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IN DETAIL: ELSA re-invents itself as a sovereign player


Elbit Systems of Australia, or ELSA, has made use of the hiatus caused by the controversy over its Battle Management System (BMS) for the Australian Army to reinvent itself as a thoroughly Australian company.

Gregor Ferguson

At the launch of its enhanced software development and global technology transfer process at its new Systems Integration Laboratory (SIL) in Melbourne on Thursday 17 March, the CEO of ELSA, retired MAJGEN Paul McLachlan, briefed a group of Australian specialist defence writers on the changes the company has made to its governance, security and software development processes over the past 16 months.

He was spruiking the security and technology transfer capabilities of the SIL, naturally, which has been created in part to support the development and roll-out of the end to end system that ELSA will offer the Commonwealth when tenders for Project LAND 125 Ph4 close at the end of April. This is based on Elbit’s E-CiX software system which is also fully compatible with future versions of the Battle Management System (BMS) that Army is acquiring separately under Project Land 200. ELSA has already been shortlisted for Land 125 Ph4 which aims to deliver an Integrated Soldier System (ISS) integrating all of the electronic systems carried by an individual soldier without resupply for up to 72 hours. The SIL will also support any potential submission for LAND 200 Tranche 3 and future ELSA offerings.

Defence is expected to make a LAND 125 Ph4 down-select in August this year with the shortlisted contenders to then undertake an Offer Definition Activity (ODA), followed by a final decision some time in 2023. “Our leading-edge technology – used by AUKUS, NATO, QUAD and the Five Eyes intelligence alliance – is game changing, and we want Australian defence, homeland security and emergency services to reap the benefits of it,” McLachlan said in a statement 17 March.

However, he also addressed the issue of Elbit’s footprint in Australia and especially perceptions of its ‘Australian-ness’.

Paul McLachlan joined ELSA in mid-2020; the controversy over the BMS erupted into the public domain in early 2021. Whatever its ostensible cause, one of the underlying factors was the Defence customer’s perception of ELSA as an Australian company – or, rather, the perception that it wasn’t. His response was strategic rather than tactical and reactive: while addressing the immediate criticism he decided to imagine and then establish a new and better company with a completely different customer relationship.

First, it has to be said that the BMS developed by Elbit for the Australian Army under Project LAND 200 was badly misrepresented, especially regarding its security and the decision to suspend the Commonwealth’s contract with the company. No contract has been terminated and Defence has grudgingly refuted the original criticism of the BMS, much of which had no basis in fact, as demonstrated by Defence testimony at a Senate Estimates hearing in Canberra last year. Regardless, Elbit Systems and ELSA acknowledge some of the criticism they have taken over schedule performance, though other commentators point out ultimate responsibility for schedule falls on Army which is the Prime Systems Integrator (PSI).

Elbit Systems in Israel was responsible for developing the BMS itself, a development of the Israeli Defence Force’s (IDF) Torch system; ELSA delivered the Australian version and had the support contract. ELSA has met all of the Land 200 Tranche 1 goals and had met about two thirds of the Tranche 2 goals when Army chose to withdraw the system. Army is currently using an Interim System but ELSA has been cleared to bid for Tranche 3, the biggest of the three Tranches, as well as being shortlisted for LAND 125 Ph4.

The exact timeline for LAND 200 Tranche 3 remains unclear; it’s understood much depends on what Army and CASG decide to do with Tranche 2. However, industry anticipates some sort of decision late this year or early next with delivery in 2024/25.

While ELSA honoured all of its contractual obligations under LAND 200, said McLachlan, he acknowledges that the company did not evolve in line with customer expectations of how an Australian prime should evolve and present itself. It was not at best practice when it came to resolving some of the issues raised over foreign ownership, especially with growing expectations about the sovereignty of the capability it was developing for the Army.

For example, despite Elbit being a master of cyber security, its security culture didn’t match Australian expectations for sovereignty: Elbit in Israel managed ELSA’s cyber protection. This kind of approach is simply not acceptable anymore, said McLachlan. ELSA now has a tender out for an Australian contractor to manage ELSA’s cyber security here in Australia – this will not be done by ELSA itself, said McLachlan.

As part of its strategic re-positioning, in late-2020 ELSA partnered with Accenture Australia in what has been a multi-million dollar (the company won’t say how many millions) overhaul of its governance and security. Why Accenture? Three reasons: firstly, self-advocacy doesn’t work so there was no point in ELSA trying to beat its own drum; secondly, Accenture has the trust of the Commonwealth; and thirdly, ELSA was happy for Accenture to undertake what McLachlan terms a ‘truth to power’ analysis of the company.

“Accenture have been fantastic,” McLachlan told the media at Port Melbourne. The two companies partnered to support the design, development and implementation of new infrastructure to augment ELSA’s existing capacity to produce secure and trusted sovereign products, aligning global production methods with the requirements of the Australian customer, he said.

Strategic transformation is a tough business and not always pretty to watch, reflected Scott Hahn, Accenture’s senior managing director ANZ technology services. The firm had up to 70 staff from a variety of competencies working on the project and he told the media at Port Melbourne that ELSA is now “kicking goals”.

The net result of all this work has been the commissioning of a new software factory that’s nearly unique in Australia, says McLachlan. The associated architecture and IT processes have turned Elbit into a fully compliant Australian defence contractor.

Within the software laboratory, one set of servers provides connectivity with Elbit in Israel and enables both access to disruptive Israeli technology and the ability for Australian engineers to contribute to software development for Elbit and its other global customers.

A second set of servers, separated from the first by a firewall, enables ELSA engineers to work securely on Australian sovereign solutions. Importantly, any resulting foreground IP and computer code developed as a result of this Australian-only work, will be owned by the Commonwealth of Australia and ELSA and not by Elbit in Israel. And if something on the first set of servers looks promising for the ADF, then it can be lifted over the firewall and placed securely on the second set.

In this way, Elbit enables secure technology transfer of disruptive IP from Israel to Australia, says McLachlan.

Like many of his management team, Paul Mclachlan is a former member of the ADF and he casts a wary eye over things that call themselves C2 systems: “Most of them are last-generation,” he said. “They’re a corporate software-based response to the challenges of warfighting. They enable the management of conflict, but not actual warfighting.” In his previous career as Commander of 7 Bde and then of 1 Division he introduced what he believed were genuinely game-changing C2 capabilities for the Australian Army. As the head of CASG’s Land Systems Division between those two appointments, he found that acquiring and rolling out such a system was much more difficult than he had anticipated.

Now, as managing director of ELSA, he brings a unique perspective to the discussion over the BMS having been an acquirer (with the DMO), a user (as Commander 1 Div) and now as supplier. Many of his senior managers are also former soldiers and they all want to see the Australian Army equipped with the best warfighting capability they can deliver.

Importantly, he points out, time is short: the regional threat picture is changing rapidly and there is no time to try and do everything in Australia: the Army needs a balance of imported and Australian-developed capability, he told the media team. Australian engineers can do almost anything you ask of them if time and resources permit, but with enhanced capability needed rapidly, the ability to blend world’s best with Australian-only smarts in a secure, sovereign way is vital. This is one of the things that ELSA has set out to achieve.

At present, the company is ‘marking time’, McLachlan says, waiting for the LAND 200 Tranche 3 and LAND 125 Ph4 tenders and using the opportunity to complete its re-invention. In the meantime, Version 9.1 of the BMS, which is also based on the company’s E-CiX system, is compatible with the LAND 200 Tranche 2 Interim Solution based on Danish firm Systematic’s SitaWare Headquarters software.

ELSA’s aim is to convince the Australian Army that it has transformed itself and to demonstrate improvements to version 9.1 of the BMS. The media group was shown the SIL in which some of this demonstration would be carried out, though with the radios and some other systems removed for security reasons. The SIL represents all of the hardware and software used by Version 9.1, including routers, computers (the Enhanced Tactical Computer), fibre optic landlines and radios; version 9.1 also includes space capabilities.

The real value proposition of ELSA’s system, says the company, is that at its full potential it offers a weapon integrated BMS (WINBMS) connecting sensors from any platform to shooters on any platform. This makes the individual soldier a platform within a network, something that could significantly change dismounted warfare.

A version of 9.1 has already undergone Acceptance Test & Evaluation (AT&E) complete with the WINBMS functionality. It is ready to be delivered now, if the customer wants, said McLachlan. The physical roll-out could take just a few weeks – when he was commanding 1 Division he had version 7.1 of the BMS in service just 6 weeks after it passed its acceptance test. Under stress, early versions crashed due to overloading at certain nodes, but this would never show up in the SIL which can’t replicate some real-world conditions such as long distances and terrain masking – the only way to de-bug the system properly is to field and test it, he said. System 7.1 was 100 per cent better than what he had previously, McLachlan added, while version 9.1 will be 3-400 percent better than this – and that’s what the SIL will help demonstrate.

McLachlan believes the company has done what it needs to improve itself and is now fully compliant at what he terms the right-hand edge of best practice in Australian Industry Capability (AIC): “It is a very, very different company from even 12 months ago.”

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