Defence pauses battle system project with Elbit Systems

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Defence pauses battle system project with Elbit Systems

Interim solution to be in place for up to three years.

The Department of Defence has paused its $1.44 billion battle management system project with Elbit Systems after both current and future versions of the software failed to meet technical standards.

The suspension has forced the department to adopt an interim software solution from Danish software provider Systematic, which is expected to be used for up to the next three years.

At senate estimates on Wednesday, chief of army Rick Burr confirmed Defence had “paused the use [of the software] in operational units” after weeks of speculation about the contract.

Australian Defence Magazine and the ABC both reported in April that Defence had told Elbit that it would stop using the deployed software version of the battle management system in May.

The command and control system – previous versions of which have been in place since 2010 – was to be delivered under Land 200 phase two in a bid to better connect soldiers in the field.

It was considered a precursor to projects like the futuristic solider combat system program (SCSP), which will “augment” soldiers with robotics and autonomous systems over the next decade.

Burr said the decision to pause and withdraw the Elbit system on May 15 was down to “a lack of accreditation of the current version of software, which is due to expire at the end of [June]”.

That version of software – version 7.1, which had been provisionally accredited for use on the Defence network between July 2020 and July 2021 – had been expected to be replaced by a version 9.1.

But Burr told the committee that version 9.1 had also “not met its contracted specifications… and therefore it hasn’t been presented for ICT accreditation”.

“[Version] 9.1 has been delayed, and will not be – or could not be – in place in time to replace [version] 7.1,” he said.

At the same time, however, Defence was unable to continue using version 7.1 as patching did not meet its expectations, in part because Elbit expected it would be superseded by version 9.1.

“Patching… hadn’t been maintained – or couldn’t be maintained – because it’s an older version of the software that we were trying to replace with [version 9.1],” Burr said.

Chief information officer Stephen Pearson added that there were “a range of architectural controls that [Defence] assessed were not there… and we are awaiting [an] update relevant to that”.

Elbit was informed of this on April 16, just over two weeks after Defence realised security accreditation for version 7.1 would not be possible.

“The timing of that advice was to enable the system to be paused, and, as appropriate, withdrawn from use so that an interim solution can be put in place by the end of [June],” Burr said.

Previous versions of Elbit software had received full accreditation, including version 4 in 2014, version 6 in 2017 and version 7 in 2018.

Two contractors have since been engaged to conduct a technical review of the software, which Defence expects will inform its next steps. PwC has been asked to review the financials.

Burr and Pearson also said they were not aware of any Five Eyes partners having approached Defence to discuss risks associated with the system, as reported by the ABC.

Interim solution

With the Elbit software unable to meet Defence's immediate needs, the department has deployed an interim software solution from Danish software provider Systematic that it was already using in other areas.

“The interim solution that we have in place is to take an element of the software application that was already in use. It’s called the SitaWare Headquarters,” Burr said.

“It is licenced software and we have bought additional licences to spread that across the army to enable us to have an interim capability.

“So it was already in use to supplement the system that we had, and it is how we are managing the interim.”

Defence began developing the solution “very late last year”, when it “became increasingly evident" that options with Elbit would fall through.

“In order to look at mitigations for the risk that that would incur, we started looking at what our options were,” Burr added.

Defence expects the interim solution could be used for “up to the next three years” or until phase three of Land 200, which is expected to begin next year.

“It’s an interim capability until phase three delivers its output,” Burr said.

“The intention is that we would, with government approval, approach the market for a system that enables our future agility.”

While the Elbit software has been withdrawn from the field in the interim, Defence still intends to use it in training schools.

$118 million up in the air

Defence has not terminated its contract with Elbit, but has not paid the company for the software readiness release, a major milestone that was expected in September 2020.

“We haven’t paid the milestone, which is different to imposing a stop payment,” capability acquisition and sustainment group deputy secretary Tony Fraser said.

“Normally the stop payment is a separate [contractual] mechanism that we would use. In this case, we have not paid the milestone for not achieving the milestone.”

The software readiness release is one of seven milestones – three of which are not “yet due and therefore yet to be achieved or assessed".

Those milestones are worth approximately $118 million, with at least some of this expected to flow to Elbit.

Fraser said that, as at August 2020, Elbit had been paid $291.4 million for meeting 11 of 18 milestones under Land 200 phase two.

Defence has set aside $962 million for Land 200 phase two, of which $691 million has been spent. The total project is worth $1.44 billion.

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