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DSTO has developed, and continues to develop, a number of key capabilities crucial to Defence operations. Many of these capabilities are developed in conjunction with industry and have applications beyond defence.

DSTO’s key capabilities include:

Through-life support of assets, which involves the development and application of technologies for the through-life support of air, maritime and land platforms, with a particular focus on technical performance, low cost maintenance and life extension. The result is significant cost-savings for the Australian Defence Force (ADF).

Operational analysis, which involves the application of scientific methods to assess the effectiveness of military operations. The assessments are used as a basis for analysing current capabilities and determining priorities for the ADF’s future developments, acquisitions and tactics.

Warfighter support, which involves the provision of direct support to the warfighter through a mix of modelling and simulation tools combined with expertise in human sciences.

Acquisition advice, which involves providing the Australian Defence Organisaton (ADO) with scientific and technical advice on the acquisition of materiel. DSTO also acts as technical adviser to the ADO during the development of new capabilities and their introduction into service.

Support for national security, which includes supporting Australia's defence against terrorism, contributing to the Science, Engineering & Technology Unit in th Department of Prime Minister and Cabinet, playing a lead role in "Safeguarding Australia" (a National Research Priority) and conducting chemical/biological defence research.