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AO-A10* 070 

UNCLASSIFIED 

NAVAL POSTGRADUATE SCHOOL MONTEREY CA F/0 5/1 

A COMPARISON Of THE ACQUISITION PROCESS FOR SHIP CONSTRUCTION P—ETCIU) 
JUN 01 DP CATON 

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NAVAL POSTGRADUATE SCHOOL 

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THESIS 


A COMPARISON OF THE ACQUISITION PROCESS 
FOR SHIP CONSTRUCTION PROJECTS OF THE 
ROYAL AUSTRALIAN NAVY AND THE UNITED STATES NAVY 

by 

David P. R. Caton 
June 1981 

Thesis Advisor: W. H. Cullin 


Approved for public release; distribution unlimited 


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4. TITLE (m4 SiaMIlUj 


> A Comparison of the Acquisition Process 
for Ship Construction Projects of the 
Royal Australian Navy and the United States Navy. 


. AUTHOftfaJ 


David P. R. Caton 


TVP« OP ftfPOIIT A^PCfttOO COVCACO 

Master's Thesis^, / 


FERFORMINa ORGANISATION NAME ANO AOORSSS 

Naval Postgraduate School 
Monterey, California 93940 


• I. CONTROLLING OFFICE NAME ANO AOORESE 

Naval Postgraduate School 
Monterey, California 93940 


NCV NAME A AODREWIIAHml I 


4. DISTRIBUTION STATEMENT <•! IM« SrM ) 



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IS. KEY BOROS ( Cmu tmm m mt iwtotm «IM II mam T <nN IMrUIT *F Mm* i 

Australia, Procurement, Shipbuilding. 


m. abstract re 


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This thesis compares the processes of acquisition for ship construction 
projects in the Royal Australian Navy and the United States Navy. It 
examines the problems associated with government furnished equipment with 
regard to specifications, timing, quality assurance, and cost. The 
requirements of standardisation, commonality, and interoperability with 
allied nations is also discussed. 


DO iETt. 1473 COITION OF I NOV EE It OBSOLETE 

S/N 0103-014* IMI | 

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security CLASSIFICATION OF TriS FARE I 


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The differences are not many, and can be attributed to the demographic aspects 
of each country, and the fact there is always more than one way of operating. 
The process theoretically should flow smoothly from one phase to the next, 
however, differences between authorities on minor aspects can lead to delays 
in the total project. 

A proposal for a replacement shipbuilding programme for the Royal Australian 
Navy is presented, whereby the fleet would be continually updated with new 
ships and new weapon systems on a cyclical basis. This proposal would 
increase involvement by Australian industries in warships for Australia. 

It would also solve many of the current problems with government furnished 
equipment, and provide a substantial degree of standardisation. 


















Approved for public release; distribution unlimited 


A Comparison of the Acquisition Process for Ship 
Construction Projects of the Royal Australian Navy and 
the United States Navy 


by 


David P. R. Caton 

Lieutenant Commander, Royal Australian Navy 
B.Sc. (Eng L)., Royal Naval Engineering College, 1970 


Submitted in partial fulfillment of the 
requirements for the degree of 


MASTER OF SCIENCE IN MANAGEMENT 


from the 

NAVAL POSTGRADUATE SCHOOL 
June, 1981 


Author: 
Approved by: 









ABSTRACT 


This tnesis compares the processes of acquisition for ship construc¬ 
tion projects in the Royal Australian Navy and the United States Navy. 

It examines the problems associated with government furnished equipment 
with regard to specifications, timing, quality assurance, and cost. The 
requirements of standardisation, commonality, and interoperability with 
allied nations is also discussed. 

The differences are not many, and can be attributed to the demographic 
aspects of eacn country, and the fact there is always more tnan one way 
of operating. The process theoretically should flow smoothly from one 
phase to the next, however, differences between authorities on minor 
aspects can lead to delays in the total project. 

A proposal for a replacement shipbuilding programme for the Royal 
Australian Navy is presented, whereby the fleet would be continually 
updated with new ships and new weapon systems on a cyclical basis. This 
proposal would increase involvement by Australian industries in warships 
for Australia. It would also solve many of the current problems with 
government furnished equipment, and provide a substantial degree of 
standardisation. 







TABLE OF CONTENTS 


Page 

INTRODUCTION . 9 

A. GENERAL. 9 

B. OBJECTIVES OF THIS RESEARCH. 10 

C. RESEARCH QUESTIONS . 10 

D. SCOPE, LIMITATIONS AND ASSUMPTIONS . 11 

E. METHOD OF RESEARCH. 11 

F. DEFINITIONS AND ABBREVIATIONS. 12 

G. ORGANISATION OF THIS THESIS. 13 

A LOOK AT THE COUNTRIES. 15 

A. GENERAL. 15 

B. GOVERNMENT STRUCTURE AND POLICIES . 15 

C. ORGANISATION OF DEFENCE AND NAVY DEPARTMENTS .... 17 

1. Australian Department of Defence . 17 

2. The Royal Australian Navy. 22 

3. U.S. Department of Defense. 25 

4. The United States Navy. 27 

D. INDUSTRIAL BASE AND CAPABILITIES. 31 

1. Australia. 33 

2. The United States of America. 35 

E. SUMMARY. 36 


5 



























Page 


III. SHIP ACQUISITION PROCEDURES . 37 

A. GENERAL. 37 

8. THE RAN ACQUISITION PROCEDURES. 37 

1. Introduction. 37 

2. The Process. 41 

3. Managing the Process for Ship Projects. 47 

4. Summary. 51 

C. THE USN SHIP ACQUISITION PROCESS. 51 

1. Introduction. 51 

2. The Process . 54 

3. Managing the Process for Ship Projects. 58 

4. Summary. 61 

D. COMPARING THE RAN AND USN PROCEDURES. 61 

E. SUMMARY. 67 

IV. GFE AND STANDARDISATION CONSIDERATIONS . 68 

A. GENERAL. 68 

B. PROBLEMS. 70 

C. SOLUTIONS. 73 

D. 'STANDARDISATION, COMMONALITY AND 

INTEROPERABILITY . 76 

E. SUMMARY. 78 

V. A PROPOSAL FOR THE RAN. 80 

A. INTRODUCTION. 80 

B. THE PROPOSAL. 80 


6 































Page 


C. EFFECTS OF THE PROPOSAL. 81 

1. Government. 81 

2. Oefence Acquisition Organisation . 83 

3. Industrial Activities . 83 

4. Equipment Considerations . 84 

5. Other Considerations . 86 

D. SUMMARY. 87 

VI. CONCLUSIONS AND RECOMMENDATIONS . 89 

A. SUMMARY OF THE THESIS. 89 

B. CONCLUSIONS. 89 

C. RECOMMENDATIONS. 90 

APPENDIX A COMMITTEES INVOLVED WITH ACQUISITION . 92 

LIST OF REFERENCES. 97 

BIBLIOGRAPHY . 100 

INITIAL DISTRIBUTION LIST . 102 


7 





















LIST OF FIGURES 


Page 


1. Australian Defence Organisation . 19 

2. RAN Outline Organisation. 23 

3. Navy Office Organisation. 24 

4. U.S. Department of Defense. 28 

5. U.S. Department of Navy. 29 

6. A Defence Industrial Base. 32 

7. Simplified Equipment Procurement Process for 

Australian Department of Defence . 39 

8. RAN Major Systems Acquisition Process . 40 

9. U.S. Department of Defense Major Systems Acquisition ... 53 

10. Comparing the RAN and USN Processes 

a. Identifying Needs . 62 

b. Generic Approval/Concept Exploration . 63 

c. Project Development/Demonstration and Validation ... 64 

d. Project Definit ion/Full Scale Development. 65 

11. A Proposed Replacement Shipbuilding Programme for 


the RAN 


82 


















I. INTRODUCTION 


A. GENERAL 

The topic for this thesis arose from the researcher's exposure to 
the acquisition and contracting procedures used by the United States 
Department of Defense in the procurement of goods and services for use in 
the United States Navy (USN). The researcher's direct involvement with 
procurement practices in the Royal Australian Navy (RAN) consisted of two 
years on the staff of the Director, Naval Equipment Production from 1973 
to 1975. From these experiences, it was recognised that some differences 
between the acquisition policies and procedures of the Navies existed, 
and that there was a possibility of each Navy learning from the other. 

The RAN, the Australian Department of Defence, and the Australian 
Government have recognised that problems in this area exist, and have 
initiated or been involved with several recent studies in an effort to 
strengthen the procurement activities. Some of the major studies are: 

- Review of Project Management in the RAN, 11 July 1978, by 
Captain D. J. Martin, RAN, et al., [Ref. 19]; 

- Joint Committee on foreign Affairs and Defence, Australian 
Defence Procurement, November 1979, (Katter Committee), [Ref. 15J; 

- Procurement of Equipment for New Construction Ships, March 1980, 

0. F. Bruce, Chairman. (Bruce Report), [Ref. 31]; and 

- Report of the Naval Procurement Working Party (NAVPRO), 28 
November 1980. [Ref. 25] 








These reports clearly indicate that there are several problems to De 
overcome, and propose changes to the existing policies, organisations, 
and procedures to strengthen the acquisition process and to assign 
responsibility and accountabil ity to appropriate areas within the 
RAN. 


3. OBJECTIVES OF THIS RESEARCH 

The objectives of this research are to compare the acquisition 
processes of the United States Navy and the Royal Australian Navy for 
ship construction projects, and to examine the problems associated with 
government furnished equipment with regard to specifications, timing, 
quality assurance and cost. The requirements of standardisation, com¬ 
monality and interoperability with allied nations are also discussed. 
Recommendations in these areas will be presented. 

C. RESEARCH QUESTIONS 

1. Primary 

What are the significant differences in the ship acquisition 
procedures between the RAN and the USN, and what steps are being taken, 
or could be taken, to overcome major problems encountered in each of 
these procedures? 

2. Secondary 

a. What are the problems in the ship acquisition procedures 
regarding government furnished equipment (GFE)? 

b. For GFE, where should the emphasis witn regard to specifica¬ 
tion, timing, quality assurance and cost be? 






c. What requirements exist for standardisation, commonality 
and interoperaoility witn allied nations? 

D. SCOPE, LIMITATIONS AND ASSUMPTIONS 

This research nas concentrated mainly on the project management 
aspects of ship construction projects. The project or programme manager 
is the driving force benind the project. To produce a viable end product, 
the project manager must consider all relevant aspects put to him by 
specialist groups. 

In an effort to cover as many aspects as possible, detailed analysis 
of any one area is limited. The arguments may therefore appear simplis¬ 
tic in some areas, however, it is hoped that by presenting the arguments 
nere it will prompt deeper analyses by others in those areas of concern 
or interest. 

It is assumed that the reader has some basic knowledge of the require¬ 
ments and procedures for obtaining defence-related equipment. 

As Australia and the United States of America have some language 
differences in the spelling and use of some words, this thesis is written 
in the "Australian" English language. 

E. METHOO OF RESEARCH 

The descriptions and ideas in this thesis have resulted mainly from 
searcning relevant literature. The literature studied included: rules, 
regulations and instructions laid down by the appropriate departments; 
and reports, studies and books written on the subject of acquisition of 
ships and government furnished equipment. An opportunity to visit 
Seattle to talk with the ship’s company of HMA3 CAN3ERRA, the Supervisor 


11 




Shipbuilding Conversion and Repair, and Todd (Pacific) Shipyards, Inc., 
revealed some concerns relating to government furnished equipment for tne 
Guided Missile Frigate (FFG-7) programme. 

To obtain sufficient information from Australia, the assistance of a 
liaison officer on the Chief of Naval Materiel's staff was obtained. 

F. DEFINITIONS AND ABBREVIATIONS 

As the acquisition process in both countries involves many committees, 
a list of their abbreviations, members and responsibilities is included 
at Appendix A. There are no significant differences in the terminologies 
used in the acquisition process, however, it is worthy to note here the 
definitions of "procurement" and "acquisition." 

The current definition of "procurement" used by the Australian 

Joint Services is given in JSP(AS) 101 as: 

"The process of obtaining personnel, services, supplies and 
equipment." 

The U.S. Defense Acquisition Regulations (DAR) Section 1-201.13 says 
that: 

"Procurement includes purchasing, renting, leasing, or otherwise 
ootaining supplies or services. It also includes all functions 
that pertain to the obtaining of supplies and services, including 
description (but not determination) of requirements, selection 
and solicitation of sources, preparation and award of contract, 
and all pnases of contract administration." 

The Federal Acquisition Regulations (FAR), designed to provide uniform 
regulations for all executive departments and agencies of the U.S.Govern¬ 
ment, uses the term "acquisition" in place of "procurement," the latter 
term being synonymous with "contracting," as a subset of acquisition 
functions. The definition of "acquisition" is essentially the same as 
that expressed in the DAR for "procurement." The Naval Procurement 


12 





Working Party in Australia in their report [Ref. 25] proposed a defini¬ 
tion for “procurement" which is almost identical to that for "acquisition" 
in the FAR. 

Throughout this thesis, the two terms will be used as synonyms. 

G. ORGANISATION OF THIS THESIS 

Any comparisons between procedures in different countries are diffi¬ 
cult to make. There are many variables impacting on the procedures which 
are unique to a particular country or organisation. Chapter II therefore 
provides some background information on both countries that impacts on 
the requirements and procedures for ship construction projects. Areas 
considered are the basic demographic nature, the structure of the govern¬ 
ments with their specific rules, the structure of the respective defence 
departments and the organisation and size of the navies. 

Chapter III begins with a description of the RAN acquisition process, 
followed Dy a description of the process used by the USN. A comparison 
of both processes is then made. By using a series of flow diagrams for 
the various phases of the acquisition process, these differences, albeit 
few in number, are easily seen. Areas where improvements are considered 
appropriate are then suggested. 

The specific problems and requirements of government furnished 
equipment are described in the next chapter. Chapter IV. An attempt has 
been made to highlight the areas where improvements would be most bene¬ 
ficial. The areas of standardisation, commonality and interoperability 
with allied nations are then discussed. 

As a result of the descriptions and discussions presented in these 
three chapters, a proposal for a shipbuilding programme for the Royal 





Australian Navy is presented in Chapter V. There would be many problems 
in implementing this proposal, however once the programme is running, it 
should be easy to manage, it should streamline the introduction of 
replacement ships into the RAN, it should involve more participation by 
Australian industries, and it should improve the morale and efficiency of 
those at sea and ashore who are involved with ships. The proposal is 
presented as an idea requiring further in-depth study. Individual 
aspects of the proposal could be acceptable without adopting the proposal 
in its entirety. 

The final chapter summarises the thesis and presents the major 
conclusions and recommendations embodied in the thesis. 


14 




II. A LUOK AT THE COUNTRIES 


A. GENERAL 

This chapter will discuss the major differences between tne countries 
of Australia and the United States of America which impact on the require¬ 
ments for Naval shipouilaing in each country. The areas of concern are 
the physical nature of the countries, the government structure and 
policies, the defence department and navy department organisations, and 
the industrial base. 

Australia is the smallest continent, but one of the largest nations 
with an area of nearly 3 million square miles (7.75 million sq. km.). 

This equates to the land area of the United States excluding Alaska and 
Hawaii. The population of Australia, however, is extremely small in 
proportion, being 14-1/2 million people compared to 220 million in the 
USA. Both countries have abundant resources of most raw materials 
including the common, precious, and exotic metals, petroleum and coal. 

B. GOVERNMENT STRUCTURE AND POLICIES 

Both Australia and the USA have a system of government based on 
the idea of federalism where the powers of government are divided between 
a central authority and a number of constituent territorial units. The 
division of powers is laid down in the respective constitutions. The 
national government has the responsibility for all matters of the national 
interest. The state governments complement the activities of the national 
government and provide a largely self-governing legislature to each 
state. A third tier exists in the structure of both systems at the local 

15 






government level to administer the cities, towns, municipalities and 
counties or shires. 


In the USA, a presidential form of government, characterized by a 
chief executive (the President) elected for a fixed term and independent 
of the legislature (Congress) exists. Australia practices a parliamen¬ 
tary system where the executive is composed of a prime minister and the 
cabinet who are themselves members of the legislature (Parliament). 

[Ref. 18:21-22] 

Bicameral legislative branches exist in both countries, and the 
chambers have the same names: the House of Representatives for the lower 
houses and the Senate for the upper houses. Australia's lower house is 
elected for a three year term compared to the term in the USA of two years. 
The Australian Senator is elected for a six year term as is his American 
counterpart. Half of the Senate is elected every three years in Australia 
and a third elected every two years in the USA. 

Additionally, each country has another branch to its government. 

This branch is the Judiciary which is responsible for interpreting and 
applying the law in those cases brought before the courts. 

There are three main political parties represented in the Australian 
Parliament: t.he Liberal Party, the Australian Labor Party, and the 
National Country Party. Whilst each party represents democracy and the 
rights of individuals, there are significant differences in their other 
platforms. The Liberal Party encourages individual initiative and 
private enterprise. The Labor Party, strongly supported by the trade 
union movement, is more socialistic, believing in equality of opportunity 
using federal resources. The National Country Party originated in the 






rural sector but is also concerned with the development of manufacturing 
industries. The Liberal and Country Parties usually form coalitions at 
both Federal and State levels. [Ref. 2:24] The two major political 
parties in the USA had opposing views in their early stages: the Demo¬ 
crats wished to restrict the powers of the Federal Government while the 
Republicans favoured a strong National Government, with aid to business 
and commerce. [Ref. 13:409-414] Latterly, however, the party lines have 
overlapped considerably and each no longer represents either strong 
liberal or strong conservative ideals. [Ref. 13:72] 

Each country has established regulations and social programmes 
impacting on the procurement of goods and services for use by the govern¬ 
ment. The USA has the Buy American Act, imposing restrictions on the 
purchase of supplies of foreign origin, and the Small Business Program 
favouring certain contract awards to be made to small or disadvantaged 
companies. [Ref. 8:14] Australia, in recognising that Australian indus¬ 
tries do not nave the capability to develop and produce major equipment 
items needed for government procurements, has established the Australian 
Industry Participation (AIP) Programme, which requires overseas suppliers 
to involve Australian industries in the production of the system Deing 
purchased, or a related product. The object of this programme is to 
attain a greater level of self-reliance in defence supplies and to 
increase the technological advancement of key industries. [Ref. 16:21] 

C. ORGANISATION OF DEFENCE AND NAVY DEPARTMENTS. 

1. Australia's Department of Defence 


The Minister for Defence is responsible to the Parliament for 
the conduct of all defence matters, including civil defence. Under 






. ~.... 

the Minister is the Department of Defence. Figure 1 displays the top 
organisational structure of the Department. Its role is the development 
of policies and advice to the Minister for Defence, a the coordination 
and execution of approved policy, and the direction of the Defence Force. 

At the top of the Departmental structure, jointly responsible to 
the Minister is the principal civilian advisor, the Secretary, Department 
of Defence, and the principal military advisor, the Chief of Qefence 
Force Staff (CDFS). The Chiefs of Staff of the Navy, Army and Air Force 
exercise command of their respective services under the CDFS. 

[Ref. 2:82] 

Administration of the Defence Force is the joint responsibility 
of the CDFS and the Secretary, except in relation to matters coming 
within the command vested in the CDFS and the Chiefs of Staff. The 
latter advise the Minister on matters relating to their professional 
military responsibilities. The CDFS and the Secretary each deal with the 
Government on matters of individual concern, but work together over the 
range of activities which are of joint concern. 

The functional organisations and divisions under the Secretary 
cover the following areas: Supply and Support, Defence Science and 
Technology, Manpower and Financial Services, Strategic Policy and Force 
Development, and Management and Infrastructure Service. [Ref. 16:77-85] 

The manpower elements are responsible for developing policies 
to manage and control defence uniformed and civilian personnel. The 
Secretary has statutory responsibilities to ensure regularity of expendi¬ 
ture and proper use of public funds within the Department. 


18 





MINISTER ASSISTING 


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Figure 1. AUSTRALIAN DEFENCE ORGANISATION 
















Australia's international defence relations and strategic policy, 
analysis of force structure and associated major weapon* and equipment 
requirements, tne development of equipment proposals in support of 
defence objectives within financial resources, come under the auspices 
of the Strategic Policy and Force Development Organisation. With this 
organisation are the "dual hatted" Chiefs of Materiel, with responsibil¬ 
ity to both the Secretary and tneir Service Chief. They are responsible 
for the development of major equipment proposals put forward by their 
Service, through the various defence processes of analysis and control, 
all the way to the decision point. The financial management of the Five 
Year Defence Programme (FYDP) is also within this organisation. 

The Management and Infrastructure Services Organisation provides 
for the computing requirements of the Department. They are also respon¬ 
sible for the formulation and implementation of defence industry, material 
and procurement policies. The Defence Industry and Material Policy 
(JIMP) Division has this role and, in particular, for major equipment 
proposals, is responsible for the development, in close consultation with 
the Service concerned and other relevant functional divisions, of acquisi¬ 
tion strategies, management arrangements, negotiation and implementation 
of Australian Industry participation proposals, and for advising on all 
these aspects in the decision making process. 

The Supply and Support Organisation also uses the "two hatted" con¬ 
cept. The technical and supply areas of each service are represented here 
with the responsibility to the Secretary for the development and monitoring 
of the defence policy and provision of technical and policy advice. 


20 



The Defence Science and Technology Organisation is responsible to 
tne Secretary for scientific advice in defence matters and the analysis 
of weapons systems and equipment. It maintains Australian research and 
development, monitors international programmes and undertakes trials 
and evaluation of proposed and existing equipment. 

The Defence Organisation covers a wide scope which includes 
questions of strategic and international policy, conditions of service, 
procurement of sophisticated and expensive weapon systems, and the 
day-to-day management of a very large, diverse organisation. To manage 
this large organisation and to ensure all interested activities are 
involved in the decision making process, the Defence Committee system and 
the FYDP are utilized. The composition and responsibilities of the 
committees involved with procurement of major equipment are listed in 
Appendix A. The decision making process is ultimately bound to the Five 
Year Defence Programme (FYDP) system. It is the direct result of detailed 
consideration concerning development of particular force capabilities for 
the five years following in specific terms, and for three years following 
that in general terms. 

A separate department, the Department of Administrative Services 
(DAS), is responsible for arranging contracts in relation to items in 
common use and undertakes most categories of purchases on behalf of all 
other departments, particularly the Department of Defence. DAS has three 
basic involvements in the procurement procedure: the invitation of 
tenders, the collation and despatch of tenders to Defence, and the issue 
of contracts and purchase orders, and contract administration thereafter. 


T 


2. Royal Australian Navy 

The Royal Australian Navy is headed by the Chief of Naval Staff, 
a Vice Admiral. Under his leadership are the Fleet Commander, the Naval 
Support Commander, various Area Commanders, tne Naval Dockyards and the 
Reserves. Additionally, Navy Office serves in a staff position. 

The RAN outline organisation is depicted in Figure 2. The Navy Office 
section is broken down into five functinal areas, as shown in Figure 3. 

As far as procurement of major equipment is concerned, each area nas some 
responsibility. The Chief of Naval Operational Requirements and Plans 
(CNORP) determines the operational requirements and then passes the 
proposal to the Chief of Naval Materiel for eventual project direction. 

The Project Director consults the Deputy Chief of Naval Staff (DCNS) for 
logistics, the Chief of Naval Personnel for manpower and training require¬ 
ments, and the Chief of Naval Technical Services (CNTS) for technical 
advice in the design, production and maintenance requirements. 

The Royal Australian Navy has 16,500 regular personnel and 1,000 
reservists. These uniformed members are supported with some 10,000 
civilians employed within the Department of Defence. The naval forces 
consist of one ageing aircraft carrier of a little more than 20,000 tons 
(HMAS MELBOURNE), which operates Skyhawk and Tracker aircraft and Sea 
King helicopters; six conventionally powered submarines; three guided 
missile destroyers and two gun destroyers; and six destroyer escorts. 

[Ref. 11:87] Two FFG-7 class frigates nave recently been commissioned 
and another two are being built in the USA. Additionally, a small patrol 
boat force, which is soon to be replaced and increased in size, support 


22 








Figure 2. RAN OUTLINE ORGANISATION 









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vessels, hydrographic and oceanographic ships and landing craft comple¬ 
ment the “fighting ships." 

The carrier, the guided missile destroyers, the existing tanker, 
the submarines and one of the new patrol boats were all built outside 
Australia. The last front line operational warship to be built in 
Australia was a destroyer escort, HMAS TORRENS, completed in 1971. Since 
that time, only one oceanographic ship, one 6,500 ton landing ship (LST) 
and one patrol boat have been built in Australia. There are plans, 
however, for two destroyers (probably FFG-7 type), thirteen more patrol 
boats, two underway replenishment ships, a further LST, and some inshore 
and seagoing mine countermeasures ships all to be built in Australia. 

3. U.S. Department of Defense 

The structure of the U.S. Department of Defense organisation is 
far more complex than that of Australia. It is obviously a much larger 
organisation, so only those participants in the weapons acquisition 
business will be described here. 

The Department is headed by the Secretary of Defense (SECDEF), a 
civilian appointed by the President, who, under the President, set: 
policies and directs the work of his department and the three service 
departments within it. His immediate aides concerned with acquisition 
are the Under Secretary of Defense (Research and Engineering), USD(R&E), 
the Under Secretary of Defense (Policy), USD(P), and the Assistant 
Secretaries of Defense, Comptroller, ASD(C), Manpower, Reserve Affairs 
and Logistics, AS0(MRA&L), and Program Analysis and Evaluation, ASD(PA&E). 

The USD(RiE) is the principal advisor to the SECDEF for policies 
and reviews of all research, engineering and contracting. As the current 


25 



Defense Acquisition Executive (OAE), he chairs the Defense System Acqui¬ 
sition Review Council (DSARC) which in essence approves the advancement 
of a major system acquisition from one phase to the next. The USD(P) is 
responsible for reviews and advice on defence policies and related 
operational matters. 

The Comptroller does the physical preparation of the Defense 
Budget and controls defence spending. He coordinates the acquisition 
process with the Planning Programing and Budgeting System, (PPBS). The 
ASD(MR&L) has responsibilities for logistics, energy, environmental 
impact, safety and manpower planning. He ensures that the logistic 
planning is consistent with the system hardware parameters, logistic 
policies and readiness objectives. The ASD (PA&E) is responsible for the 
evaluation of the individual weapons systems programmes, both from a 
standpoint of individual cost effectiveness and from an integrated force 
structure viewpoint. [Ref. 9] 

All of the above officials are members of the DSARC, as is the 
Chairman, Joint Chiefs of Staff (JCS), who has the responsibility of 
reviewing force levels, strategy and tactical implications. The DSARC 
has advisory members drawn from other areas within the Secretary of 
Defense organisation. 

The Department of Defense is regulated in its procurement activ¬ 
ities by the Defense Acquisition Regulations (OAR), and claims against the 
government by civilian contractors are reviewed by the Armed Services 
Board of Contract Appeals (ASBCA). Two other agencies of significance 
to systems acquisition report to the OSD. The Defense Contract Audit 
Agency (DCAA) performs all necessary contract audits for DoD. They also 


26 



provide accounting and financial advisory services regarding contracts 
and subcontracts to all components of DoD who are responsible for 
procurement and contract administration. The Defense Contract Administra¬ 
tion Service Office (DCASO) seldom becomes involved in the administration 
of a prime contract for a ship, but has a responsibility for contract 
administration for weapons procurement, the major portion of government 
furnished equipment (GFE). [Ref. 17:96-101] 

Figure 4 shows the organisation of the U.S. Department of Defense 
as it relates to acquisition. 

4. The United States Navy 

The Department of Navy can logically be divided in two areas. 

The Secretary of the Navy is responsible to the Secretary of Defense for 
the activities of both the Office of the Secretary of the Navy and the 
Chief of Naval Operations. [Ref. 17:101] Figure 5 is a diagram of the 
formal organisation of the Office of the Secretary of the Navy, and of 
the Chief of Naval Operations. 

a. Office of the Secretary of the Navy 

This office is similar in structure to that of the Office of 
the Secretary of Defense (OSD), with the deletion of the Program Analysis 
and Evaluation Division. This activity is performed in the Systems 
Analysis section under the Chief of Naval Operations. 

The Assistant Secretary of the Navy (Research, Engineering 
and Systems), ASN(RE&S), is responsible for all matters related to RDT&E 
within the Navy. The Assistant Secretary of the Navy (Comptroller), 
ASN(C), and the Assistant Secretary of the Navy (Manpower, Reserve 


27 






SECRETARY OF 
DEFENSE 



Figure 4. U.S. DEPARTMENT OF DEFENSE 












T 


5 






Figure 5. U.S. DEPARTMENT OF THE NAVY 








Affairs and Logistics), ASN(MRAiL), have equivalent responsibilities to 
their counterparts AOS(C) and ADS(MRA&L). 

As in OSD, a Service System Acquisition Review Council 
exists, DNSARC for the Navy, performing the same functions for the 
Secretary of the Navy as the DSARC does for the Secretary of Defense. 
DNSARC would review all naval acquisitions and make recommendations for 
major equipment to the DSARC. 

b. Chief of Naval Operations 

The Chief of Naval Operations (CNO) commands the operating 
forces of the Navy which includes several fleets, seagoing forces and the 
Marine Forces. He also commands the Naval Material Command, and the 
Bureau of Medicine and Surgery. 

Within the organisation of the Office of the Chief of Naval 
Operations (OPNAV) are many areas with responsibilities for major system 
procurement. The operational requirements are provided by the line 
organisations including Manpower, Submarine Warfare, Surface Warfare, 
Logistics, Air Warfare and Plans, Policy and Operations. Their respon¬ 
sibilities include not only the material requirements, but also the 
operational readiness, tactical doctrine, training and related require¬ 
ments. The Staff functions performed by such divisions as Program 
Planning, Intelligence, ASW and Ocean Surveillance, and RDT&E, provide 
basic coordination across all programmes and offices. [Ref. 30: 

Appendix E] 

The Naval Material Command (NAVMAT) commanded by the Chief 
of Naval Material (CNM) is the single integrated material support agency 
responsible for the total weapons support systems development, procurement 


30 




production and support, including human operator integration, depot 
maintenance, supply management, facility support and integrated logistic 
support planning. The organisation is divided into several systems 
commands responsible respectively for Air, Electronic, Facilities Engin¬ 
eering, Sea, and Supply. These systems commands are the providers of the 
weapon systems and support to the operating units of the Navy. Project 
Officers are established by CNM to accomplish specific tasks. 

[Ref. 17: 108] 

In turn, the systems commands are divided further into areas 
dealing with planning, acquisitions, RDT&E and support. 

The USN itself comprises more than 520,000 uniformed person¬ 
nel with many civilians also employed. The size of the USN is very 
large, consisting of over 400 ships, the breakdown of which is too 
involved for this research. 

An on-going shipbuilding programme does exist that has 
generated over 400 ships excluding patrol, landing, mine and service 
craft, during the last twenty years. Roughly 90 percent of these have 
been built in commercial shipyards, the remaining 10 percent in Naval 
shipyards; however, none have been ordered since 1967 from the latter. 

The number of destroyers and frigates built in this time frame is nearing 
150. [Ref. 26: Chapter 1] 

D. INDUSTRIAL BASE AND CAPABILITIES 

The industrial base required to support the needs of a defence 
force could be considered as a hierarchy like that depicted in Figure 6. 
In Australia, the dependence is centered mainly in the upper echelons 
of this hierarchy, those areas controlled by the government, but in 


31 











r 


T 





Figure 6. A DEFENCE INDUSTRIAL BASE 


32 









America, the majority of defence equipment is supplied by dedicated 
defence industries. There is a growing technological gap between the 
commercial industry requirements and the demanding technologies of 
advanced defence systems, making the dedicated industries necessary, but 
such firms can only continue if there is sufficient stability in 
requirements. 

To describe and comment on the complete industrial base and capabil¬ 
ities of each country would require extensive research outside the scope 
of this thesis. However, it is worth highlighting some of the aspects of 
each country's industries that are related to the production of a warship. 

1. Australia 

Australia has a broad industrial base capable of producing a 
wide variety of manufactures. Tariff protection and quota restrictions 
on imported goods that have allowed the manufacturing industries to grow 
substantially in this area now account for about 25 percent of the gross 
domestic product. Essential technologies have not only been "imported" 
under licence from overseas industries, but have also been the result of 
much domestic innovation, resulting in overseas licencing of Australian- 
divised products and processes. [Ref. 2: 67] 

Australian shipyards are of three types: Government owned and 
operated. Government owned/contractor operated, and contractor owned and 
operated. In the past, warships of destroyer and frigate size have been 
built in the former two types of dockyards. Patrol boats, and recently, 
amphibious heavy lift ships of 6,000 tonnes have been built in commercial 
yards. Commercial yards have the capacity to construct merchant ships up 
to 80,000 tonnes. A government bounty of 25 percent is provided on 







commercial ships built in registered Australian yards for use in Aus¬ 
tralian waters or internationally under the Australian Flag. The largest 
naval vessel so far built in Australia is HMAS STALWART, a destroyer 
maintenance vessel of about 16,000 tonnes. Under construction at this 
time is a Fleet Underway Replenishment Ship of about 18,000 tonnes. 

The Australian electrical industry produces a wide range of 
electrical motors, switch gear, control gear, and wires and cables. The 
electronics industry produces telecommunications equipment and is capable 
of producing complicated defence electronic requirements, such as the 
Mulloka Sonar and Barra Sonobuoys. Most of the electronics industries 
are Australian subsidiaries of big foreign companies, the notable excep¬ 
tion being the Australian-owned Amalgamated Wireless (Australasia) 

Limited. [Ref. 2: 69] 

The engineering industries produce a wide range of hand and 
machine tools, metalworking machinery, and materials handling equipment. 

Roller bearings, die casting, petrol engines, valves and control equip¬ 
ment, pumping and ventilating equipment are the products of the light 
engineering industries. Heavy engineering industries have produced 
railway rolling stock, diesel-electric locomotives, commercial motor 
vehicles, earth-moving, excavating and agricultural equipment and j 

tractors. [Ref. 2: 69] 

This brief account of the type of products capable of being 
produced in Australia shows that Australian industries are able to 
tender for many military items within reach of their technologies. 

However, the ability and willingness of firms to bid for the more tech¬ 
nologically demanding defence equipments have been limited by the small 


34 






numbers required of each item, the high cost of developing a comprehen¬ 
sive tender response, and the need to establish specialised techniques 
and facilities. [Ref. 10: 38] 

2. United States of America 

America has an even broader industrial base than Australia. 

Because of the volume of defence requirements, there are many firms which 
are totally defence-related, with little or no application to commercial 
products. Such companies exist mainly to take advantage of the rapidly 
changing technology which has benefits in that the members of the company 
gain valuable training in the technical skills and that defence work has 
a favorable influence on investment analysis by some segments of the 
American public. [Ref. 12: 53] 

There are over four hundred yards engaged in shipbuilding and 
repair in the United States; however, there are only twenty-six performing 
a significant amount of new ship construction. The U.S. Navy accounts 
for seventy-five percent of the new construction and this is undertaken 
in eleven privately owned yards, belonging to nine companies. Three of 
these yards are capable of, but only two currently engaged in, nuclear 
ship new construction. [Ref. 14: 516-527 and 26: Chapter 1] 

United States shipbuilders, as Australian shipbuilders, are 
not competitive on the world market for commercial ships. Civil ship 
construction is subsidised up to 35% of total costs. [Ref. 14: 515] 

The defence industry is characterised by a number of large 
conglomerates each with divisions covering the sectors of aircraft, 
ships, electronics and vehicles, however, there is a considerable overlap 
in the production and engineering skills required, as well as the 


35 





production equipment and facilities utilized. These industries are 
capable of producing any equipments needed to meet a perceived threat, 
but equally important is their ability to conduct much research and 
development to advance technologically. 

E. SUMMARY 

This chapter has identified some major aspects of both Australia 
and the United States of America which impact on the ship construction 
projects required to maintain the ability and advancement of the respec¬ 
tive navies. The most obvious difference is the difference in the sizes 
of the populations resulting in less money available for defence spending 
and a consequent impact on the size of the navies and the shipbuilding 
requirements. 


36 


III. SHIP ACQUISITION PROCEDURES 


A. GENERAL 

This chapter will describe the acquisition procedures of both navies 
followed by a comparative section which will also suggest some possible 
problems and solutions to the procedures. It will be shown that the 
differences in the procedures are not particularly significant. 

There have been many books written and studies undertaken about 
acquisition in the USA. It has not been possible in this research effort 
to cover each one, but it appears that the majority of these studies are 
directed at the physical process and not at the individual participants 
in the process. It will be demonstrated that the procedures are in the 
main quite streamlined, with some feedback loops for necessary amendments. 
However, the full internal passages of major equipment proposals within 
the navies are not discussed in detail here, and these areas could be the 
root of some of the current problems. 

B. THE RAN SHIP ACQUISITION PROCEDURES. 

1. Introduction 

The ship acquisition process used in the Royal Australian Navy 
follows the procedures for Major Equipment Proposals. A major equipment is 
one which conforms to any one of the following criteria: [Ref. 1: Art 0214] 

- has significant Defence policy implications; 

- has significant Joint Service implications; 

- is estimated to have a project investment cost (all onetime 
costs including research and development, prime equipment. 




37 



spares, modifications, training investment, facilities machin¬ 
ery and plant, test equipment and supporting equipment) of 
$10 million or more; or 

- where the unit cost of individual equipment is estimated 

at $0.5 M or more (excluding spares, documentation, support, 
etc.). 

This section will describe the procurement process, a simplified 
form of which is depicted in Figure 7. This process may be divided, 
somewhat arbitrarily, into four distinct stages, namely: 

- the identification and specification of a general requirement 
for a force capability; 

- the examination and analysis which lead to the seeking of 

a generic approval from the Government to acquire a specific 
capability; 

- the selection of the equipment to be purchased; and 

- the production and entry of the equipment into service. 

These stages are shown in Figure 8. 

The first two stages are sequential and cyclical and relate to 
the development and examination of major equipment proposals, and com¬ 
prise an integral part of the Five Year Defence Programme (FYDP). The 
latter two stages are in general related to the particular Service only 
and thus become less dependent on the cyclical reviews of the FYDP, but 
still require appropriate Governmental approval at significant milestones. 

The descriptions in this section have been developed from the 
appropriate Defence Instructions (General) [Ref. 4, 5, 6, and 7], and the 
RAN Project Management Manual [Ref. 2] and other material. 

38 




Figure 7. SIMPLIFIED EQUIPMENT PROCUREMENT PROCESS FOR AUSTRALIAN 


































Figure 8. RAN MAJOR SYSTEMS ACQUISITION PROCESS 





2. The Process 


a. Identifying and Specifying a Requirement 

The requirement for new equipment may originate from one 
of three ways: as a result of a new threat, new technology, or as a 
result of existing equipment becoming obsolescent. 

Changes in Australia's strategic circumstances would consti¬ 
tute a new need. Strategic and other basic guidance (such as environmen¬ 
tal or technical factors) are issued from time-to-time by the Defence 
Committee for defence planning and programing. Then the "Defence Force 
Capabilities" document is prepared by the Defence Force Development 
Committee (DFDC). This is a policy document which identifies the present 
military and other defence capabilities, their limitations and the extent 
to which capabilities should be developed or varied. This paper is not 
written in terms of specific equipments, but indicates the areas in which 
adjustments to existing capabilities are required. 

The Services then formulate five-year programmes to initiate 
projects to affect the necessary adjustments to the force structure. 

Where this involves the need for new or updated equipment, the Services 
initiate proposals for their acquisition in the form of Staff Objectives, 
Staff Targets, or Staff Requirements. 

The Staff Objective is a statement of a capability considered 
to be necessary for the effective conduct of operations. It specifies 
the relevance, importance and timing of the requirement and identifies 
potential options for meeting the requirement. A preliminary study is 
then conducted by the Service and-the Defence Operational Requirements 
Committee (DORC) to confirm the need and to show that the concept is 







practicable, and can be met technologically. Where this is done, the 
Service may proceed to a Staff Requirement. If there is any doubt, 
however, a Staff Target will be raised instead. 

The Staff Target describes in broad terms the functions and 
desired performance of an equipment as a basis for determining the 
technical and scientific feasibility of the proposal, the risks involved 
and the indicative costs. The Naval Staff Target is first considered by 
the Naval Staff Requirements Committee (NSRC) and if approved is passed 
on to the DORC for endorsement. 

The Staff Requirement is a statement of the function, main 
features and performance required of an equipment which can reasonably 
be expected to be available in the stated time frame to enable proposal 
requirement definition and approval for the acquisition to proceed. 

Staff Requirements are subjected to intensive intra-service evaluation 
before being submitted to the DORC for review and endorsement. The Staff 
Requirement is continually updated during the procurement process and can 
be used in the final source selection. A "sanitised" version may also be 
released to industry when assistance in the development of a future 
project may be required. 

b. Seeking Generic Approval 

With the Defence Operational Requirements Committee's endorse¬ 
ment of the Staff Requirement, the Service proceeds to issue the "Major 
Equipment Submission - Form DPI." The DPI represents a detailed examina¬ 
tion and justification of the proposal in a standard format covering the 
following major headings: 


42 








- justification and objective; 

- assumptions; 

- analysis of requirement; 

- operational capability; 

- technical risk; 

- life assessment; 

- force structure implications; 

- compatibility of equipment; 

- production aspects; 

- operating, maintenance and logistic support; 

- environmental impact; 

- manpower implications; 

- training implications; 

- associated facilities; 

- cost implications; and 

- implementation programme. 

The DPI is submitted to the Force Development and Analysis Division 
(FDA) which, in conjunction with the relevant Service office, develops 
the Project Brief. This brief sets out the major points concerning the 
proposal together with an objective analysis of options and alternative 
views. Particularly significant or complex proposals are handled by a 
special group composed of all interested Services or Divisions, to ensure 
that all the aspects of the proposal are analysed. 

The Major Equipment Proposals are then examined by the 
Force Structure Committee (FSC) in two separate review periods in each 
financial year. In the initial review (September to December), the 




acceptability of each proposal is examined for its further consideration 
in the FYDP. Those proposals examined previously are reviewed for 
adequacy of development and continued relevance. The FSC consideration 
includes such items as: financial guidelines from the Government, the 
level of annual commitments in the FYDP, major equipment proposals likely 
to arise in the years beyond the FYDP, and general views held by the FSC 
and Defence Forces Development Committee (DFDC). 

A consolidation of all equipment proposals, whether new or 
approved, both major and minor, manpower costs, defence facilities, 
operating costs, etc., is then prepared for consideration by the DFDC. 
Those proposals with final approval of the DFDC are submitted to the 
Minister of Defence for approval by the Cabinet in the context of the 
annual Budget. Depending upon the stage a project has reached, this 
approval will take one of the following forms: 

- project approval — approval of the generic type of 
equipment; 

- project development — approval to continue to develop 
and refine a project; 

- project definition — approval to enter into activities 
likely to involve outside agencies to more precisely 
define the scope and implications of the project; and 

- evaluation — approval for evaluation of contending 
equipments for a particular project. 

These approvals do not constitute approval to expend funds, except 
where the Minister or his delegates may approve expenditure within 


44 



budgetary provisions and defined limits. Once Cabinet endorses Year One 
proposals further project development then proceeds towards procurement, 
c. Selecting the Equipment to be Purchased 

As a project moves through the FYDP from Year five to the year 
of decision, details of costing and the Required Major Characteristics 
are continuously reviewed and refined. For multiphased projects, such as 
ship construction, the design and production phases are separated and the 
approval for the first phase only will be given. At this time, a deci¬ 
sion to design and produce in Australia or to purchase overseas may not 
have been finalised. This decision will depend primarily on the char¬ 
acteristics required. If the procurement is from overseas, this phase 
entails a project definition task; but if the design and production is to 
be undertaken in Australia, this phase is for the preliminary design 
only. 

With such documents as the Major Characteristic and the 
sanitised Staff Requirement released to industry, commercial firms may 
now respond to an Invitation to Register Interest. If the tender is to 
be restricted to certain firms only, a Certificate of Inexpediency is 
required by Treasury regulations, and obtained by applying to the Depart¬ 
ment of Administrative Services (DAS). 

Firms responding to the above are evaluated by DAS, Navy 
and Defence and a short list of firms is prepared who will now be issued 
a tender package for phase one and an invitation to tender. 

The Navy's contribution to the tender package is usually 
the technical specification with any other additional or special require¬ 
ments such as training or handbooks, etc., which are to be included in 


45 






the pr'me contract , and any particular contractual requirements such as 
delivery, testing, quality assurance and warranties. The tender responses 
are evaluated and as a result contract is, or sometimes more than one 
contracts are, awarded for the Preliminary Design Definition phase. 
Although competition is encouraged, the cost of several contracts is 
often prohibitive, and it is therefore most important that a detailed and 
firm cost estimate for following phases is available before this contract 
is awarded. 

As an alternative to the Preliminary Design being obtained 
from commercial firms, an In-house Design may be developed. 

From the Preliminary Design, if required, a further phase is 
used for a Final Design and preparation of a tender package for 
production. 

d. Production 

With the final design selected, approval is now sought 
to proceed further into final negotiations and placing of the order. 

It may have been necessary for other procurements forming 
part of the overall ship procurement to be ordered before the contract 
for ship construction is awarded. These long lead items, as well as 
other acquisitions impacting in the project, form what is known as 
Australian Goverment Furnished Equipment (AGFE). 

The construction of the ship is closely monitored and when 
completed is subjected to many trials, both by the shipbuilder and the 
RAN, before being accepted and commissioned into the Royal Australian 
Navy. 


46 







3. Managing the Process for Ship Projects 

a. Developing the Five Year Defence Programme 

The Five Year Defence Programme (FYDP)'is formulated each 
year based on bids submitted by the Defence Organisations in support of 
endorsed policy objectives for ongoing activities and new capital equip¬ 
ment and facilities proposals. New or replacement ship proposals are 
considered as new capital equipment proposals. 

Although the FYDP is prepared each year, it is in effect an 
updated version of the previous year's FYDP with necessary modifications 
for new requirements and revised priorities. 

b. Organisation of Ship Acquisition 

The Oirector General of Naval Operational Requirements 
(DGNOR) is responsible for the sponsorship of ship projects and the 
preparation of the Draft Naval Staff Requirement and Required Major 
Characteristics. For ship projects, a Project Director is normally 
appointed on approval of the Naval Staff Objective (NSO), the Naval Staff 
Target (NST) or the Naval Staff Requirement (NSR). 

The Project Director is responsible to the Chief of Naval 
Materiel (CNM), who assumes overall management of the project from the 
date of approval of the NSR, or in the case of an NST, at the commencement 
of the feasibility study. Initially, the Project Director will be 
required to develop the appropriate documentation and be involved 
in project related activities. As the acquisition process proceeds, he 
becomes responsible for: 

- planning and coordination of all project activities; 


47 









- placing agreed tasks with the functional areas for 
execution; 

- maintaining a comprehensive review of physical and finan¬ 
cial progress against planned targets; and 

- taking or recommending action to correct any deviation. 

The size of the Project Office will vary, depending upon 

several factors, from a part-time Project Director to a fully dedicated 
Project Office. No two projects are exactly the same and so the composi¬ 
tion of the Project Office is regulated by the timing, complexity and 
workload, priority, cost and availability of manpower. 

A matrix Project Management system is usually employed in 
the RAN, to make the most effective use of manpower resources and the 
benefits of functional experience. The functional areas provide the 
appropriate involvement in the Project. The level of effort required of 
each functional area is spelled out in the Project Management and Acqui¬ 
sition Plan. 

c. Project Management Documentation 

Two major planning documents are used to cover the entire 
period of a major project, from the formulative stages to the entry of the 
equipment into service: the Equipment Acquisition Strategy (EAS) and the 
Project Management and Acquisition Plan (PMAP). 

(1) Equipment Acquisition Strategy (EAS) . The EAS defines 
the parameters and provides the framework within which all participants 
in the acquisition of major equipment are to work. It establishes the 
nature and sequence of activities, outlines the strategy to be used and 
the time frame in which the procurement is to be conducted. The EAS for 


48 







each specific equipment acquisition is currently prepared by the Defence 
Industry and Material Policy Division (D1MP) but there are indications 
that this will become the responsibility of the Chief of Naval Materiel 
(CNM) in conjunction with DIMP. It is usually developed after the Staff 
Requirement has been endorsed by the DORC. 

The events and activities identified and the matters 
normally addressed in the EAS are: 

- preparation of and release dates to industry for 
the Naval Staff Target/Requirement and associated 
documents including Request for Proposals; 

- early development of comprehensive capability 
specifications for both prime and support equipment; 

- estabalishment of maintenance support and training 
requirements; 

- development of related requirements and offset 
programmes for Australian Industry; 

- preparation of tender schedules for the conduct 

of feasibility studies, project development, contract 
definition exercises and equipment acquisition 
with prospective suppliers; and 

- tactics to be employed and the methods to be used 
for maintaining competition whilst progressively 
reducing the number of prospective brands of equipment 
to a short list of at least two, for which final 
negotiations are to be conducted. 


49 






1 

1 

n 


Whilst this list is by no means exhaustive, it does show 
that the EAS is a major tool in the development and management of a 
project. It is a dynamic document which is up-dated throughout the life 
of a project. It provides a focus for achieving the best overall result 
in terms of operational performance, cost, delivery, time scale, product 
support and involvement of Australian Industry. It is tailored to 
optimize the results obtainable from competative situations, sole source 
and Government-to-Government procurements, for example. Foreign Military 
Sales (FMS) procedures with the U.S. Government. 

(2) The Project Management and Acquisition Plan (PMAP) . The 
Project Director, on approval of the EAS, prepares the more detailed 
and comprehensive Project Management and Acquisition Plan (PMAP). It 
identifies and documents in quite specific detail a number of aspects 
of the project, with emphasis on the contract implementation and sur¬ 
veillance stages of the project. Such aspects are: 

- statements of internal departmental management 
arrangements and the allocation of the responsibility, 
authority and accountability for the achievement of 
allocated project tasks; 

- a complete listing of tasks required to bring the 
equipment into full operational service; 

- statements covering all aspects of Australian 
Industry Participation; 

- production and delivery schedules for prime and 
support equipment; 


50 



L 







- funding and expenditure plans for all aspects 
of the project; 

- major milestones and review points; and 

- administrative and reporting procedures of the 
day-to-day control of the project. 

As with the EAS, certain aspects of the PMAP may not 
be specified and documented completely at first, but only as the 
project develops. It is important, however, to establish at the outset 
the particular tasks and management arrangements and appropriate 
responsibi1ities. 

The EAS and PMAP are planning documents incorporated 
into an executive document, the Naval Project Directive (NPD) which gives 
instruction and direction to implement the project. 

4. Summary 

This section has described the procedures in the Royal Australian 
Navy for the acquisition of major new equipments. Ships are considered 
major new equipments, but obviously form very complicated projects. The 
procedures are laid down in Defence Instruction (General) ADMIN 05-1, 
05-2, 05-3, and 05-4, supplemented by ABR 5069, RAN Project Management 
Manual. The procedures emphasise the need for approval at various stages 
of a project and identify the necessary approval processes. 

c. THE USN SHIP ACQUISITION PROCESS 
1. Introduction 

The U.S. Department of Defense has defined a major system as one 
where: [Ref. 28 and 29] 



51 




- there is a development risk, urgency of need, or is of interest 
to the Secretary of Defense; 

- there is a requirement for joint acquisition between Department 
of Defense components, or between nations; 

- the anticipated cost of research, development, test and 
evaluation, (RDT&E) exceeds $100 million; or the production 
costs are expected to exceed $56o million; and 

- there are particular circumstances related to the manpower 
requirements, follow on support, or Congressional interest. 

The acquisition process for such systems is based on the require¬ 
ments of 0MB Circular A-109, which DoD has implemented via directives 
5000.1 and 5000.2. The principal change from previous directives is 
the addition of "milestone zero" as a Secretary of Defense decision to 
initiate a program, in conformance with 0MB circular A-109. 

This section will describe the acquisition process, a simplified 
form of which is depicted in Figure 9. This process may be divided into 
five distinct stages, namely: 

- determination of mission needs; 

- alternative concept exploration; 

- demonstration and validation; 

- full scale engineering developments; and 

- production and use of the system. 

After the description of the process, an organisational view is 
presented to show how the process is managed, and some of the documenta¬ 
tion which is used by the Ship Acquisition Project Manager. 




52 









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- I I 11 1 1 

r 

Much of the descriptions that follow have been developed using 
0MB Circular A-109, [Ref. 23] the Naval Ship Procurement Process Study, 
[Ref. 26] the Ship Acquisition Reef Points, [Ref. 22] and relevant 
Defense Instructions. [Ref. 28 and 29] 

2. The Process 

a. Determination of Mission Needs 

The initial step in determining the needs of a new major 
equipment is the consideration of national objectives and policies, with 
due cognizance of the economic conditions, social attitudes and available 
technology. [(Ref. 22] The National Security Council (NSC) is respon¬ 
sible for developing the national security policy which is published in 
the Presidential Review Memoranda (PRM). On approval by the President, 
those documents become Presidential Decision Memoranda (PDM), which, with 
intelligence estimates provided by the Defense Intelligence Agency (DIA), 
are used by the Joint Chiefs of Staff (JCS) to formulate strategies, both 
short term (up to 10 years) and long term (up to 20 years). The U.S. 

Navy uses these studies to develop the roles and contributions required of 
the Navy for the national defense. 

Where the existing or projected capability of the Navy is 
deficient in meeting the strategic guidelines, needs are established for 
new systems to meet the mission requirements. The Navy proposes the 
"Mission Element Need Statement" (MENS) to recommend the initiation of a 
new major system acquisition programme. 

This document is submitted for review by the Defense Acquisi¬ 
tion Executive (DAE), and the Offices of the Joint Chiefs of Staff and 
the Secretary of Defense (OJCS and OSD). After this review. 


54 








r 


recommendations are made to the Secretary of Defense (SECDEF) for approval 
of the MENS. This approval, the Secretary of Defense Decision Memorandum 
(SDDM), is the Milestone Zero decision point, and allows the Navy to 
proceed into the next phase, Concept Exploration, 
b. Concept Exploration 

Following approval of the MENS and authorisation to proceed, 
the acquisition cycle moves into the Concept Exploration phase, which 
includes the solicitation, evaluation and competitive exploration of 
alternative system concepts. The Program Manager is appointed at the 
start of this phase. 

The first step in this phase is an in-depth expansion of the 
mission feasibility studies, that may have been initiated prior to 
milestone zero, to establish and define criteria for synthesising alter¬ 
native system concepts. 

The second step is the commencement of preliminary studies 
exploring the alternative systems concepts. This is the responsibility 
of the Navy and includes the investigation of the system cost and effec¬ 
tiveness of the alternative candidate approaches. The solicitation for 
proposed solutions is in terms of mission needs and not explicit system 
characteristics, and provides complete information including the mission 
task, the operating environment, and the threat. Each approach is 
analysed, evaluated and optimised in order to present the recommended 
alternatives or alternative for the Milestone 1 decision at the end of 
this phase. Adequate competition is desirable to avoid premature commit¬ 
ments to solutions that may prove costly or are marginally effective. 


55 








The third and last step in this phase is the development of 
the Decision Coordinating Paper (DCP) and the Integrated Program Summary 
(IPS), which detail the recommended approach with respect to cost, 
schedule and technical risk. These documents are forwarded through the 
Department of the Navy Systems Acquisition Review Council (DNSARC) to the 
Defense Systems Acquisition Review Council (DSARC) for review. Appropri¬ 
ate recommendations are then made to SECDEF for approval. 

Approval of the programme by SECDEF, via the SDDM, at Mile¬ 
stone 1 allows the acquisition process to continue into the Demonstration 
and Validation Phase. 

c. Demonstration and Validation 

During the Demonstration and Validation Phase, the selected 
alternatives are refined through extensive study and analysis. Advanced 
development models (prototypes) are developed to meet the operational 
requirements. The prototypes are tested and evaluated, usually by the 
contractor and the Navy, to assess the performance and availability of 
the high risk parts of the system and to reduce the development risk. 

Competition is actively encouraged and prototypes may be 
developed simultaneously by two or more contractors. These prototypes 
and other experimental models are used to demonstrate that the required 
performance capability can be achieved, while reducing the technical 
uncertainty. Prototypes for ships are not required. The DCP and IPS are 
again prepared for review by the DSARC at Milestone 2, and subsequent 
approval by the SECDEF allows the programme to move into the Full Scale 
Development Phase. 


56 




d. Full Scale Development 

The Full Scale Development Phase includes refining the 
prototype for production and may also include a limited production run 
for operational test and evaluation. 

The main activities conducted during this phase are as 

follows: 

- the threat and need assessment are re-evaluated and 
updated; 

- the systems or equipments and other principle items for 
production and future support are designed, fabricated, 
tested and evaluated; 

- preproduction prototypes are fabricated with the documen¬ 
tation necessary to enter the following phase of full 
scale production; 

- development and operational test and evaluation of the 
preproduction prototypes are performed to determine 
whether the product meets its specifications and what 
changes would be required for the production phase; 

- long lead items are finalised and orders placed if 
necessary to meet the production schedule; and 

- the detailed concepts and methods of operations, main¬ 
tenance, training, facilities, logistics, publications, 
manpower and support equipment are refined and documented. 

At the end of this phase (Milestone 3), the DCP and IPS are 
again updated and submitted to DSARC. The DSARC III reviews and recommends 
approval of the system, determining whether or not to proceed into the 


57 





last phase of the acquisition process of a major system, the Production 
and Deployment Phase. 


e. Production and Deployment 

The Production and Deployment Phase can logically be split 
into two separate activities, with an overlapping of each. The Produc¬ 
tion activity starts with the approval to proceed at Milestone 3 and 
continues until the last system is delivered and accepted. The Deployment 
activity begins with the acceptance of the first operational system and 
continues until the system is phased out of the inventory. 

3. Managing the Process for Ship Projects 

a. Developing the Five-Year Shipbuilding Plan 

The U.S. Navy shipbuilding programme is extremely complex 
resulting in the acquisition of a wide variety of ships ranging from huge 
nuclear aircraft carriers and complex submarines to small auxiliary and 
patrol craft, [Ref. 26: 3]. The building block for this programme is the 
Five-Year Shipbuilding Plan, the Navy's request to Congress (as approved 
by SECDEF and the President) for the ships believed necessary to accom¬ 
plish assigned missions. This five year programme is up-dated annually 
as part of the budget submission by the President. It includes a break¬ 
down of the number of ships by type and a cost estimate for the total 
package including all government furnished equipment (6FE). The ship¬ 
building plan is developed by consideration of the size and mix of the 
ships deemed necessary, the funding requirements and the ability of the 
shipbuilding industry to meet the programme. 






58 





b. Organisation for Ship Acquisition 

The actual acquisition begins on approval by the Congress of 
the Five-Year Shipbuilding Program. Several Navy organisations become 
involved, but the major responsibility is assigned to the Naval Sea 
Systems Command (NAVSEA). A Ship Acquisition Project Manager (SHAPM) is 
assigned at Milestone 0, and has the responsibility for providing fleet¬ 
worthy ships to the operating forces or designated recipients, fully 
supported and according to the requirements and schedules as expressed by 
the Chief of Naval Operations. [Ref. 22: 90] A project office is set 
up, the structure and composition of which is dependent on the particular 
project. NAVSEA usually employs a small workforce coordinating and 
managing the efforts of larger functional organisations that affect the 
project. 

Such functions as risk analysis, configuration management, 
integrated logistic support (ILS), plans and change management are 
the responsibility of the SHAPM. The SHAPM, through a system of Ship 
Project Directives (SPOs), directs and controls the actions of various 
functional organisations in providing necessary inputs to the project. A 
major area in this regard is the provisioning of Government Furnished 
Equipment (GFE) and Government Furnished Information (GFI). A warship is 
an integration of many systems, some of which are developed concurrently 
with the ship design. Thus, there is a need for the project managers for 
these component systems to continuously keep the SHAPM informed on 
aspects that will affect this programme. SPDs form a "contractual" 
document between the SHAPMs and the participating managers (PARMs). 


59 






All contracts negotiated and awarded for the shipbuilding 


project are handled by a Procurement Contracting Officer (PCO). The PCO 
is normally organisationally apart from the SHAPM, but he retains contract 
autonomy, while the SHAPM controls the funding. The administration of 
the contracts is the responsibility of the Supervisor of Shipbuilding 
(SUPSHIPS). 

c. Project Management Documentation 

The most important project documentation prepared by the 
SHAPM is the Ship Acquisition Plan (SHAP) Outline. This document reflects 
all the data on the project known to date and lays down the dates for all 
SPOs to be issued to support the project. As the program proceeds, the 
outline is refined continuously and the SHAP itself is developed which 
details the plan and strategy to be followed throughout the acquisition 
process. It reflects the management concept for directing and control- 
ing all the elements of the acquisition to meet the goals and objectives 
of the programme. The strategy is developed during the Concept Develop¬ 
ment Phase and covers such areas as competitive procurement, during this 
phase and future phases. This document evolves through an iterative 
process and becomes increasingly definitive as the programme advances. 

It is not a document requiring approval by any other authority, but it 
forms the basis of other documents such as the DCP/IPS. 

Other documents of note are the Top Level Requirement (TLR) 
and the Top Level Specification (TLS). The former defines the opera¬ 
tional requirements of the ship to be produced, stipulates the maximum 
cost and identifies all other constraints affecting the project. The 
TLS translates the TLR into a description of the ship and provides 


60 






a bridge between the TLR and the contract specifications that will be 
developed for the procurement of the ship. 


4. Summary 

This section has described the U.S. Navy procedures to be fol¬ 
lowed for the acquisition of major systems. These procedures are based 
on the requirements of 0MB Circular A-109, which have been incorporated 
into DODO 5000.1 and DODI 5000.2 to reflect the specific needs and policies 
of the Department of Defense. The directives emphasise the establishment 
of a project office and the concept of decision milestone points during 
the process of the acquisition. The project manager is appointed early 
in the process and he develops certain documents enabling him to control, 
direct and monitor the progress of acquisition. 

0. COMPARING THE RAN AND USN PROCEDURES 

This section will compare and comment on the procedures of the 
RAN and USN Ship Acquisition Procedures. Figures 10a through lOd show a 
side by side pictorial presentation of both countries' procedures for 
each major phase of the process. These figures do not show the internal 
endorsement and approval processes by the respective navies necessary 
before consideration by the respective defence departments. 

An examination of the flow diagrams shows that the procedures have 
sequential steps with sufficient feedback loops for the re-examination of 
the requirements where necessary. It is considered that the procedures 
as they stand are satisfactory. 

The topics addressed in the documents forwarded to the decision 
makers in both countries are also comparable. The prime document in 
the RAN is the Major Equipment Submission — Form DPI; the prime documents 








Figure 10a. IDENTIFYING NEEDS 
62 



















63 















64 



















! ROYAL AUSTRALIAN NAVY 

1 

UNITED STATES NAVY | 

i 


I / PRELIM / 

/ DEMO & / | 

I / DESIGN / 

/ VALIDATION / | 

| / APPROVAL / 

/ APPROVAL / I 

1 

1 1 4 

I 1 

1 1 

1 1 

1 III 

I I | UPDATE | 

1 1 1 

| FULL SCALE | I 

1 I | EAS | 

1 III 

| DEVELOPMENT | | 

1 1 1 

j ] FINAL DESIGN j j 

1 1 

1 1 

1 1 1 

j j PROJECT DEFINITION J j 

| EVALUATION | | 

1 1 1 

1 1 
! | SERVICE ! J 

! 1 

1 - 1 - 1 i 

j j EVALUATION j | 

| UPDATE | | 

1 -E- 1 

| DCP / IPS | | 

1 1 1 

| DSDC 

i i 

i- 1 -1 1 

i 

1 1 

1 1 

| DNSARC | | 

1 1 1 

1 1 

| 

1 1 

1 1 

1 1 1 

| DSARC III | | 

1 1 1 

1 1 

1 1 

1 1 

I <GOVERNMEN^> 

1 1 

SECDEF I 

1 1 

I i 

| 

1 1 

1 1 

S TO PRODUCTION AND DEPLOYMENT 

TO PRODUCTION AND DEPLOYMENT | 


Figure lOd. PROJECT DEFINITION/FULL SCALE DEVELOPMENT 

65 













in the USN being the Decision coordinating Paper (DCP) and Integrated 
Program Summary (IPS). 

There is, however, a general feeling, evident by the many studies 
and papers written, that there are problems with the procurement process. 
If it is accepted that the procedural steps in figure 10 are satisfactory 
and flow logically from one endorsement or approval to another, the 
problems must be within the organisations involved in the process. 

For the RAN, the Bruce Working Party reported that many delays were 
occurring due to the organisation of Naval procurement which was not 
sufficiently unified. Consequently, the responsibility and accountabil¬ 
ity for procurement actions were ill-defined, and communication between 
branches difficult. [Ref. 31: paragraphs 73-77] The Working Party 
proposed an outline structure for a Naval Procurement Division within 
which would be commodity procurement cells, a major project cell and 
control cells for financial and management systems. In the USN, these 
functions are all within the Naval Material Command, and even appear in 
the individual systems commands. The proposed structure, under the 
leadership of the Chief of Naval Procurement, would significantly reduce 
the continual debate of contentious points of a proposal between numerous 
directorates when these contentious points do not significantly alter the 
total content of the proposal. Dedicated procurement officers would gain 
experience in this field, which currently is staffed by many non¬ 
specialists. The NAVPRO Working Party examined the Bruce proposal in 
greater depth and proposed three options for the reorganisation of the 
present technical and materiel divisions to improve the project 
administration and project activities. [Ref. 25: Chapter 7] 






An opinion as to which option would be most appropriate is outside 
the capabilities of this author. However, it is felt that although there 
is a need to have the responsibi1ity and accountability delegated to the 
lowest level possible, the organisation within the RAN should be con¬ 
sidered in the light of the other Australian services and the Department 
of Defence as a whole. 

Common organisational structures and procedures within all defence 
factions would enable conformity in approach, considered necessary for a 
country like Australia. The training of procurement personnel and their 
subsequent experience along common lines would strengthen the expertise 
in the acquisition of defence equipments. Australian industries would 
find it easier in their dealings with the Services and the Oefence 
Department. 

E. SUMMARY 

This chapter has described the processes used in the procurement of 
major systems by both the RAN and the USN. A comparison has shown that 
the procedures are almost identical. 

However, there is evidence that there are several problems which 
cause delays in the processes, and it is considered that these problems 
lie not in the procedures, but the management of the procedures within 
the navies. A unified Naval Procurement Directorate has been proposed 
for the RAN by the Bruce and Naval Procurement Working Parties. Further 
study into this area is recommended, however, for a small country such as 
Australia; each of the Services and the Defence Department should be 
organised along similar lines for procurement activities. 


67 



I 


IV. GFE AND STANDARDISATION CONSIDERATIONS 


A. GENERAL 

Government Furnished Equipment (GFE) is that equipment supplied to 

a contractor for subsequent use in the manufacturing of, or incorporating 

in, the item being procured. The technical information describing such 

equipment or information provided in suport of the production, such as 

specifications and standards, is called Government Furnished Information 

(GFI). Collectively, the above items are known as Government Furnished 

Materials (GFM). Items procured by the contractor for use in production 

are known as Contractor Furnished Equipment (CFE). 

The U.S. Defense Acquisition Regulations (DAR), suggest that the use 

of Government Furnished Equipment be restricted. DAR 13-201 says: 

"It is the general policy of the Department of Defense that Con¬ 
tractors will furnish all material required for the performance of 
government contracts. However, the Government should furnish 
material to a contractor when it is determined to be in the best 
interest of the government by reason of economy, standardization, 
the expediting of production, or other appropriate circumstances." 

This researcher knows of no equivalent Australian policy statement. 

Items of equipment are generally designated as GFM for ship construc¬ 
tion projects when it is considered to be in the best interest of the 
government to do so. This usually occurs under one or more of the 
following conditions: [Ref. 24: 7] 

- the production lead time of the equipment is so lengthy that 
the procurement action for it must commence before the shipbuild¬ 
ing contract is let; 


68 








- the material to be supplied is still in the development stage 

and will be produced concurrently with the shipbuilding programme, 
and hence definitive specifications cannot be provided and the 
large attendent element of risk would be inappropriate for the 
shipbuilder to bear; 

- a requirement exists to standardise with other equipments already 
in service, or already being procured under other contracts, and 
cost savings would occur through quantity procurement; 

- the equipment is already stocked in the supply system, and its 
provision to the shipbuilder will not require subsequent special 
reprovisioning (commonly called "in long supply"); and 

- the items are standard stock items of a portable nature which 
will constitute the outfit supply. 

The selection of which items are to be designated GFE must also consider 
the requirement for standardisation, commonality and interoperability 
with allied nations. 

When a ship is built in a Naval dockyard, all equipment and material 
is effectively furnished by the government and must then be procured in 
accordance with the purchasing policy of that government. In Australia, 
a distinction is then made by designating the equipment as either Naval 
Board Supply Items (NBSI) or Shipbuilder Supply Items (SBSI). When a 
ship is built in a commercial dockyard, the procurement of contractor 
furnished equipment and material is largely carried out in accordance 
with the shipbuilder's own procurement policy. In the U.S., the purchas¬ 
ing policy of a contractor is reviewed to determine that it is efficient 
and effective in the expenditure of government funds. It has recently 


69 





been demonstrated in Australia that a commercial shipbuilding firm was 
able to procure items of CFE in 16 to 44 weeks, with an average of 35 
weeks. Similar items procured by the Navy took between 46 to 130 weeks, 
averaging 77 weeks, from the placement of the orders to receipt. 

[Ref. 31: paragraph 18] 

This chapter will discuss the problems associated with particular 
GFE and highlight some possible solutions to these problems. The require¬ 
ment for GFE and CFE to have some level of standardisation is also 
discussed. 

8. PROBLEMS 

The shipbuilding programme management office is usually based on 
a matrix organisation with the functional areas procuring and controling 
the GFE. Whilst this makes possible greater specialisation with less 
technical duplication, proper coordination is necessary to ensure ade¬ 
quate cost, schedule and performance control. [Ref. 24: 13] 

When the Government undertakes to furnish material to contractors, 
it becomes contractually obligated to ensure that the material is deliv¬ 
ered in time, is properly identified, is suitable for its intended use, 
and that it conforms to the specifications for the total system. 
Additionally, there are significant cost implications in the management 
of GFE. 

1. Timing 

The timing of the delivery of GFM to a contractor is very impor¬ 
tant: late deliveries cause delays and disruptions, early deliveries 
affect storage and warranty conditions. 


70 






The shipbuilders' construction schedules and delivery dates can 
be disturbed by late supply of equipment or information. The work, 
either in planning or actual construction, in a particular area, or a 
related area, could be severly disrupted if the right material is not 
available. To rearrange the schedule may not be fully possible espec¬ 
ially when the activities involve several disciplines. Inevitably, the 
final delivery date must be delayed, and the costs rise. 

Early delivery of equipment to the shipbuilder makes it necessary 
for him to store the equipment until installation is possible. Conse¬ 
quently, this equipment could be subjected to degradation due to environ¬ 
mental conditions, pilferage or cannibalisation for preceding ships. The 
contractor may have to establish some type of preventative maintenance 


programme for the equipment, and provide adequate security during the 
storage period. The Government may have a warranty of this equipment but 
cannot exercise the conditions on the warranty if a receipt testing is 
not possible within a certain period, and the warranty could expire prior 
to the installation and initial testing. If the shipbuilder does not, or 
cannot, accept responsibility for the equipment prior to the due date 
because of space or manpower implications, the Government would have to 
provide the appropriate facilities. 

2. Specifications 


The adequacy of the specifications supplied to a shipbuilder 
is extremely important. Defective or incomplete specifications have to 
be amended prior to all preparations for installing items of equipment. 

If the equipment is installed and then a fault is discovered with the 
specifications, alterations or deletions to the work are usually required 


71 





with the resultant effect on the delivery schedule and cost. The speci¬ 
fications could originate from the Navy, another contractor, or from the 
lead-yard in a major shipbuilding progrartme. 

3. Identification 

The proper identification of material impacts on the shipbuilders' 
planning and control. The contract documents, drawings, specifications 
and equipments must be clearly identified, and the method of identifica¬ 
tion consistent between related documents and equipment. 

Confusion inevitably arises when the contract quotes another 
document which is subsequently amended, or the identification is altered. 
Areas of concern are drawings which are supplied by a third party, but 
subsequently endorsed by the Navy with another identification number. 

The equipment is then delivered with another series of identification 
markings. Cross verification of these different markings impacts on the 
delivery schedule and configuration management. 

One major problem encountered by Todd Pacific Dockyard Seattle, and 
the Superintendent of Shipbuilding Conversion and Repair, Seattle in the 
FFG programme, is the identification of GFM at delivery to the ship¬ 
builder. The only formal documentation identifying GFM is the "Schedule 
A" listing the GFM to be provided to the contractor for the performance 
of the contract. [Ref. 21: 405] This listing, however, identifies major 
items only and is inadequate for use as a means of identifying all items 
of equipments received. The FFG Program Office (PMS 399) has provided to 
SUPSHIPS a further breakdown of Schedule A to part numbers of major 
sub-assemblies. This, however, is still inadequate. The packing list 
accompanying the equipment is sometimes incomplete so an adequate check 


72 






f 


is not possible using this. The warehouseman at Todd uses the packing 
list for the first delivered of each equipment as his baseline. This may 
be acceptable for a competent warehouseman in a lengthy programme, but 
is insufficient for a one-of-a-kind situation. 

C. SOLUTIONS 

The management of 6FM within the two Navies is similar in that 
the matrix organisation concept is followed and there are documents 
issued to ensure that the appropriate functional areas are identified and 
the appropriate responsibility assigned for the procurement of GFE. The 
RAN uses the Equipment Acquisition Strategy (EAS) document incorporated 
into the Naval Project Directive (NPD); the USN uses Ship Project 
Directives (SPO). The NPD is an executive document which directs author¬ 
ities to take action, whilst the SPD represents an agreement between the 
Ship Acquisition Program Manager (SHAPM) and the Participating Manager 
(PARM), and is signed by both parties. The type of information contained 
in each is similar, the major difference being that NPD encompasses the 
total project, whereas the SPD addresses only those goods or services 
under the cognizance of a particular PARM. Several SPD's with a number 
of PARM's are necessary for each ship construction project. 

Considering the relative sizes of the two navies, each type of 
document is probably appropriate for the prevailing conditions. 

All of the problems discussed in the previous section lead to slip¬ 
pages in the delivery schedule and increased cost. In the USA, ship¬ 
builders have filed substantial claims resulting from GFM-associated 
problems against the government. In Australia, these same problems have 


73 





resulted in large cost overruns and late deliveries for ships either 
being built or refitted in Navy operated dockyards. 

The early selection of GFM and in particular GFE, or the selection of 
GFE items that are currently in production would solve many of the late 
delivery problems encountered. 

A cut-off date for the designation of an item for each ship should be 
established such that any equipment changes or modifications made after 
that date would not be incorporatd. The configuration of the equipment 
would be firm and could be validated to ensure that the correct specifi¬ 
cations were available to the shipbuilder. A disadvantage, however, to 
this approach is that a possible technological breakthrough would not be 
incorporated resulting in inferior equipment, when a relatively small 
delay would have given an enhanced capability for the operational life 
of, say, the weapons system. 

Firm specifications and configurations would also enable identifica¬ 
tion problems to be solved. A constant effort throughout the programme 
would be necessary to ensure that all the project documentation is 
compatible and cross referencing thus made easier. The identification of 
delivered items could be enhanced with an expanded Schedule A format to 
major component level. A possible tool tor this is the RAN's Equipment 
Breakdown and Support Assessment List (EBASAL). The EBASAL is designed 
to facilitate the ordering of support spares and special-to-type tools 
and test equipment. It is completed by the contractor and identifies the 
parent equipment, each main assembly, each significant subassembly, and 
any special-to-type tools and test equipment. The component items 
relevant to each main assembly are also listed. If this document was 





I 


made available to the shipbuilder, he would have a comprehensive listing 
of deliverable GFE items. 

For the Guided Missile Frigate (FFG-7) shipbuilding programme, the 
USN has made extensive use of a Land Base Test Site for combat systems 
equipment. Such equipment (radars, sonars, launchers, guns and fire 
control systems), are generally always GFE. The original purpose of the 
Land Based Test Site was to install and integrate live equipments in 
simulated shipboard compartments and to develop the computer programs to 
render the entire system operable early in the ship design process. 

[Ref. 24] It has also acted as a staging and testing ground for GFE 
prior to shipping these equipments to the shipyards. Each equipment is 
inspected and tested individually, and then as a total system. Hence the 
Government could exercise the warranty provisions in sufficient time, and 
hold the equipments until the required shipment date. At this time, a 
procedure could be developed to relieve the identification problems at 
the shipyard. 

With the size of Australia's shipbuilding programme, the luxury of a 
Land Based Test Site is not affordable. For the RAN FFG's built in the 
USA, the facility can be used; however, for ships built in Australia, 
with the possibility of equipments from several different countries, its 
use is denied. An alternative would be for the equipment to be set up 
ashore in the dockyard prior to installation. The limitations of this 
approach, however, are that the total system could not be integrated, and 
an operational check-out impossible. It may, however, be a step in the 
right direction, given sufficient numbers of each equipment in service. 


75 





D. STANDARDISATION, COMMONALITY AND INTEROPERABILITY 


In selecting equipment to be fitted in a ship, cognizance of the 
of the requirements for standardisation, corrcnonality and interoperability 
with allied nations is necessary. The USA is currently engaged in 
several studies and projects related to NATO Rationalisation, Standardi¬ 
sation and Interoperability (RSI). These are broad terms and thus 
require defining prior to discussion on their applicability to the RAN 
requirements: 

1. Rationalisation 

"Any action that increases the effectiveness of Allied 
Forces through more efficient or effective use of defense 
resources committed to the Alliance needs, standardisation, 
specialization, mutual support, improved interoperability 
or greater cooperation." [Ref. 27] 

This is a broad definition forming the basis of policies towards stan¬ 
dardisation. It says, in effect, that each Allied nation in enhancing 
their own military effectiveness should consider the needs of the other 
nations. 


2. Standardisation 


"The process by which member nations achieve the closest 
practicable cooperation among forces; the most efficient 
use of research, development and production resources; 
and agree to adopt on the broadest possible basis the use 
of (a) common or compatible operational, administrative, 
and logistic procedures; (b) common or compatible technical 
procedures and criteria; (c) common compatible or inter¬ 
changeable supplies, compontents, weapons, or equipment; 
and (d) common or compatible tactical doctrine with 
corresponding organizational compatibility." [Ref. 27] 

This definition is again very broad, and does not specify the degree 

to which systems should be "alike," but does state that "alikeness" 

is desirable. 


76 







3. Interoperability 

"The ability of systems, units, or forces to provide 
services to and accept services from other systems, 
units or forces and to use the services so exchanged 
to enable them to operate effectively together." [Ref. 27] 

Interoperability is an attempt for different systems, although not 

necessarily "standardised," to work together. 

4. Commonality 

"A quality which applies to material or systems 
possessing like and interchangeable characteristics 
enabling each to be utilized or operated and maintained 
by personnel trained on the others without additional 
specialized training; and/or having interchangeable 
repair parts and/or components; and applying to 
consummable items interchangeably equivalent without 
adjustment." [Ref. 27] 

There are two sides to this definition: one being that equipments 
should have no significant external differences, and the other that 
internal composition should be as identical as possible. 

From the above definitions, it can be seen that effectively "common¬ 
ality" is a subset of "interoperability" which in turn is a subset 
of "standardisation." To meet a given operational requirement, it is 
certainly beneficial to have a standard system, design, logistics and 
operating procedures; logistic items (spare parts, modules, etc.) that 
can be utilized in many systems become common items. 

Standardisation has many benefits, the major ones b* the 
reduction in life cycle costs, the reduction in spa 1 -. ,,ar_ ,o be pur¬ 
chased and stocked, the simplification of test equipment requirements and 
testing procedures, the reduction in training requirements, and the 
improvement of reliability, maintainability and availability. However, 
on the other hand, there are disadvantages of standardisation, some 


77 







being: ideals cannot be realised, limitation of design flexibility, 
more parameters become fixed, expensive subassemblies become more pop¬ 
ulous and voluminous, and greater susceptibility to obsolescence. [Ref. 
20: Chapter 14] 

The advantages and disadvantages clearly have to be weighed against 
each other to determine the level of standardisation required: intra¬ 
ship, intra-class, intra-Navy, inter-service, or inter-nation. The 
decision on the degree of standardisation and methods to achieve the 
required level of standardisation should be made early in, and continually 
reviewed during, the acquisition cycle. 

As Australia buys most major weapons systems from other countries, in 
particular the USA, a large degree of interoperability occurs naturally. 
However, the RAN is a small navy, with three or four major classes of 
destroyers and frigate-size ships, and there is little commonality 
between classes, and, in some cases, within a particular class. An 
improvement in the degree of standardisation would be beneficial. 

E. SUMMARY 

This chapter has described the problems associated with government 
furnished equipment supplied to a shipbuilder. The problems occur in the 
areas of timing, specifications, and identification, which all lead to 
slippages in the delivery schedule and increased cost of the shipbuilding 
programme. 

Early selection of GFE would solve most of the problems with the 
attendent risk that the latest available technology may not be incor¬ 
porated. A balance between the technology and cost and delivery must 
therefore be adopted. 







The requirements for standardisation, conmonality and interoperabil¬ 
ity with allied nations has been discussed and some advantages and dis¬ 
advantages highlighted. No firm guidelines have been proposed as it is 


considered that the requirements for each project must be considered 
individually. However, for a small navy, standardisation between 
the ships would reduce costs in training, spares support and would 
simplify the management aspects of equipment. It would mean, however, 
that advances in technology would not be incorporated rapidly with the 
consequent feeling of being "out-of-date." 






V. A PROPOSAL FOR THE RAN 


A. INTRODUCTION 

Existing requirements and procedures for ship construction projects 
in the Royal Australian Navy are not particularly well defined, and a 
need is seen to improve the situation from the determination of the 
requirements through to the operational use and subsequent retirement of 
a ship. This chapter will develop a proposal for the complete life 
cycle; however, some of the ideas could very well be used for a partic¬ 
ular phase, without having the whole proposal accepted. 

8. THE PROPOSAL 

The Royal Australian Navy normally operates with approximately 
twelve front line operational warships of the destroyer/frigate size. If 
the average life of such a warship is 24 to 30 years, Australia should on 
the average be procuring warships at the rate of one every two to two-and- 
a-half years. It is suggested that Australia embark upon a programme 
which will produce ships at this rate. 

By embarking on a cyclical replacement programme for warships, the 
"replacement syndrome" in lieu of mission needs is not being promoted. 
Australia, being a large island nation dependent on trade, will always 
need some form of defence at sea. The basic platform requirements, such 
as displacement, range and speed, do not alter significantly over time 
frames up to 30 years, allowing a common platform to be designed with 
little need for modification for 10 to 20 years, or say up to ten ships. 
The effectiveness of a weapons system from its initial operational 


80 







commitment varies more in relation to perceived threats than does the 
platform requirements; however, a commonly accepted period is 10 to 15 
years, allowing five ships to be built with a common weapons system, and 
a further five existing ships to be updated with the same weapons system. 
Modifications to such a weapons system inevitably are introduced, which 
extend the effective period further. 

The basic proposal is, therefore, to develop an on-going replacement 
programme to maintain the present size of the Royal Australian Navy, such 
that a ship is completed every two years, the requirements being contin¬ 
ually reviewed, however, the platforms not substantially altered for ten 
new ships, and the weapons fit not being altered for five new ships. A 
diagrammatic presentation of this proposal is shown in Figure 11. 

The effects on Government considerations. Defence asquisition organi¬ 
sations, industrial activities, equipment considerations and other aspects 
of this proposal are discussed in the following sections. 

C. EFFECTS OF THE PROPOSAL 

1. Government 

This proposal is for a replacement programme only and is not a 
means of increasing the size of the Royal Australian Navy. As Australia's 
political structure is such that the govenment-of-the-day directs the 
activities of the Defence Forces, and the political climate such that a 
change of government could occur every three years, a bi-partisan agree¬ 
ment between the major political parties would be required for such a 
programme to continue. As a replacement programme alone, the idea may be 
easy to "sell" to both parties, leaving any requirement to increase the 






















size of the Navy to meet changes in the strategic conditions, the respon¬ 
sibility of the government-of-the-day after due analysis of the threat. 

2. Defence Acquisition Organisation 

The present acquisition procedures within the Navy, Defence 
and other government organisations are cumbersome and inefficient. An 
established on-going programme would enable the appropriate organisations 
to consolidate their procedures. In particular for the Navy, a consol¬ 
idated procurement organization, such as that proposed by the Bruce 
Working Party, would be very effective and efficient. The consolidated 
organisation would receive the technical specifications of the require¬ 
ment and would then process the requirement through the tendering, 
assessment of tenders, contract preparation and award, contract adminis¬ 
tration and finally receiving the equipment/ship for handover to the 
user. [Ref. 31] The approval procedures leading to the various 
milestones would be reduced. Accountability and responsibility would be 
easily visible, and administrative costs would be reduced. 

This type of organisation could be further consolidated if the 
technical aspects are also included. This approach was suggested by the 
Naval Procurement Working Party (NAVPRO). [Ref. 25: 7] The conse¬ 
quences of this change would be a departure from the matrix-type organi¬ 
sation to a functionally-oriented structure. However, as the ship design 
and selection of equipment requirements would be greatly reduced, no 
increase in manpower is seen as necessary. 

3. Industrial Activities 

It is unlikely that an overseas shipbuilder would be willing 
to provide ships to such a programme, and thus this programme would 


83 


IUTT-'— —. a » 









require the ships to be built in Australia. The Australian shipbuilding 
industry would therefore have an on-going approved programme and would 
thus be able to plan their activities in relation to plant, equipment, 
manpower and management controls more effectively. The effect on the 
competition is difficult to determine as there is the possibility of 
collaboration between shipyards leading to a conglomerate and monopolis¬ 
tic situation, and also the possibility of other corporations seeing the 
requirements and endeavoring to enter the shipbuilding industry. By 
maintaining a Naval Dockyard for refitting ships, but with a capability 
of ship construction, competition should be enhanced. 

Other industries, such as the electronics industry, in Australia 
would be motivated to enter into defence contracts if an on-going need is 
foreseen. The production runs would be for similar quantities of each 
equipment, but they would be spread over a longer period. It would not 
be economical to produce ten weapons systems over ten years. The possi¬ 
bility of overseas sales of such modular equipment should not be over¬ 
looked, allowing more units to be produced with consequent reductions in 
R&D and set-up costs per unit. 

The stabilising effect in local industries would be felt from the 
design stages, through the production, to the maintenance and follow on 
support stages. It would affect capital equipment purchases, learning 
curves of designers and producers, and encourage more people of all 
disciplines to enter the industries. 

4. Equipment Considerations 

All equipment and material required for the construction of a 
ship would be procured more efficiently through quantity purchases. 




84 












reductions in specifications and ordering preparations, and general 
reductions in administrative and other delays. The selection of equip¬ 
ment would require a greater effort in the initial stages of such a 
programme, but the effort to maintain the programme will be reduced. 

For the weapons systems which will be incorporated into the 
platform, a greater degree of modularity than exists today would be 
required. However, it is considered that apart from launchers, guns and 
magazines, most present day electronic equipment could be more modularized. 
Ideally, each piece of electronic equipment should be portable to allow 
installation inside a ship to be accomplished by carrying the item 
through standard doorways and hatchways and then plugging into a pre¬ 
determined equipment rack. The services provided by the platform, such 
as electrical power, air conditioning, cooling water, and control wiring, 
would require sufficient contingencies built in to accommodate changes to 
equipment throughout the operational life of the platform. If follow on 
equipments, although enhanced technologically and in their capabilities, 
were produced in similar sizes and numbers of modules, the half-life 
modification of a ship would be considerably easier, and would not require 
major superstructure changes as experienced with the Destroyer Escorts 
and Daring Class Destroyers. 

The construction or refitting of a ship would effectively be 
divided into two distinct stages: tne platform and the weapons fit. 

These two activities need not necessarily be assigned to the same contrac¬ 
tor; for example, the platform could be constructed or refitted in a 
commercial shipyard, with the weapons fit being installed by a Naval 
dockyard. Delays in the availability of one weapons system would not 






85 




prevent a new ship from being completed, from undergoing trials, or even 
from operating, albeit with a reduced capacity. It is considered 
that it is better to have some capability at sea, than to have no ship 
at all. 

5. Other Considerations 

As Australia does not have the technology base to develop a 
complete modern weapons system, it will still be necessary to obtain from 
overseas the equipment, or, at the least, the production information. To 
purchase equipments overseas to the required level of modularity may not 
be possible when the overseas manufacturer is producing the same equipment 
for several countries, and the Australian order is small in comparison to 
the total quantity being produced. If the other customer countries are 
also interested in the modularity concept, the manufacturer would 
undoubtedly be interested in such specifications. If not, then the 
design specifications could be bought by an Australian company or licensed 
production could be considered. The overseas manufacturer could still 
provide the major components, the Australian manufacturer configuring 
them to meet the modularisation needs. 

As a greater number of the same weapons systems would eventually 
be procured, standardisation within the Navy would occur. The advantages 
of such commonality described previously would result. Additionally, if 
one, or even two, extra systems were procured than those required for 
shipboard use, a site ashore could be established with the appropriate 
services to give a "hot," but not necessarily fully operational, system. 
This system could be used for technical or operational training, fault 
diagnosis on equipments removed from ships during maintenance periods. 


86 



or as a ready-use spare to meet an urgent operational requirement. This 
shore-based equipment would not be as effective as the Land Based Test 
Site used in America, but it would certainly be a step towards the 
concept. The cost of these extra systems would be partly offset by 
reduced training costs, and reduced spares inventory costs. 

The morale of everyone involved with Naval ships would increase. 
The seagoing uniformed personnel would see a continual update of the Navy 
as a whole; they would be better trained, less frustrated due to lack of 
spares and long maintenance periods, and would be more interchangeable 
between both ships and shore facilities. Those employed ashore in policy 
and procurement activities would see a result of their efforts, without 
fear of a project being disbanded after many years of work. Dockyard and 
industry personnel would have an on-going programme resulting in employ¬ 
ment tenure. 

D. SUMMARY 

If an on-going proposal to replace the ships of the Royal Australian 
Navy was introduced, such that a new ship appeared every two years, with 
a common platform for ten ships, and a common weapon fit for five new and 
five existing platforms, many advantages would occur. The advantages 
would affect the procurement activities within the Navy and Defence 
organisations, the Australian industrial base for the production and 
support of defence equipment, the maintenance, operational and training 
requirements for the Navy, and all personnel involved with ships. 

The proposal would not be easy to initiate: the cooperation of the 
political parties and industry would be required; the initial platform 
design would require considerable effort; and the redesign of weapons 

87 


"3 


■ 











systems to the modular concept and their subsequent manufacture would 
require considerable effort. However, once underway, the programme would 
be relatively simple to plan, control, coordinate and implement. It 
would also establish a baseline from which advanced or additional require¬ 
ments could be generated. 

Although the ideas expressed result from this proposal in total, 
they could be individually applied to existing arrangements for various 
aspects of ship construction projects. 


88 









VI. RECOMMENDATIONS AND CONCLUSIONS 


A. SUMMARY OF THESIS 

This thesis has presented the author's view of various aspects of 
the acquisition processes of the Royal Australian Navy and the United 
States Navy. The processes have been compared, and, recognising that 
direct comparisons between two countries of widely differing populations, 
government structure, defence organisations and industrial capabilities 
are difficult, some areas of possible improvements have been discussed. 

A proposal for the RAN to embark on a replacement shipbuilding 
programme has been presented. This proposal is for the RAN to have built 
in Australia one warship of destroyer/frigate size every two years. The 
warship platform design would remain essentially stable for ten ships, 
with a modularized weapon fit suitable for half the life of the platforms, 
installed in five new, and five existing ships. The impacts and require¬ 
ments of various aspects of such an acquisition programme have been 
discussed, and presented in such a way that they could be adopted indi¬ 
vidually even if the total proposal was considered unsuitable after a 
more detailed study. 

B. CONCLUSIONS 

The actual procedures for the acquisition of equipments followed by 
the defence departments in both Australia and the United States of 
America are, in general, straightforward and follow logical steps from 
one stage to another, with sufficient feedback loops to provide necessary 
checks and balances. The majority of material written about the process 


89 






in the USA tends to criticise the procedures. However, it is considered 
that the procedures are adequate; the problems occur in the management of 
these procedures. 

The early selection of items which are to be furnished to the ship¬ 
builder by the government would reduce the problems leading to delays and 
increased costs of the shipbuilding programme. Selecting items that are 
standardised with other equipments would reduce costs in training, 
support and management. The opposing view is that advances in technology 
would not be incorporated, leading to earlier obsolescence of equipments. 

C. RECOMMENDATIONS 

The major recommendation resulting from this research is for Australia 
to embark on a cyclical replacement programme for destroyer/frigate size 
ships. This proposal is discussed fully in Chapter V. 

The procedures for major system acquisition are adequate, however, it 
is recommended that improvements could be made in the management of the 
process within each Navy. A unified procurement area within the RAN along 
the lines proposed by the Bruce and Naval Procurement Working Parties is 
recommended. The final structure of this area requires further study, 
but should be considered in the light of the other services and the 
Defence Department as a whole. 

The requirements for government furnished equipment should be deter¬ 
mined and finalised as early as practicable to reduce costs and maintain 
delivery dates. A balance between technology and cost and delivery must 
be drawn for each project alone; a firm general policy statement is 
inappropriate. Similar arguments exist for the extent of standardisation 
to be adopted. It is, however, recommended that for the RAN it is more 


90 









APPENDIX A 


COMMITTEES INVOLVED WITH ACQUISITION 


1. AUSTRALIA 
Consultative Group 


Chairman: 


Members: 


Functions: 


Deputy Secretary 8 (or other appropriate Deputy 
Secretary) 

Deputy Secretary A 
Deputy Secretary C 

Assistant Chief of Defence Force Staff 
Deputy Chief of Naval Staff 
Deputy Chief of General Staff 
Deputy Chief of Air Staff 

Executive Controller, Australian Defence Scientific 
Service 

First Assistant Secretary, Programmes and Budgets 
First Assistant Secretary, Force Development and 
Analysis 

To review the draft Five Year Defence Programme 
and annual draft Defence Programme and Estimates 
proposals and to make recommendations to the 
Defence Force Development Committee. 


Defence Committee 


Chairman: Secretary, Department of Defence 

Members: Chief of Defence Force Staff 

Chief of Naval Staff 
Chief of the General Staff 
Chief of the Air Staff 

Secretary, Department of the Prime Minister and 
Cabinet 

Secretary to the Treasury 

Secretary, Department of Foreign Affairs 


92 



Functions: To advise the Minister on: 

the defence policy as a whole; 

the co-ordination of military, strategic, economic, 
financial and external affairs aspects of the 
defence policy; 

matters of policy or principle and important 
questions having a joint Service or Inter¬ 
departmental defence aspect; and 

such other matters having a defence aspect as 
are referred to the Committee by or on behalf of 
the Minister, 

and carry out such investigations as it thinks 
fit for the purpose of advising the Minister on 
those matters. 


Defence Force Development Committee (DFDC) 

Chairman: Secretary, Department of Defence 

Members: Chief of Defence Force Staff 

Chief of Naval Staff 
Chief of the General Staff 
Chief of the Air Staff 


Functions: To advise the Minister for Defence, in the context 

of strategic assessments and the most efficient use 
of resources, on the development of the Defence 
Force as a whole; and the inclusion in the Five Year 
Rolling Programme of major weapons and equipment 
capabi1ities; 

To initiate and review major studies concerned 
with the development of the Defence Force, and to 
exchange views, and review progress in the develop¬ 
ment of the Defence Programme; and 

To review matters of common interest to members 
and review progress in the preparation of proposals 
and appreciations for submisison to the Government. 


93 





Defence Force Structure Committee (DFSC or FSC) 


Chairman: 
Members: 


Functions: 


Deputy Secretary B 

Chief of Joint Operations and Plans 

Chief of Naval Operational Requirements and Plans 

Chief of Operations - Army 

Chief of Air Force Operations 

Executive Controller, Australian Defence Scientific 
Service 

First Assistant Secretary, Force Development and 
Analysis 

First Assistant Secretary, Programmes and Budgets 
First Assistant Secretary, Defence Industry and 
Materiel Policy 

First Assistant Secretary, Strategic and Inter¬ 
national Policy 

First Assistant Secretary, Defence and Works 
Division, Department of Finance 

To provide advice to the Defence Force Develop¬ 
ment Committee and to participate in decision 
making on the development of the force structure. 
Five year Defence Programme and major equipment 
proposals and to keep these matters under review. 


Defence Operational Requirements Committee (DORC) 

Chairman: Assistant Chief of Defence Force Staff 


Members: Chief of Naval Operational Requirements and Plans 

Chief of Operations - Army 
Chief of Air Force Operations 
Controller, Military Studies and Operational 
Analysis 

First Assistant Secretary, Force Development and 
Analysis 

First Assistant Secretary, Programmes and Budgets 
First Assistant Secretary, Strategic and Inter¬ 
national Policy 

First Assistant Secretary, Defence Industry and 
Materiel Policy 

Functions: The consideration of Staff Objectives and Staff 

Targets likely to become the subject of major 
equipment submissions and their endorsement for 
further definition and development. 


94 








The consideration, review and endorsement of Staff 
Requirements for major equipments and, when appro¬ 
priate, their submission for further consideration 
by the Chiefs of Staff Committee. 


Defence Source Definition Committee (DSDC) 

Chairman: First Assistant Secretary, Defence Industry and 

Materiel Policy 

Members: Appropriate Chief of Materiel 

Assistant Secretary Financial Programmes 
Assistant Secretary Project Development 
Assistant Commissioner (Operations) Purchasing 
Division, Department of Administrative Serivces 
Appropriate Chief of Technical Services (Navy or 
Air Force, if required) 

Appropriate Director General Supply (if required) 
Assistant Secretary Project Planning and Evaluation 

Functions: Analysis and presentation of the objective defence 

considerations for and against the respective offers 
of competing manufacturers for the supply of altern¬ 
ative equipments under investigation. 

Review of equipment acquisition strategies for 
specific major and the more significant minor 
equipment projects. 

Review of proposals for Australian industry involve¬ 
ment . 

Examination of proposals for capital expenditure 
in connection with the production of equipment. 


2. UNITED STATES 

National Security Council (NSC) 

Chairman: President, United States of America 

Vice President 
Secretary of State 
Secretary of Defense 


Members: 







AO-AlOA 070 


UNCLASSIFIED 


NAVAL POST6RADUATE SCHOOL MONTEREY C* F/O 5/1 

A COMPARISON Of THE ACOUISITION PROCESS FOR SHIP CONSTRUCTION P—ETC(U) 
JUN 81 DP CATON 


H| 





END 

■ ■ 


■■ 

■■ 


JO-81 1 

OTIC 
















Advisors: 


Chairman of Joint Chiefs of Staff 
Director of Central Intelligence 


Functions: To advise the President with respect to the integra¬ 

tion of domestic, foreign, and military policies 
relating to national security. 


Defense Systems Acquisition Review Council (DSARC) 


Chairman: 


Defense Acquisition Executive, DAE 


Members: Under Secretary of Defense (Research and Engineer¬ 

ing) USD (R&E) 

Under Secretary of Defense (Policy), USD (P) 
Assistant Secretary of Defense (Comptroller), 
ASD(C) 

Assistant Secretary of Defense (Program Analysis 
and Evaluation), ASC (PA&E) 

Assistant Secretary of Defense (Manpower, Reserve 
Affairs and Logistics), ASD (MRA&L) 

Functions: To serve as an advisory body to the SECDEF on 

the acquisition of major defence programmes and 
related policies, and to provide the SECDEF with 
supporting information and recommendations when 
decisions are necessary. 


Department of the Navy Systems Acquisition Review Council (DNSARC) 

Chairman: Cognizant Assistant Secretary 

Members Secretary of the Navy 

Under Secretary of the Navy 
Assistant Secretaries of the Navy 
Chief of Naval Operations 
Commandant of the Marine Corps 
Chief of Naval Material 


Functions: To provide a formal mechanism by which the SECNAV 

will receive counsel of his principal advisors 
prior to making decisions concerning initiation 
or continuation of, or substantial change to, 
major weapons systems acquisition programmes. 





LIST OF REFERENCES 


1. ABR 5069, RAN Project Management Manual , Department of Defence (Navy 
Office), Canberra, August, 19)6. 

2. Australia Handbook 1979/80 , Department of Administrative Services, 
Canberra, 1979. 

3. Australian Department of Administrative Services, Purchasing Division, 
How to do Business with the Commonwealth Government , Canberra, 1980. 

4. Australian Department of Defence Instruction DI(G) ADMIN 05-1, 
Procedures for the Development of Documentation of Major Equipment 
Requirements up to the Issue of Staff Requirements , Canberra, 25 
August, 1980. 

5. Australian Department of Defence Instruction DI(G) ADMIN 05-2, 

Major Equipment Procedures (from the Submission of Proposals up to 
and Including Government Approval of the Generic Type ), Canberra, 

8 July, 1977. 

6. Australian Department of Defence Instruction DI(G) ADMIN 05-3, 
Instructions for the Procurment of Equipment and Associated Services , 
Canberra, 30 June, 1977. 

7. Australian Department of Defence Instruction DI(G) ADMIN 05-4, 

Release of Staff Requirements and Similar Documents to Industry , 
Canberra, 18 August, 1978. 

8. Belden, 0. L., and Cammack, E. G., Procurement , National Defense 
University, Washington, D.C., 1978. 

9. C & C Associates, Consultants, Life Cycle of Major System 
Acquisitions , 1980. 

10. Churcher, G. J., "Defence and Industry — A Defence Perspective," 
Strategem , V. 1, No. 3, p. 37-42, November 1980. 

11. Evans, G., Commander, RANR, "America's Ally, 'Down Under'," 
Proceedings, United States Naval Institute, V. 107/3/937, p. 84-89, 
flafch,1M. 

12. Fox, J. Ronald, Arming America: How the U.S. Buys Weapons , 

Harvard University Rress, 1974. 


97 













13. Freedman, l.. Power and Politics in America, Duxbury Press, 1974. 


14. Gansler, J., The Diminishing Economic and Strategic Viability of 
the U.S. Defense Industrial Base . Ph.D. Thesis, The American 
University, Washington, D.C., 1978. 

15. Joint Committee on Foreign Affairs and Defence, Australian Defence 
Procurement, Report on Procurement Policy , Katter, R. C., M.P., 
(Chairman), 23 October, 197?. 

16. Ketron, Incorporated, Australian Industry Participation (AIP) 
Handbook , February 1987! 

17. Leon, H. L., Jr., The Ship Acquisition Process; An Interorgan - 
izational Perspective , Master's Thesis, Naval Postgraduate School, 
Monterey, Marcn 1976. 

18. McClanaqhan, W. A., American Government, Allyn and Bacon, Inc., 
1960. 

19. Martin, D. J., Captain, RAN, and others. Review of Project Man - 
agement in the RAN, report submitted to the Chief of Naval Staff, 

1/ July, 1978. 

20. Naval Ocean Systems Command TO 108, Project Managers Guide , by 
Townsend, J. H., June 1977. 

21. Naval Sea Systems Command, Ship Acquisition and Contracting 
Administration Manual (SACAM) , 1978. 

22. Naval Sea Systems Command, Ship Acquisition Reef Points , 1976. 

23. Office of Management and Budget Circular No. A-109, Major Systems 
Acquisitions , 5 April, 1976. 

24. Pinelli, J. J., Approaches to Solving GFE Dilemmas in Navy Ship¬ 
building Contracts , Study Project Report, Defense Systems Manage¬ 
ment School, 1976. 

25. Report of the Naval Procurement Working Party (NAVPRO) , West, B. L. 
Commodore, ftAN, (Chairman), submitted to Chief of* Naval Materiel, 

28 November, 1980. 

26. The Assistant Secretary of the Navy (Manpower, Reserve Affairs, 
and Logistics), Naval Ship Procurement Process Study, Final 
Report , July 1977! 


98 






1 


27. U.S. Department of Defense Directive 2010.6, Standardi zation ang. 
Interoperabi1ity of Weapon Systems and Equipment Within the North 
Atlantic Treaty Organization , 11 March, 1977. 

28. Department of Defense Directive 5000.1, Major System Acqui sitions, 
19 March, 1980. 

29. U.S. Department of Defense Instruction 5000.2, Major System 
Acquisition Procedures , 19 March, 1980. 

30. U.S. Department of the Navy, RDT&E Management Guide , NAVSO 
P-2457, 15 December, 1979. 

31 Working Party Report on Procurement of Equipment for New Con¬ 
struction Ships, Bruce', D. F., lunairman), suDmitted to 
Chiei^ of Naval Materiel, 24 March, 1980. 




BIBLIOGRAPHY 


Cumming, G. G. A., A Comparison Between the Royal Navy and the United 
States Navy of the System Acquisition Process and Project Control , 
Master's Thesis, Naval Postgraduate School, December 1977. 

Engineering Duty Officer School D-100, Ship Definition Process , EDQP 
Study Paper, October 1978. 

General Dynamics, Pomona Division, Fiscal & Life Cycles of Defense 
Systems , 1980. 

Keightley, C. E., Is the Defense Industrial Base Being Eroded , Study, 

The George Washington University, 4 May 1978. 

Leopold, R., "Should the Navy Design Its Own Ships?" United States 
Naval Institute Proceedings, Naval Review , 1975. 

Mediansky, F. A., editor. The Military and Australia's Defence , Longman 
Cheshire, 1979. 

Morgan, J. H., II, and Scott, N. S., An Evaluation of the Problem Areas 
in the Implementation of the Ship Project Directive Process , Master's 
thesis. Naval Postgraduate School, Monterey, September 1973. 

National Security Affiars Monograph Series 79-5, Procurement of Naval 
Ships: It is time for the U.S. Navy to acknowledge its shipbuilders 
may be holdinq a winning hand, by Cole, B.M., Captain, U$N, September 

T_^_ 

Naval Electronic Systems Command, RDT&E Orientation , by Schutt, H. J., 

19 March 1980. 

O'Neill, R., editor. The Defence of Australia: Fundamental New Aspects , 
Australian National University, 1976. ” 

Peak, Marwick, Livington & Co., CFE/GFE Policy Study Final Report , 
submitted to Naval Ship Systems Command, June 1967. 

Sagee, N., Israeli Air Force Project Management: Acquiring Weapon 
Systems from the United States , Master's Thesis, Naval Postgraduate 
School, Monterey, December 1979. 

Strategem's Research Team, "Defence and Industry," Strategem , V. 1, 

No. 1., May/June 1980. 







Sukardono, G., A Comparison of the Ship Acquisition Process of the 
Indonesian Navy and United States Navy , Master's Thesis, Naval Post¬ 
graduate School, Monterey, December 1978. 

The Rand Cooperation Report R-2184/1-AF, Peacetime Adequacy of the 
Lower Tiers of the Defense Industrial Base , by G. 6. Baumbusch and A. J. 
Harman, November 1977. 

Turner, 0. M., A Systems Engineering Approach to NATO Standardization , 
Master's Thesis, Naval Postgraduate School, Monterey, March 1979. 

Ward, J. W., and Garcia, L. E., The United States Shipbuilding Industry: 
Structure, Conduct, Performance , Master's Thesis, Naval Postgraduate 
School, Monterey, March l97S. 







INITIAL DISTRIBUTION LIST 


No. Copi 


1. Defense Technical Information Center 2 

Cameron Station 

Alexandria, Virginia 22314 

2. Library, Code 0142 2 

Naval Postgraduate School 

Monterey, California 93940 

3. Department Chairman, Code 54 1 

Department of Administrative Sciences 

Naval Postgraduate School 
Monterey, California 93940 

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Department of Administrative Sciences 

Naval Postgraduate School 
Monterey, California 93940 

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Department of Administrative Sciences 

Naval Postgraduate School 
Monterey, California 93940 

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Department of Administration Sciences 

Naval Postgraduate School 
Monterey, Cali form's 93924 

7. Lieutenant Commander D. P. R. Caton, RAN 1 


Office of the Naval Attache 
Australian Embassy 
1601 Massachusetts Avenue 
Washington, O.C. 20036 

8. The Naval Attache 1 

Australian Embassy 

1601 Massachusetts Avenue 
Washington, D.C. 20036 

9. The Chief of Naval Materiel 5* 

Department of Defence (Navy office) 

Russell 

Canberra, ACT 2600 
Australia 

♦Via The Office of the Naval Attache 
Australian Embassy 
1601 Massachusetts Avenue 
Washington, D.C. 20036 


102 





END 

DATE 

FILMED 




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DTIC