Confronted with the First Principles Review’s 70 recommendations, it’s easy to lose sight of the forest for the trees. Viewed from arm’s length, the two most important outcomes aren’t actual recommendations  but the decisions—one explicit, one implicit—to leave things as they are: to retain the civilian–military diarchy, and to preserve the shared services model for materiel and corporate support.

Those outcomes weren’t pre-ordained. There are some who’d like to see the diarchy done away with and the Chief of the Defence Force (CDF) put in charge—either with or without a parallel civilian-led Defence Department. And there are others who’d like to see the services reabsorb the materiel sustainment and enabling support functions. In each case, the arguments hinge on clarity of accountability and its alignment with authority. A typical rhetorical question would be: How can a service chief, or indeed the CDF, be held to account for delivering military capability if they don’t control the resources needed for the task?

Although the First Principles Review’s first principle was ‘clear authorities and accountabilities that align with resources’, the review team members weren’t persuaded—most likely because they recognised the need to balance accountability with other competing factors. For the shared services model, it was the substantial efficiencies available through economies of scale and the central rationing of service levels. For the diarchy, it was avoiding the conflict of interest that’d arise if the military were the government’s sole source of advice about the military. I think the review made the right decision in both cases.

I’ve already made my views on the diarchy clear, so there’s no need to recount them, but the merits of the shared services model deserve explanation.

There’s no denying that the shared services model separates the service chiefs from the direct control of the resources needed to deliver the outcomes that they’re accountable for. In the most critical area—the sustainment of military platforms and weapons systems—the service chiefs already hold the purse strings and are able to make trade-offs between cost and the level of support they receive. And their ability to do so has been enhanced in recent years through cooperation with industry facilitated by DMO. In terms of garrison and corporate support, the capability managers don’t own  the budget, and service levels are largely set centrally. But this is no different from what happens in many parts of the private and public sectors.

The essential point is that the shared services model (even in its current form) doesn’t prevent capability managers being held to account for their performance in ‘raising, training and sustaining’ the forces under their command. With the improved monitoring and performance management promised under the One Defence model, the situation can only get better.

But there are limits to apportioning accountability in a complex organisation like Defence. Consider capability development. The review envisages service chiefs ‘having clear authority and accountability as sponsors for the delivery of capability outcomes to time and budget’. This is unrealistic. The acquisition phase of capability development will be executed by the new Capability Acquisition and Sustainment Group as the agent for the service chiefs. It’s neither feasible nor practical for service chiefs to monitor and supervise the details of contracting, tender evaluation and project management. Conversely, the Capability Acquisition and Sustainment Group can’t control the level of risk that they’re directed to bear by the services and central decision-makers via the choice of equipment solutions. Capability development is a department-wide activity in which accountability rests with the diarchy and ultimately the minister.

Over the years, a great deal of attention has been placed on Defence’s structure and governance in an effort to ‘improve accountability’. One Defence continues the heroic quest. But in the final analysis accountability is something that one person imposes on another. And while structures and governance can facilitate or impede accountability, the real problem in Defence has been a systemic unwillingness to manage underperformance.

That unwillingness starts from the top of the organisation. No better example exists than the steady deterioration in the availability of the Collins-class submarines during the 2000s—a slow-motion crash which was only arrested by ministerial intervention.

The First Principles Review is alert to the problem; when discussing personnel management it says that ‘Defence has a sound performance management tool at its disposal, but is not using it effectively. We view this as a failing of leadership and management.’ Their remedy is a ‘transparent performance management system…that recognises and rewards high performance and introduces consequences for underperformance and failure to deal with it.’

In my view, it’s the single most important recommendation in the entire report.