1.23 Defence policy mandates that if an Off-The-Shelf (OTS) option exists for Defence's capability requirements, it will be presented for Government consideration and will be the benchmark against which a rigorous cost-benefit analysis of any additional capability is sought, taking into account the cost and risk of doing so.
1.24 Likewise, any option that proposes 'Australianisation' or modification to an existing OTS capability solution must detail the rationale and associated costs and risks to undertaking such modifications.
1.25 Projects seeking First Pass Approval during 2010-11 were subject to this policy, which ultimately aims to provide greater visibility and fidelity over the risk identification and treatment process associated with capability solutions, including OTS.
1.26 OTS solutions are not risk free and any cost/benefit analysis of OTS solutions needs to fully consider the potential benefits and risks of OTS solutions, expanded under Table 1.2. The major benefits of OTS include: proven solution; more predictable cost and schedule; the use of global supply chains; greater potential for interoperability with allies; and, access to potentially lower cost and better informed upgrade cycles. These benefits should be balanced against possible risks and costs of OTS which include: potentially, not leading edge technology; a market driven product which may not fully meet the ADF's capability need; market-driven product/update cycles with which Defence must keep pace and fund; potentially limited access to technical data; certification and regulatory challenges; integration costs of disparate systems; and the strategic need for Australian industry capability and a secure supply chain which may not be possible for an overseas sourced OTS.
Table 1.2: Off-The-Shelf Benefit and Risk Summary
Benefits of Off-The-Shelf | Constraints, Risks and Cost Drivers of Off-The-Shelf |
Proven Solution: By definition, OTS products are mature solutions that have completed the higher risk research, development, evaluation and certification activities and, in most instances, have been proven in service. Predictable Cost and Schedule: Because OTS products have completed development, the unit price and delivery schedule is known. Global Supply Chains: There is potential to leverage international supply chains to reduce costs and secure diversity of supply. Interoperability: Where the same OTS systems are already in service with allies, there is an inherent level of interoperability. Upgrades: OTS products are enhanced and upgraded based on the experiences of multiple users, and the benefits and costs on these improvements are shared across multiple customers. | Technological 'Edge': by definition, OTS products are mature solutions and may not offer leading edge capability.Market Driven Capability: OTS product functionality is market driven, and can fall short of Australia's full mission requirements.Intellectual Property & Technical Data: OTS products are developed for commercial benefit, and the competitive advantage resides in the intellectual property. Therefore, there is usually limited technical data available and opportunities for Australian-specific modifications and support may be limited.Integration Risk: Capability needs are rarely satisfied by a pure standalone OTS solution and require some level of integration (e.g. into platforms, with legacy systems, with other off- the-shelf systems, business processes and doctrine). |