you have to spend some; and that spending money on a sovereign capability to understand the design, to be able to access the design artefacts ] to make intelligent decisions about what to do with them; and that engagement across the whole of enterprise is the kind of sovereign capability we need if we're going to operate a relatively small fleet of unique configuration. And that point is the starting point for a lot of work that the Parliament did, which then led to some of our policy changes which has now been a paradigm shift in how government and Defence are interacting with industry, because for many years - and the lived experience for many of you in this room would be where Defence saw industry as someone to be kept at arm's length, either due to probity or bias, for a whole range of reasons. But what we've seen is an increased understanding now that if we are actually going to make the capabilities that we give to our land commander, maritime commander, and air commander available when he or she needs them, effective against the threats that they are facing in a given theatre and affordable across their life of type, then we actually need to re-evaluate how we look at value for money. And for something like the C17, where there's a large fleet, with a common configuration, value for money probably does drive us to link in to a global supply chain; a spiral upgrade program that's run by a trusted ally that we might have a few people in just to understand but we don't actually own it or run it. But where it is a small fleet with a unique configuration, we can't take that path. And we've seen some dreadful failures in the past, whether it's the collapse of the amphibious fleet that led to the Rizzo review, the Collins fleet that led to the Coles review, even things like the Tiger, a relatively small fleet, unique configuration to us; and we had to have some pretty substantial changes of thinking about how we get the design support network for that platform. There are elements of industry that are as fundamental to the capability as the individuals - the collective training, the individual training - all the elements of what the military has known for many years as FIC, or fundamental input to capability; and that's why you saw in the first principles review the change of thinking that said we actually need to treat parts of industry as a fundamental input to capability. We can no longer hold them at arm's length and assume that when we need them, they'll be there with the requisite capacity and confidence at a price we can afford, just ready to jump and do that task. If we need certain elements, we need to partner with them. We need to make sure they're sustainable and that they have that capacity and confidence that we need into the future to have this whole of enterprise or sovereign ownership and management of key capabilities.
And that's what's led out of the First Principles Review to the Defence Industry Policy Statement of 2016, where we are looking to have a framework to assess what those elements of industry capability are. A new approach to long-term engagement with defence industry; supporting actively, for first time in Australia's history, exports because we realise that one of the ways to make industry sustainable is to amortise their cost base over not just our requirements but over the requirements that other allies may have for similar equipment; and importantly, if you're going to be able to export, it means you have to generate your own IP. The culmination of value for money and intellectual property, therefore capability, that is world beating the essential enablers for export and if our industry can generate that for export, it also means we are getting capability that is affordable, value for money, and world-leading in terms of capabilities.
So there's a whole raft of lessons that we've learned out of experiences like Collins that are now flowing through into policy; and don't be misled by the cynics who argue that these policy measures are or about pork-barrelling into somebody's seats just to create jobs. The underlying philosophy, which actually came from a joint standing committee on Foreign Affairs, Defence and Trade Report in 2015, is all about capability - how do we make that capability available when we need it, effective in the role, and affordable over its lifetime - and some areas, submarines are a classic, it means we need to have a sovereign capability spanning defence and industry.
So where are we at the moment? Well, one of the applications of that thinking is the national shipbuilding plan. Rather than having the ramp-up and then the valley at the end of it, where people invest a lot, build up capacity and then they have to disband it all, which leads to inefficiencies, leads to risks and leads to cost, the national shipbuilding plan is saying: you know what? If we want this industry capability, we actually need to have a sustainable work flow over a long period of time with long-term partnerships so that we can see the investment in people, in processes, and infrastructure that not only make it affordable but it also means that we can repair, modify, certify submarines or ships when we need them in response to new threats or battle damage or other considerations. So that's been a very practical outworking we've put, as you're aware, some $90 billion into that program - $1 billion into infrastructure alone and over $60 million into workforce strategies around raising the skill level from naval architects right down to the various trades that were involved with that enterprise.
And the last element of that that we have learned from the air environment - again, we learned this after the Nimrod loss in the UK that led to the Haddon-Cave Report; that generated our concepts of air worthiness review. And in the maritime space, Tim Barrett, another aviator, took that and applied it to now a sea worthiness construct in terms of saying how we evaluate operational and technical sea-worthiness of our ships and vessels, and assets. And it goes to some of the things that Coles talks about in terms of having the correct information to make accurate and timely decisions about your capability. And so collectively, what you've seen out of experiences like Collins is a significant lift in Australia's ability to design, own, and operate complex systems.
Now, has all that paid off? Well, I'm really pleased to report: yes. As many of you would know, we are now getting, sometimes, five out of six boats available in service. Between '16-'17 and '17-'18, one of the measures of effectiveness is material-ready days, achieving 101 per cent of the requirement over that three-year period, which is well above international benchmarks. So, there's measures there around the effectiveness of the remediation measures which we can take great pride in but, I think the thing that speaks volumes to me is when I went to RIMPAC this year and met with the CO of HMAS Rankin and talk to them about the reliability, effectiveness, the role, the way they interacted with the USN and the other counterparts and I also spoke to Admiral Davidson and others from the USN about Rankin's performance. What it really validates is that the Collins is a good boat; it's very capable. And with the right design support and industry network behind it, it is truly a world leading capability in that space. So, lots of good lessons from Collins which are going to have an impact for years to come.
Very quickly, the strategic context behind a possible lifetime extension. Australia's a maritime nation; we always have been; we always will be. We still send the bulk of our exports, by volume and value, by sea. We still import, in one form or another, whether feed stock or finished product, pretty close to a 100 per cent of our liquid fuel needs. We are very reliant, both from an economic perspective and a defence perspective on the sea lines of communication, and keeping those open - so, the global rules base order, which has underpinned freedom of navigation, freedom of overflight, are incredibly important, and yet we see pressures on those now, like we've never seen before; both from non-state actors and state actors. Coupled with increasing economic power in our region, and therefore investment in military capability, with investment in new technologies such as supersonic sea-skimming missiles that put major fleet units at risk, submarines are becoming even more important in terms of both a deterrent capability and were the worse to happen, the ability to engage and defeat enemies. So, I don't see the requirement for submarines diminishing anytime soon. Perhaps the mode of operating, the use of unmanned vehicles to support submarine operations, you know, it may evolve, but I see the undersea environment will continue for some time to come.
Which brings us to SEA1450, the life of type extension program. Clearly, as we indicated in the White Paper, our expectation is that we're going to need to extend the life of Collins to plug any gap between Collins and future submarines. The very fact that we need to consider doing that comes back to this concept that we have now achieved a sovereign capability around the ownership of the submarine design support, the industry that goes behind that, that whole of enterprise approach. We also, not only for capability, but as we ramp up from six boats to 12 boats, we actually need those vessels so that we can be working up crew to have the ability to man those 12 boats as they come online. It also provides a risk mitigation. We already have 13 programs running on Collins; things like sonar and comms and EW. It provides the opportunity to risk mitigate some of the things we may be looking at future submarine by incorporating those in the update cycle, whether part of LOTE or outside of LOTE, to reduce the risk both of the technical side but also be transition where crews are trained up on equipment on Collins that may well be common here to the new platform. So, there's a range of reasons we may want to be doing it. We've had a 2012 study by USN and RAN that says it's possible. In 2016, a package of work was given to ASC to actually look at the scope of work that will be required. That's complete and now the detailed design engineering work is underway that will inform the government decision processes, which we will now look to engage with Defence on. So, SEA1450 is something that we are looking at; we're in the process of looking at how we approve that, when we approve it. How many boats? You know, the potential is there - probably minimum three, potentially five or even more boats in that program because it does give us an ongoing capability that we need, it gives us the ability to build up our workforce, and it gives us the ability to reduce risk into future programs.
So, in conclusion, today, the theme of you conference is: Collins: Life of Type Extension, Issues, and Opportunities. Well, yes, there have been issues in Collins' past, but they've actually laid the groundwork for a far more robust approach to the future. And you could well argue that the only reason we have the option to consider a life of type extension that is affordable and achievable, is because of what we have learned from Collins. The challenge is to make sure that we don't lose those lessons. A year or two after Coles, I visited Osborne and I was rather taken aback to speak to one member of that whole enterprise who indicated that he hadn't visited any of the SMEs or supply chains or others because that wasn't his job. I've got to say, Tim Barrett and I had a few words about that, and I'm sure he had some good career counselling. But it just shows the posting cycle and the competitive tension cycle of re tendering and contracting work, has the potential, on a periodic basis, to undermine the progress that we've made. And so the RSL motto: the Price of Liberty is Eternal Vigilance we could adapt to the price of effective sovereign capability is eternal vigilance to the lessons we've learned in the past.
We've learned those from Collins, it's a great capability. We have the potential for LOTE, it's a credit to many of you on this room and to those from navy and ASC and industry that have worked through those character building issues to deliver us a world leading capability. And as you have this conference today, it's one more opportunity to gather that collective thought around how we can further our sovereign ownership of Collins and like capabilities. And I wish you all the best for the conference.