Australia has made a good start, but must continue to strive for defense procurement reform in a time of economic restraint, the Minister for Defence Personnel, Materiel and Science said.
“We are simply not prepared to accept the waste of resources we have seen in the past in defence procurement,” the Hon. Greg Combet AM MP said in a speech in Canberra Nov. 13.
“We need to remember that every dollar wasted is a dollar not being invested in capability for the ADF. Every dollar wasted is a dollar that could have been spent on a hospital or school,” said Combet, who also is the Minister Assisting the Minister for Climate Change.
Programs that run over budget will only damage Defence’s reputation, and lower public confidence, at a time when the government is moving toward “perhaps the greatest modernization of the ADF ever undertaken.”
For example, the Kaman [KAMN] SeaSprite helicopter project “saw over $1 billion wasted and for no result,” he said. “The leadership at Defence firmly understands that we need significant improvement in procurement performance at Defence to deliver better results for the men and women of the ADF and the Australian taxpayers.”
Australia is not alone, Combet said, as the United States and United Kingdom are wrestling with similar problems–delivering better results for military troops and taxpayers.
After a recent trip to the United States, Combet said U.S. reforms are similar to Australia’s. “Their reforms are centered on investing in professionalizing their acquisition workforce and also improving the contestability and independence of advice on major procurement projects.”
There are also similarities to U.K. efforts, where the Ministry of Defence just released an independent review of defence acquisition called the Gray Report.
The U.K. MoD has announced an eightpoint plan that has some similarities with the Australian government’s response to the Mortimer Review.
Combet said he would continue to monitor policy developments abroad and look for international examples to emulate or adapt.
In 2008, in a different role, Combet commissioned the 2008 Defence Procurement and Sustainment Review, conducted by David Mortimer. Its results continue to shape the government’s consideration of acquisition and sustainment.
While the government agreed to all but one of the Mortimer recommendations, implementation has been “too slow,” he said.
The report aimed toward two goals: the need to develop a more business-like procurement agencythat has all the necessary commercial skills to be the largest project management organization in the country. This will require a significant change in the procurement culture of the Defence Organisation, and of the (Defence Materiel Organisation) DMO in particular, he said. The second goal is to elevate the acquisition strategy in the capability development cycle.
As part of this, DMO will be involved earlier in the capability development cycle.
“Ninety per cent of the discretionary decisions that affect the outcome of a project are made in the first 7 to 12 percent of the project’s life,” Combet said. “An appropriate acquisition strategy must be in place to govern these crucial early decisions. Otherwise, problems are inevitable.”
One outcome from the Mortimer Review is the clear requirement for the DSTO to assess capability proposals for technical risk and for the DMO to assess the acquisition strategy and advise on the drivers of risk, cost and schedule.
The formation of the new Project Performance Office has been critical to enhancing the management of early project phases, ensuring that comprehensive project proposals come to government for decision, and providing oversight of the gate review process.
Another program delivering greater efficiency in defense procurement is the Projects of Concern process. Projects receive extra attention and leadership focus when they are on this list, improving the performance of both the project office and the private sector contractors involved. The Wedgetail acquisition and Collins-class submarine sustainment are examples of programs on the list.
Some of the lessons the government learned from such projects include: the need to manage requirements across the project development and acquisition stages; that first-of-type equipment projects experience a range of unique and interrelated issues, for example, around requirements management, system development and integration, verification and validation and the development of in-service support concepts.
Other lessons include: the need to not overestimate the design maturity of modified military off-the-shelf acquisitions, and the need to have a standardized contracting approach to the management of complex technical programs. This also involves linking contracting payments to a supplier meeting actual project milestones. Finally, another lesson is the need to adequately resource the early ramp-up stages of projects.
“These are lessons that we are applying to other projects and I am confident that this will result in better project management. In fact, I can report that project slippage of approved projects is at an all time low,” Combet said.