McKinsey to deliver digital twin of Defence’s ‘future Army’

Joseph Brookes
Senior Reporter

The Department of Defence has called in US consultants to develop a digital twin of its ‘future Army’, which it intends to use for cost, personnel and equipment decisions and risk management.

But only 2 per cent of the $9.8 million contract will go towards skill transfer programs for ongoing delivery and operation.

McKinsey has secured two contracts worth $15 million for work on Defence’s digital twins programs

The initiative stems from the government’s 2020 Force Structure Plan, which called for a range of new Defence capabilities during period of “significant modernisation” for the Army.

US consulting giant McKinsey is now being paid $15 million to develop digital twins of the Army and a Royal Australian Air Force airbase through two open tender contracts with Defence.

The first began in August last year and will see McKinsey paid $9.8 million over 22 months for the army’s new digital twin. The second is for $6.4 million over just eight and a half months for a prototype of the RAAF Amberley airbase southwest of Brisbane.

More details about the Army project were provided to the Senate last week in responses to Labor’s questions on notice to Defence minister Peter Dutton.

The minister confirmed the contract described only as “computer services” was for a second McKinsey digital twins project.

“McKinsey will provide expertise to develop a digital twin of the future Army as described in the 2020 Force Structure Plan,” Mr Dutton’s response said.

“A Digital Twin is the generation or collection of digital data representing a physical object, asset, system or capability.

“A digital twin allows Army to make informed decisions about cost, personnel and equipment.”

Specifically, the digital twins data will be used to support investment decisions related to Defence’s major technology systems, skilled personnel and training, and estate purchases, according to Mr Dutton’s response.

McKinsey, which last financial year increased its Australian government contracts by 75 per cent to $58.6 million, has brought in senior partners for work on RAAF digital twin project, and was selected for the Army job because it lacked internal capabilities and the US firm had “demonstrated experience implementing similar systems”.

Mr Dutton said Army and Australian Public Service staff will work alongside McKinsey staff, with Army also supplying its own contractors, but the Army would be in control of the project.

However, less than $200,000 has been budgeted for Defence staff training programs – around 2 per cent of the project’s budget.

“The Digital Twin is heavily informed and guided by Army personnel to ensure that the tool meets Army’s decision-making needs. The Digital Twin tool will be hosted on Army equipment, with training provided for Army personnel to perform the services on an ongoing basis,” Mr Dutton said.

The minister could not provide the requested breakdown of hours McKinsey has assigned for the work because the contract had been based on “defined outputs” from the following activities:

  • map value streams ($1.245m exGST),
  • build the simulation model and Minimum Viable Product (MVP) ($1.660m exGST)
  • identify opportunities to reallocate resources ($1.245m exGST)
  • two learning programs ($0.195m exGST) to develop ADF and APS personnel with the skills required to deliver the Digital Twin. These learning programs ensure that McKinsey and Company transfer knowledge and skills to Defence

“Following the proof of concept and successful delivery of the MVP there is potential for follow on work ($4.545m exGST) to identify risk-based trade off decisions and targeted investments required to deliver future capabilities,” the response said.

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