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Intelligence

Report of the Inquiry into  Australian Intelligence Agencies  

Chapter 7 - Resourcing and effectiveness of the agencies


[Table of Contents]

 

The Defence Intelligence Organisation

The Defence Intelligence Organisation
DIO Today
DIO's purpose
A renewed mandate for DIO
Quality of product
Other areas for improvement
Human resources and people management
Support Systems
Coordination & Oversight of the Defence Intelligence System
Resources

The Defence Intelligence Organisation

The Defence Intelligence Organisation (DIO) was established in 1990 as the Defence Organisation's strategic-level, all-source intelligence assessment agency. It is not an autonomous body; unlike ONA, DIO is a subordinate organisation within the Department of Defence with no separate statutory mandate or direct budget line. The organisation's character and purpose is defined by its position within the Defence portfolio.

DIO's current role is to develop all-source intelligence assessment to support the planning and conduct of military operations, Defence policy making and planning, capability development and wider government decision-making. Its functions fall broadly into three main areas:

  • strategic-level foreign intelligence assessment relevant to the security of Australia
  • assessment to support ADF operations and potential operations and
  • technical assessment of weapons systems and defence technologies.

As an all-source assessment agency, DIO draws on a broad range of information, both covertly and overtly gathered. The Director of DIO also operates as principal strategic-level intelligence adviser to the Chief of the Defence Force (CDF) and senior ADF and Defence leaders to support strategic-level command, planning and conduct of ADF operations. In this way, DIO plays a key enabling role for the CDF and Defence leaders in executing their advisory roles to government and in the effective conception and execution of military operations.

The range of clients for DIO's product is broad, and includes non-ADF and non-operational customers, including outside the Defence Organisation. DIO's role and focus, however, are to provide intelligence support relevant to Australia's national security interests.

DIO is accountable through the Defence Deputy Secretary, Intelligence and Security, to the Secretary of Defence and the CDF. It is funded through the Defence budget and its performance is reported in a general sense as part of the Defence portfolio, as well as through DIO's own annual report and intelligence community-wide reporting mechanisms.

As a member of the Australian intelligence community, DIO's assessment priorities are guided by the National Foreign Intelligence Assessment Priorities process (see Chapter 4). Importantly, in DIO's case these general priorities are moderated by Defence-specific needs, particularly to support ADF operations, planning and capability development.

DIO Today

The organisation today operates with a staffing base of approximately 300: it has increased in number by about 12 per cent since 1999-00 and represents a mix of civilians and military personnel. Civilians increasingly outnumber military personnel. The decline in DIO's uniformed staff - from 34 per cent of total staffing in 1996 to less than 20 per cent in 2004 - is a matter of concern dealt with later in this chapter. DIO has some 160 analysts, with the remainder of its staff in management and enabling functions.

DIO sits at the national level alongside Defence's key intelligence collection agencies, DSD and DIGO, and is a key part of the broader Defence intelligence system 1. While single-Service intelligence assets still exist at various levels, defence intelligence is now regarded and managed in most respects as an integrated, cross-Defence capability.

DIO's formal output in financial year 2003-04 was 2,975 reports of all types, current and long term. Besides its formal publications, DIO maintains two major databases which are drawn on to varying degrees by the ADF and other parts of the Defence Organisation. DIO also operates as a centre of defence-related scientific and technical expertise to support broader defence capability development and national counter-proliferation objectives.

DIO's budget for 2004-05 is approximately $52.5 million (this does not include staffing costs of some $5 million a year for ADF personnel serving in DIO, which are met by the contributing Service). Of this $52.5 million, about $17 million is for civilian employee expenses and some $23 million for specific projects which DIO administers on behalf of Defence, with the remainder spent on administration, training, travel and security. DIO received supplementation in the 2004-05 Budget for 19 additional positions in priority areas.

Significant progress has been made in recent years to entrench an understanding of intelligence as a defence capability; that is, it should be regarded and developed in the same way as other front-line war-fighting assets represented by the ADF's air, land and sea forces. This is being accepted across Defence, but unevenly. Recent war-fighting trends and the evolving posture of the ADF are helping to push forward the integration of the intelligence function with broader ADF activity. As the tempo of ADF operations has gathered pace in recent years, and with the emergence of non-traditional security threats, the importance of good intelligence for ADF operations is being increasingly recognised. Intelligence is demonstrating its usefulness to military planners and operational commanders.

Institutional adjustments have reflected the evolution of intelligence as an integral military capability. Four years ago, Defence recognised that the portfolio's intelligence and security functions were sufficiently large, complex and significant in capability terms to be brought together in a single group. Intelligence was subsequently designated as one of the six key portfolio outputs. A Deputy Secretary for Intelligence and Security was appointed, charged with overseeing and coordinating the Defence intelligence system to ensure the system was structured and operating to provide the best and most relevant capability for the Defence portfolio.

DIO's purpose

DIO's remit is wide reaching, its customer base is broad and the demands on it are high. The complex character of the organisation brings with it a number of difficult challenges for DIO and Defence management.

DIO's mandate overlaps with the roles of other organisations at both ends; at the military end, there is overlap with other parts of the Defence intelligence system and, in terms of national-level strategic assessments, there is some overlap with ONA. Indeed, the two significant overlap issues in the Australian foreign intelligence system both involve DIO. This underlines the need to define clearly the unique value DIO can bring to both the AIC and the Defence intelligence system, and indicates a need for better management of the boundaries DIO shares with other agencies. Better communication between organisations and deeper mutual understanding of their respective roles will be essential to this. DIO needs a redefined sense of purpose and its product, staffing and systems need to be geared to deliver accordingly.

Some level of overlap between ONA and DIO in strategic assessments is inevitable, given the set of common strategic issues on which each may legitimately report. Political and economic developments cannot be sheared off from a comprehensive assessment of defence strategic issues facing Australia. Seeking to define and police fixed boundaries between ONA and DIO assessment subject matter would be debilitating for both organisations and would produce assessments which are less comprehensive and contextualised - and less relevant - than they need to be. Defence leaders' understanding of key regional developments, for example, and how those developments might interact with ADF capability is at the core of their advisory function upwards and command responsibilities downwards. Just as ONA, as the government's peak assessment agency, will need on occasion to cover military matters in its assessments, so DIO analysts need to be aware of political and economic events and trends for the implications they might hold for Australia's strategic circumstances and future postures. They do not, however, necessarily need to publish on those subjects.

Some level of overlap - properly managed - is also desirable as a source of contestability in strategic-level assessments.

But there are costs. More than ever, DIO needs a sharp focus. ADF expectations of, and demands on, intelligence are growing. Far-reaching developments in war-fighting methods and military doctrine over the past several years have had a profound effect on the interaction of intelligence and military operations. The nature of modern war-fighting, notably the emergence of network-centric warfare has placed a premium on intelligence information and assessment to inform the development and execution of battle plans. While intelligence has always been crucial in war, today's wars fought with today's weaponry against today's adversaries are even more demanding of high-quality, timely and relevant intelligence support. The rise of non-traditional security threats, terrorism in particular, has also drawn intelligence as a capability to the centre of strategic and operational decision-making.

These developments are global, and have implications for military intelligence organisations and armed forces all over the world. In Australia's case, there is something more to it. Not only has the high ADF operational tempo in recent years placed additional demands on DIO (and on DSD and DIGO) but also the changing nature of ADF operations has forced a major shift in what defence planners and commanders need from intelligence. Intelligence as a military capability for the ADF is being tested now in ways it has not been tested for several decades. In East Timor in 1999, for the first time in decades, Australia was in command. Unlike many previous deployments, it was not an option for the ADF to rely on others for the intelligence and other support essential to keeping our soldiers alive and achieving the mission. While this was not the case in Iraq or Afghanistan, increasingly active Australian foreign and strategic policies in the Pacific region, in particular, have reinforced the centrality of intelligence as a war-fighting capability.

Demands on DIO from Defence are such that DIO cannot afford to be anything but tightly focused on priority defence-related needs. With finite resources, it is crucial that all members of the AIC focus on their central purpose and key clients, and that each agency concentrate its work and resources on areas where it is best able to add value.

Both DIO and the AIC would benefit from some deliberate refocusing by DIO on defence-related matters and the Defence customer. As an agency operating at the national strategic level, an important part of DIO's orientation is necessarily upwards, to the Minister, the CDF and senior Defence policy-makers. Important as this is, DIO's upwards focus should not come at the expense of its more prosaic but vital role of providing wide-ranging, up-to-date data and assessments required for the planning and conduct of military operations.

Better resourcing of ONA should help this readjustment. ONA, of course, needs to be alert to the needs of senior Defence customers when developing its assessments.

The Inquiry recommends that DIO cease to produce intelligence not directly serving Defence requirements for strategic-level defence-related analysis, noting that there are some specialist areas such as counter-proliferation on which DIO provides special expertise to support whole-of-government efforts. DIO should be more judicious in publishing on political-economic developments, and should do so only to provide context for military strategic assessments and in ways that draw out clearly the military strategic implications of those developments. The resulting product should be more strongly defence oriented and distributed primarily to Defence customers. As leader of the Defence intelligence system, the Defence Deputy Secretary, Intelligence and Security, needs to take an active monitoring role in this area.

RECOMMENDATION:

The Defence Intelligence Organisation should cease publishing intelligence not directly serving requirements for strategic-level military-related analysis. The resultant product should be more strongly defence-oriented and distributed primarily to defence customers. The Department of Defence should take an active role in monitoring this.

Maintaining such a focus will always be a challenge and will continue to be a difficult management task for the DIO leadership team. A tighter focus is likely to mean DIO produces fewer assessments, and certainly less by way of current intelligence updates covering political and economic developments. This may require some adjustment on the part of DIO's high-level readership. Policy-makers in Defence and beyond will need to look elsewhere - including to ONA, to relevant policy departments and to open sources - for political-economic analysis and for updates on international events which do not have particular defence implications. They need to accept that DIO will not be able to continue to produce a comprehensive current intelligence update service on all matters. And they will need to appreciate that a good proportion of DIO's activity, including some of its most important and valuable work, will remain largely invisible to many.

Another set of boundary issues facing DIO are internal to the Defence portfolio and have to do with how DIO interacts and works in a complementary way with other intelligence elements in the ADF.

As with the DIO-ONA relationship, some level of overlap is inevitable. The very nature of the military intelligence environment, where the same information and analysis might have value at strategic, operational and tactical levels, has led to some blurring of the boundaries between DIO, the Joint Operations Intelligence Centre (JOIC) at Headquarters Joint Operations Command, the intelligence staffs at the environmental commands and deployed intelligence staff.

The boundaries between DIO's strategic-level focus on these issues and the operational and tactical intelligence work done by the JOIC and other ADF intelligence staff are complex and require high levels of mutual understanding, communication and goodwill to negotiate successfully. Managing these boundaries will remain an ongoing challenge for the Defence Organisation as a whole.

The establishment of the JOIC (until recently the Australian Theatre Joint Intelligence Centre, ASTJIC) in 1996 recognised fundamental differences in the intelligence support requirements of Defence decision-makers at strategic and operational levels. At the strategic level, the principal consumer is the national-level policy-maker who is more interested in trends and broad capability assessments than the detail and ephemera of battlefield information. Intelligence needs at the operational and tactical levels are different: commanders want an intelligence staff which is theirs to task, directly responsive to their particular operational priorities and agile enough to drill down into the detail of the intelligence picture and the threat situation. While there will be some overlap - commanders need to be aware of strategic context and likely developments, and operational-level and tactical-level intelligence staff need to draw on data and analysis developed by DIO - this does not mean the efforts of the different intelligence functions are necessarily duplicative. Analysis conducted at the different levels of command - from the strategic to operational and tactical levels - supports significantly different purposes and applications.

Despite their distinct roles, there remains on going tension in relation to the division of responsibility between DIO and JOIC. This division was last agreed in February 1999 with a formal agreement between DIO and the Commander, Australian Theatre. There have been significant changes since then in ADF needs and operational orientation and reforms are still being implemented to ADF command and control arrangements. Defence intelligence arrangements must flow from and support current command arrangements, and the planned move of the JOIC from Sydney to the Canberra area, and the bedding down of new ADF command arrangements, affords a good opportunity to review the optimal intelligence arrangements to support the ADF. This move, however, will not be complete for several years and the current arrangements should be addressed, as much as possible, as soon as possible.

On this basis, the Inquiry recommends that working arrangements and divisions of responsibility between DIO and JOIC, last defined in 1999, be re-examined by the Defence Organisation to ensure they reflect current needs and command structures and to build understanding of them among staff. The performance of both organisations should be judged by their ability to work with each other in a complementary way. The Inquiry also recommends renewed efforts by both organisations to build mutual understanding and to ensure the organisations are operating in an appropriately complementary way. The theory is not complex. Strategic-level assessment should cascade into operational and tactical-level assessment: intelligence analysts at the operational and deployed level should be able to reach into DIO product and data to inform the assessments they provide to guide their commanders and to support operational and field-level decision making. This complementary relationship should flow in both directions. The issue is not location, but communication, coordination and leadership.

RECOMMENDATION:

The Department of Defence and the Australian Defence Force should re-examine guidelines for the division of responsibility between the Defence Intelligence Organisation and the Joint Operations Intelligence Centre (JOIC), last agreed in 1999, to ensure they reflect current needs and command structures. DIO should undertake an outreach strategy with the ADF and the JOIC in particular to develop an agreed set of requirements and level of service in order to synchronise expectations and reduce duplication.

There is room for improvement on both sides. Under heavy workload pressure and information demands from high-level readers, DIO's day-to-day priorities have not always given prominence to the operational levels of the ADF and to support for Defence capability development. Even assessments produced by DIO for ADF customers are not always seen as meeting ADF operational needs.

Part of the solution rests in ensuring that DIO is staffed appropriately and has the systems in place and access to the ADF planning table it needs to underpin its understanding of ADF operational needs. DIO and the JOIC (and other ADF intelligence assets) need to continue working to coordinate their efforts to best draw on the strengths each brings to the assessment process.

While the relationship is not a direct causal one, the composition of DIO's workforce - and, in particular, the number of its ADF staff which has been reduced by about half over the past eight years - is a matter of some concern. The issue of ADF staffing is largely out of DIO's control, but DIO needs to continue to make the case to commanders to increase the number of its uniformed staff and secure high-quality ADF personnel in DIO. Even still, DIO is and will remain a predominantly civilian-staffed organisation working to a mixed civilian and ADF client base. Recognising this, the organisation needs enhanced strategies to build understanding among its civilian staff of the way the Defence organisation and the ADF operates, what its intelligence needs are and the particular conceptual lenses through which the ADF approaches intelligence assessment.

Discussion and debate within Defence about the preferred background (civilian or military) of the Director DIO position, dates back some time. Historically, DIO's leadership has been military - since the organisation was established in 1990, all but the current Director have been serving military officers at the level of Major General. A civilian head is unusual internationally. The Inquiry has considered the arguments on both sides of the debate and can appreciate some points in favour of having military officers represented in DIO senior leadership positions to help ensure the organisation is attuned to ADF needs and processes. Nevertheless, the Inquiry considers that merit should be the central consideration in determining who should lead DIO. Now more than ever, DIO needs to produce the highest possible quality of intelligence support to Defence decision-makers. The Defence Organisation as a whole cannot afford to settle for anything but the best possible leadership of DIO. The ideal outcome would be a Director of DIO who has both a strong military background and high-order analytical and management skills. To achieve this, the ADF needs to be prepared to acknowledge the importance of the position and its direct relevance to the defence of Australia by putting forward the highest-quality candidates for the job.

RECOMMENDATION:

The Department of Defence and the Australian Defence Force should, on vacancy, fill the position of Director, Defence Intelligence Organisation through a competitive selection of civilian and military candidates. Selection should be made on merit with a preference for a suitably qualified high-quality military officer if such an officer is available. The position should be filled on a 3-4 year contract basis.

The ADF for its part needs to be better at articulating its intelligence needs at all levels of command. The broader Defence Organisation has not always been good at understanding what DIO is able to do for them and in engaging DIO and the other agencies on their particular intelligence needs. An appreciation of intelligence as a core capability is also incompletely felt and implemented in some parts of the Defence Organisation. A higher level of engagement between intelligence functions and staff will be essential to the ongoing task of building mutual understanding, trust and interoperability between the organisations.

The shortage of ADF staff numbers in the Defence intelligence system is part of a broader ADF staffing deficit being felt in many parts of the Defence organisation. This deficit will not be easily solved. Here, as in other areas of ADF activity, ADF staffing levels require difficult choices - Service chiefs are finding themselves increasingly with too few personnel available to meet demand across the organisation. Work currently underway to review staffing across all the Defence intelligence agencies for consideration by the Chiefs of Service Committee should bring a higher and welcome degree of coordination to the distribution of ADF personnel across intelligence functions.

RECOMMENDATION:

The Department of Defence and the Australian Defence Force should agree on a strategy to redress the shortfall of military personnel assigned to the Defence intelligence agencies, including in leadership positions, to ensure military staffing levels are commensurate with the growing importance of intelligence in war-fighting and planning.

A renewed mandate for DIO

There is a strong case for re-enunciating DIO's role in a way which makes clear, internally and externally, the organisation's core business - to support defence strategic policy and operational needs. Such a mandate would state DIO's role, as part of the broader Defence Organisation, to support Defence planning and operations through the provision of all-source intelligence advice on threats to the national interest, in particular military threats or those requiring a military response. A refreshed mandate would take account of organisational and structural changes, including the establishment of the Defence intelligence and security group and the creation of the position of Deputy Secretary, Intelligence and Security. It might also serve as a basis for renewed outreach efforts by DIO to build more dynamic interaction between the organisation and Defence customers and to promote a more active and engaged constituency for DIO product.

RECOMMENDATION:

The Department of Defence and the Australian Defence Force should issue a revised mandate for the Defence Intelligence Organisation which focuses the organisation clearly on supporting defence strategic policy and meeting the strategic assessment needs of the Australian Defence Force.

Quality of product

DIO produces much good quality strategic-level assessment. The organisation's staff mix, spanning analytic, technical and scientific expertise, is a valuable asset. Readability and product presentation have improved considerably over recent years. The Director of DIO and his staff work hard to foster a culture of critical inquiry and internal contestability. Managers do not interfere inappropriately in the work of line analysts. Customer feedback to the Inquiry was generally positive.

The Inquiry did, however, hear some concerns about the breadth of DIO's range of reporting and the effect it has on the organisation's ability to provide intelligence support to ADF operations and defence policy planners at all levels. The organisational refocusing proposed above would allow DIO to be more responsive across all of its core constituency and to deepen the analytical base it is able to apply to complex defence-related assessment tasks.

Another related concern is the extent to which DIO's longer term strategic assessment task is being crowded out by perceived weight of demand for daily and other current products, including on matters not directly related to defence policy and operations. The bulk of DIO product is in the form of short daily reports and current intelligence snapshots. While this balance does not necessarily reflect the amount of analyst time devoted to current as opposed to longer term assessment, the trend lines are clear.

An ongoing challenge for DIO management, as for its counterparts elsewhere, is to get the balance right between short and longer term reporting. A lesson of recent crises has been the importance of balancing day-to-day crisis reporting with reports assessing broader trends over a longer time frame - putting immediate developments into context. The Inquiry's findings from the case studies in Chapter 3 underline the importance of wider use of the Strategic Intelligence Estimate in particular. Short descriptions and analysis of current events have limited shelf life; they do not represent the best investment of Australia's assessment resources. They distract busy analysts from the longer term strategic assessments which are of deepest and more enduring value for strategic policy-makers.

The current intelligence bias also exacerbates resource gaps at a time when demands on the organisation are high from new areas of reporting need (terrorism, ADF deployments), resulting in less work being done on issues of enduring and fundamental defence-strategic relevance to Australia. DIO must ensure it maintains its production of assessments of, and its expertise on, current and future military capabilities of most relevance to Australia's national security. Such assessments are essential support for operational planning and procurement decisions. They must be given due priority, notwithstanding changing levels of demand for current assessments to support short-term decision-making.

The creeping dominance of the current intelligence load is not unique to DIO. The same pressures are felt by other assessment agencies in Australia and in allied communities and have been exacerbated by the quickening pace of globalisation and global inter-connectedness, the information revolution and the emergence of non-traditional security threats. There is now a greater volume of significant current intelligence for our agencies to report on. Customer appetites and expectations may also have grown in some areas, although a range of customers also expressed concern to the Inquiry about the volume of snapshot assessments flowing to them and the falling off of longer term strategic assessments. DIO managers and analysts themselves need to be more judicious in publishing current intelligence snapshots.

RECOMMENDATION:

The Defence Intelligence Organisation should give greater focus to longer term and strategic assessments. DIO should produce Strategic Intelligence Estimates for significant military operations and for issues of high security relevance to Australia.

Other areas for improvement

Chapter 2 identifies key attributes of high-quality intelligence assessment. A number of those attributes have been discussed in foregoing paragraphs. Others, including the growing need for close management of key parts of the intelligence cycle, are covered again below in discussion of essential supporting systems for high-quality assessment.

Contestability is another area integral to good assessment and one deserving of further attention. Chapter 6 of this report reviews formal and informal contestability processes operating in DIO (and ONA) and recommends more deliberate processes of critical review of product before it is published. DIO's organisational culture in general terms supports a healthy level of internal contestability. For DIO, as well as for ONA and others, the onus should continue to be on analysts and their managers to ensure that rigorous testing of assumptions, sources and inherited judgments takes place through all stages of the assessment process.

An important partner for DIO in this respect is ONA. There are many ways in which analysts in the two organisations engage with each other in testing assumptions and conclusions. Some of this takes place formally, through mechanisms such as the National Assessment and joint ONA-DIO reports. But most methods of contestability play out informally within and between assessment agencies and other sources of expertise. This should continue to be encouraged as an essential part of high-quality intelligence assessment.

Human resources and people management

The broad personnel mix that makes up DIO is a source of significant strength for the organisation. The staffing combination helps DIO straddle the different worlds of the policy-maker and the ADF planner, leavening high-quality analytical skills with relevant technical and military experience.

But the mix also presents a number of challenges to management in building methodological and cultural coherence in the organisation and ensuring consistently high-quality output. Most crucially, DIO management has incomplete control over the organisation's staffing profile, turnover rates and recruitment. It relies on the ADF for its military staffing and has opted to date to draw on central Defence recruitment processes for its graduate-level intake.

The steady decline of ADF personnel numbers in DIO (and other parts of the Defence intelligence system) is a cause for concern, including for the agency itself. While there is no mechanical relationship between the number of uniforms in the organisation and its responsiveness to ADF needs and ways, a good uniformed presence does help ground the agency in the Defence environment and assist mutual understanding. The Inquiry understands the many pressures and demands on the Service chiefs, and that civilianisation reforms have had an impact across many parts of the Defence Organisation. Still, the Inquiry considers that the pendulum has swung too far. It would be desirable if the examination of staffing coordination across the Defence intelligence agency workforce currently being undertaken for the Chiefs of Service Committee was able to go some way towards redressing the current situation.

Another part of this chapter (see Cross-community Issues) addresses training and professional development needs of the foreign intelligence agencies and recommends some community-wide coordination of analyst training, not only on arrival in an agency but during their careers. In DIO's case, training has to respond to the organisation's hybrid staffing mix. There is an ongoing, special need for DIO staff to be sensitised very early to DIO's Defence-related responsibilities and to the way the Defence Organisation - and its various intelligence components - operates. All DIO analysts and managers should undertake early intelligence staff training offered by the Defence Organisation.

The Inquiry heard from staff at all levels of DIO, including from senior leaders, a concern about the extent to which the organisation, and the broader AIC, is able to offer career paths to their intelligence professionals. There are difficult issues here for DIO and for the other foreign intelligence agencies.

The Inquiry is sympathetic to DIO on many of these points. Acknowledging these difficulties, DIO should develop and seek approval for career structures that enable it to fulfil its mission and attract high-quality staff. It should seek to develop a cadre of career intelligence professionals. The Inquiry recommends that the organisation explore possibilities for some broader use of the senior analyst designation in combination with other workplace reforms already under consideration by the agency and the Defence Organisation. Such reform should help DIO to retain key specialist analysts. Structural reforms in the direction of greater 'broadbanding' of work-level classifications and development of agency-specific workforce arrangements might also provide additional flexibility for management to attract and retain high-quality staff.

RECOMMENDATION:

The Defence Intelligence Organisation should review its workforce management structures, including possible introduction of agency-specific workforce arrangements and wider use of senior analyst positions and Australian Workplace Agreements, to attract and retain high-quality staff, particularly in key technical and scientific disciplines.

Support Systems

Good assessment is defined by more than words on paper. Good assessment also requires more than top-quality staff, important as these are. Good intelligence assessment requires active and engaged management of the full intelligence cycle - from defining intelligence requirements right through to dissemination of product and assessment of customer feedback. Support functions are crucial. An organisation will not produce high-quality, timely and relevant assessment in the absence of effective systems for determining what to write on, in what form, for whom, in what order of priority. Effective systems are also needed to determine what raw intelligence analysts need to see and what gaps there are in the intelligence picture.

Current systems in DIO are not functioning as effectively as they need to. Reforms undertaken over the past several years to strip back inefficient processes have helped to reinvigorate the organisation but they have also revealed some systems gaps.

The need for more deliberate and systematic management of the intelligence cycle has been recognised by the organisation itself. A comprehensive review of DIO's computer support, publication and dissemination systems is planned with a view to overhauling DIO's production processes. The Inquiry commends this step and recommends that a similar review be undertaken of DIO's intelligence management processes in totality.

Acknowledging the serious security challenges facing Australia and the high ADF operational tempo of recent times, DIO should continue to re-examine and test the procedures it has in place for crisis management. Sustainability issues will be inevitable where crisis situations continue for extended periods. The problem can be eased by ensuring limited expertise is applied only to tasks which require it by internal reallocation of resources or borrowing from other agencies where possible (although others are likely also to be involved in their own agencies' crisis efforts) and by designing shifts to relieve stress on staff. None of these pressures are unique to intelligence agencies. Systems need to be shaped to deliver surge capacity as needed while minimising staff burn-out and ensuring that the rest of the organisation is able to continue with its essential tasks.

Coordination & Oversight of the Defence Intelligence System

The designation in 2001 of a dedicated Defence Deputy Secretary, Intelligence and Security, recognised the need for high-level stewardship of defence intelligence as a front-line defence capability. The appointment has already had an impact. Importantly, it has helped promote within Defence an image of the Defence intelligence agencies and staffs as distinct parts of a team, working towards the same basic goals. It has also helped encourage closer cooperation and coordination across the agencies, and has provided a focal point for engagement with Defence capability and resource planning and with other departments and agencies on wider intelligence and national security matters.

Nevertheless, there is still some way to go in portfolio-wide coordination and communication. There is an important job to be done in cross-community management, in driving the development of the Defence intelligence capability and in coordinating activity and priority setting across the Defence intelligence system. The Defence intelligence system is a complex grouping, consisting of agencies with much in common and much also to separate them. Each characteristically has its own orientation, reflecting its technical focus and history.

The position of Deputy Secretary, Intelligence and Security, is not appropriately resourced for the task. As things stand, only two staff work directly to the position. While the coordination task is lodged with the Deputy Secretary, the staff to support the position's coordination and community management roles are lodged elsewhere, distributed among the intelligence agencies. It is something of an anomaly that staffing to support intelligence capability development, a central responsibility of the Deputy Secretary, currently resides inside DIO, just as community wide financial and administrative oversight is managed by a unit lodged in DSD.

This situation is not ideal. The Inquiry recommends a clearer matching of resources and responsibility such that the Deputy Secretary position is functionally united with its staff. This would entail a restructuring to shift the position of Director-General, Intelligence Capability and Support to Operations, and associated staff responsible for system-wide coordination and intelligence capability development from DIO to the Deputy Secretary staff. Similarly, staff lodged within DSD and performing system-wide resource management and business operations functions should also work directly to the Deputy Secretary. While accommodation shortages may preclude co-location, lines of reporting should reflect lines of responsibility, direct to the Deputy Secretary position. Correcting the current situation and ensuring that the Deputy Secretary position is adequately resourced to drive coordination of the Defence intelligence system should also relieve some pressure on the directors of DIO and DSD.

The Deputy Secretary has a key coordinating role to play to ensure the Defence intelligence system collectively is geared to producing the right kind, quality and amount of intelligence support to the Defence Organisation. This means playing a central role in overseeing collection and liaison management, tasking and priority setting for the Defence intelligence system, and working to invigorate a more dynamic engagement by the broader Defence Organisation in the development of the Defence intelligence capability. An important part of this involves interpreting future needs and reaching back into the system to ensure priority requirements are understood by the agencies and that the agencies have the tools and resourcing to meet these needs.

RECOMMENDATION:

The Department of Defence and the Australian Defence Force should restructure current arrangements to ensure the position of Deputy Secretary Intelligence and Security is supported by adequate resources to undertake an effective coordination role for the Defence intelligence agencies. In particular, staff working on defence intelligence system-wide coordination and capability development issues, and cross-agency administrative issues, should be functionally united with and report directly to the Deputy Secretary.

Resources

For DIO, the primary issue is not resources; it is organisational focus. A number of areas of DIO activity have not received adequate attention and corresponding resources in recent times. Those gaps, discussed above, are not only in depth of coverage of key subject areas; they are also in maintenance of essential supporting systems and back-office functions through which DIO manages the intelligence cycle. The gaps have been made more obvious by the high level of intelligence activity and ADF operational tempo over the past several years.

DIO alerted the Inquiry to a number of areas in which it is seeking, or would like, resource supplementation.

A number of these relate to increased analytical staff resources to deepen the organisation's coverage of a number of important subject and country areas. The Inquiry notes recent funding supplementation provided to DIO in the 2004-05 Budget for 19 additional staff positions to increase analytical strength in a number of key areas. This targeted supplementation, combined with the sort of organisational refocusing recommended above, should help fill any gaps. Nevertheless, over time, DIO should continue to be alert to any significant resource weaknesses in emerging and priority areas and should continue to make a case for supplementation where internal reallocation of resources cannot provide the coverage needed.

Under-investment in DIO is perhaps most acute in information management. There is a risk that information may not be exploited to its potential because of assessment bottlenecks. As noted above, the Inquiry recommends an early, thorough and integrated review by DIO of its business systems and its information technology needs. Any strategy for upgrading DIO IT systems needs to be developed in a complementary way with AIC processes. Depending on the form of re-engineering required, some one-off supplementation to allow DIO to implement an information management plan and upgrade its IT may be needed. This should be considered in the context of proposed development of the main cross-community IT network, AICNet (see section in this chapter dealing with Cross Community Issues).

RECOMMENDATION:

The Defence Intelligence Organisation should undertake an integrated review of its business systems, including those for information, collection and liaison management, and of its information technology needs. The latter should take place in the context of IT network developments across the AIC and internationally and may require some one-off funding supplementation.

Finally, senior management structure and staffing levels is another area which may warrant some additional resources. DIO as an organisation faces significant management challenges. In an agency with such a broad-ranging mandate and varied client base, management cannot be regarded as a second-order issue. It needs to be adequately resourced.

The Inquiry recommends the formal designation of a Deputy Director, DIO, at the SES Band 2 lower or Band 1/military one-star level. This would be an additional position and would balance the reassignment of the position of Director-General, Intelligence Capability and Support to Operations, to provide direct support to the Deputy Secretary, Intelligence and Security. Working with the Director as part of the DIO leadership team, the Deputy Director could operate as either principal analyst overseeing the organisation's product, or be charged with management coordination for the organisation, with a particular focus on the development of DIO's analytical capabilities and on developing and overseeing systems and enabling functions to support high-quality assessment.

The appointment of a deputy would free up the Director to focus on analytical product, strategic intelligence support for senior Defence leaders and the broad management of the organisation. And while the Inquiry does not consider that the civilian or military complexion of candidates should be a primary factor in selection of DIO's leadership group, a balance should be struck between military and non-military experience at the management level in the organisation. When the position of Director is filled by a civilian, the deputy position should if possible be taken by a uniformed officer and vice versa. This may assist DIO in the difficult task of straddling the two worlds in which it needs to operate.

RECOMMENDATION:

The Department of Defence and the Australian Defence Force should create a Deputy Director position for the Defence Intelligence Organisation. Where possible, if the Director is a military officer, the Deputy Director should be civilian, and vice versa.

The Inquiry considers that the current classification level of the Director, DIO, at the SES Band 2 upper level, is appropriate. The Inquiry does not find compelling the arguments it has heard for upgrading the position to SES Band 3 level. The current level of Director, DIO represents a good fit with the designations of leaders of the other two Defence intelligence agencies both of whom, like the DIO Director, report to a Defence Deputy Secretary at SES Band 3 level.


1. In organisational terms, the Defence intelligence system constitutes DIO, DSD, DIGO, the Defence Security Authority, the Joint Operations Intelligence Centre (JOIC) at Headquarters Joint Operations Command, the Defence Intelligence Training Centre and ADF intelligence staffs and units at the strategic, operational and tactical levels of command.

 

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