1. Review Case Study and Article Event 25 Deakin University CRICOS Provider Code: 00113B

2. 25.1 Defence R&D R&D important and a significant cost for defence As an industry, defence is an adopter of new technology – always searching for an edge – Products purchased are often applications that result from integrating new and complex technologies in a novel way (constant innovation) – There is a need for systems to adapt and repurpose over long time periods Therefore, R&D is important but also costly: – Amount of R&D varies enormously by project – It is a significant cost – Projects can be high risk in terms of cost overruns 2

3. 25.2 R&D Contracting and IP Discussion as large group Should defence pay for R&D? Provide arguments for and against. Who should own the intellectual property (IP) rights to a product that results from R&D? 3

4. 25.3 Should Defence Pay for R&D? Arguments for Provides recognition of defence-specific R&D requirements (i.e. helps ensure research is task specific) Ensures full testing and development carried out, improving whole-of-life outcomes on research products as they come to fruition Allows specific adaptation/evolution of capability over life of long contracts Motivates contractors to continue development in a particular direction 4

5. 25.4 Should Defence Pay for R&D? Arguments against R&D may be high risk and large markets are not always available to recoup sunk costs: – How much R&D can be used elsewhere? – Need for phased approach and success KPIs at each stage What level of R&D should industry be funding itself outside outsourcing contracts? How much should we pay up front as R&D versus paying for product when it is working? 5

6. 25.5 Intellectual Property Who should own the IP? If supplier funds R&D under own volition (background IP): – IP is usually supplier owned – GoC can purchase right to use If defence funds R&D (foreground IP): – GoC seeks to own IP – Ensures that rights cover maintenance/modifications, so will not pay for IP twice via high in-service support costs of proprietary technology, documentation, future production – Is it better to license IP for scope of work (create, operate, sustain and modify) if not intending to exploit IP? Competitive issues: – Purchasing IP rights may help foster competition for downstream maintenance, support and modification 6

7. 25.6 Case study – Research and development costs Discussion points Explore the issue of ‘ownership’, background IP and foreground IP rights and the possibilities of finding middle ground. What is meant by ‘commercialisation rights’, ‘ownership of IP’, ‘licence to use’, ‘licence to alter’ and ‘licence to sell’ in respect to IP in contracts? Discuss possible solutions and barriers to those solutions in this case study. 7

8. 25.7 Review Article – No ‘tree hugging’ for UK procurement and support Discussion points Where is the ADM Mat Group at in relation to the UK thinking? Given the emphasis on relationship with industry whole of life approach to procurement, what are the key challenges for suppliers? Given the emphasis on relationship with industry whole of life approach to procurement, what are the key challenges for ADM Mat Group (you)? 8