Review Case Studyand Article

Event 25

Deakin University CRICOS Provider Code: 00113B

25.1 Defence R&D

R&D important and a significant costfor 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

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

25.3 Should Defence Pay for R&D?

Arguments for• Provides recognition of defence-specific

R&D requirements (i.e. helps ensure research istask 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 ina particular direction

4

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 ateach 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

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

25.6 Case study – Research and development costsDiscussion 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’, ‘licenceto alter’ and ‘licence to sell’ in respect to IPin contracts?

• Discuss possible solutions and barriers to those solutions in this case study.

7

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