However, Defence continues to address specific operational shortcomings and there remains scope for Defence to improve its performance monitoring, reporting and evaluation activities to better support the management and external scrutiny of materiel sustainment. 200.409 Special considerations. In July2011, a further health checkthis time by external consultantsfound that Smart Sustainment had achieved some early successes with cost reductions and changes in practice. [13], In March 2009, the Corporate general manager of the DMO, Jane Wolfe, was dismissed for unsatisfactory performance. Key elements of the governance and organisational framework include: a specialist organisational unitcurrently the Capability Acquisition and Sustainment Groupstaffed by a mix of civilian and military personnel; contract-like arrangements for sustainment between that unit and the Chiefs of Navy, Army and Air Force (Defences Capability Managers); and day-to-day responsibility for most sustainment activities falling to Systems Program Offices, which carry out that work using a mix of in-sourced and out-sourced service provision. Figure 2.1:Simplified representation of organisational arrangements supporting Defence sustainment of specialist military equipment. This method produces a rough order-of-magnitude estimate, and is generally used early in the life cycle of a new asset/system when technical definition is immature and insufficient cost data is available. Defence records show that the department made substantial efforts to keep track of the large number of diverse initiatives identified across the department under the smart sustainment reforms associated with the SRP, including internal reporting to management. The CASG MSP implementation is inconsistent with the intent of the First Principles Review, opting for the ease of 'body shopping' rather than thoughtful outcomes-based procurement. The skill sets required in sustainment are quite different from those required for design and build: repairing the range of equipments in a submarine poses problems of access and control which are not likely to be experienced during build, and the design issues which crop up during sustainment are focused on keeping equipment operational rather than on design for performance. 211Dr Andrew Davies, Director of Research, Australian Strategic Policy Institute. Defence has initiated a reform project as part of its First Principles Review implementation. It is an overarching element in progressing First Principles Review implementation in Capability Acquisition and Sustainment Group. 132Defence considered not using the term Systems Program Office as this could be confused with the use of the same term in the USA, where Systems Program Offices were said to be concerned only with acquisition and not sustainment. These activities are outside the scope of the audit. 53The 2008 Audit of the Defence Budget found that the lack of joint metrics for the serviceability of the FA-18 Hornets contributed to a silo mentality between the Systems Program Office and the Air Force squadron using the aircraft. The lack of funds to deliver necessary Mission Support outcomes across the DMFP will result in increased risk to Materiel Confidence in outer years. This has largely been achieved by increasing the number of materiel ready days being obtained by adopting a 10+2 year Usage and Upkeep Cycle, but also by reducing costs of maintenance periods, particularly Full Cycle Dockings. 29Defence, Operational Concept Document for DMO Sustainment Reporting System (Version A, December 2004, Sponsored by Director General Standardisation). 6. 5.20The purpose and structure of Systems Program Offices have remained essentially the same since their inception in 2000. For example, a small number of products could be selected, with rotation or other variation from year-to-year, limiting the risks that may flow from time-series analysis and the release of other material whose aggregation could add risk. Recipients may use their own accounting systems, policies, and procedures to implement the cost principle The government-wide principles, issued by OMB (or, in the case of commercial organizations, the Federal Acquisition Regulation [48 CFR 21], or, in the case of hospitals, 45 CFR 75, Appendix IX, "Principles For Determining Costs Applicable to Research and Development Under Grants and Contracts with Hospitals"), on allowability and unallowability of costs under federally sponsored agreements. The project has spent $133.966million on sustainment in 201516 against a budget for the year of $133.679million, and $1867million of an acquisition budget of $2033million. Acquisition and sustainment salaries are held by [Capability Acquisition and Sustainment Group] and not funded by [Capability Managers], so reductions in this Commonwealth APS workforce do not generate a saving for [Capability Managers]. The ANAO recommends that Defence institutes a risk-based quality assurance process for the information included in the Defence Quarterly Performance Report. This proposal is regarded as a key principle, integral to the acquisition and reform agenda. Areas for improvement include: Defences second corporate plan prepared under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) identifies sustainment more clearly than the first corporate plan. depends on the type of organization (regardless whether domestic or foreign) making the expenditure. 94Defence has advised that around two-thirds of Systems Program Office staff are engaged in sustainment work. Maintenance Completion (tasks) to Plan is an output measure, which directly reflects achievement against the Materiel Confidence outcome. Table10: Capability Sustainment Program corresponds to Table6 in the PBS (see above). The value of the contracts for this work is $8.8million. This recommendation was not included in the summary of First Principles Review recommendations at the front of the report of the review, whereas the recommendations set out in the preceding and subsequent paragraphs of the report are included in that summary (recommendations 2.12 and 2.13 respectively). 2.15Coles took a similar view a few months later, in the Collins Class Sustainment Review, arguing that Defence should give sustainment much higher attention and priority during the initial phases of the assets lifecycle (Needs, Requirements, and Acquisition phases). Will future rises in fuel prices be subtracted from savings? (The Cost of Defence: ASPI Defence Budget Brief 201213, 2012, p. 138). Cash Accounting Definition, Example & Limitations - Investopedia This followed a joint speech by the Secretary of Defence and Chief of the Defence Force stating that improving Defence productivity was a priority. However, based on the ANAOs review of a Quarterly Performance Report produced during the audit, its contents are neither complete nor reliable, it takes two months to produce and its contents are sometimes difficult to understand. Key Takeaways Accrual accounting records revenue and. These competencies include: specifying requirements independent of suppliers, working out where best to obtain those requirements; and knowing how to assess what they have received on behalf of the Commonwealth. The primary element of this reform is the consolidation and review of the Systems Program Offices; establishing centres of expertise as part of a matrix organisation within Capability Acquisition and Sustainment Group to make best use of specialist skills that are common across its Systems Program Offices. Define and document a clear, unclassified requirement for the sustainment program. In this context any proposal for new reporting requirements will need to consider if the new information might be aggregated to disclose classified information on capability readiness and availability.. Develop cost baselines, models, and supporting processes for sustainment program. Opinion: Defence's MSP creation is without strategy, and at a premium The First Principles Review has pointed out that Defence has treated Systems Program Office staff costs at the project level as a free good, reducing the transparency of the cost of sustainment work and providing inaccurate price signals and a distorted incentive structure to Capability Managers. The CASG Cost Principles apply to all procurements. Defence has initiated a reform project as part of its First Principles Review implementation. A consultancy found in March2013 that: DMO evolved through the amalgamation of many dispersed business units, without undergoing typical post-merger integration activities needed to drive efficiency. Contracts with the principal provider are not performance-based. 58ANAO Audit Report No.52 201314, Multi-Role Helicopter Program. 5.48The First Principles Review recommended that Defence establish a single end-to-end capability development function and that this would require, among other changes, Moving to a leaner smart buyer model that better leverages industry, is more commercially oriented and delivers value for money.164 The Review cites a US Government Accountability Office report which is also consistent with past Australian usage: A smart buyer is one who retains an in-house staff who understands the organizations mission, its requirements, and its customer needs, and who can translate those needs and requirements into corporate direction. In 201516, Defence spent about $6.3billion21percent of its total departmental expenditureon sustainment of specialist military equipment. Note b:The availability of the Collins Class was about half that achieved by comparable submarine fleets; time spent in planned maintenance was about one third greater; and maintenance overruns and percentage days lost due to defects were approximately double. through read-across of data). Defence has elaborated on its approach to being a smart buyer in its submission to the Joint Select Committee on Government Procurement, April 2017. Develop enterprise-wide IT strategy and information management strategy. Defence advises that Over the past 12months the CASG e-Procurement Team and the DoF AusTender Team, and SAP Australia Canberra Office have been progressing a whole of Government project to address the technical and business process risks posed by the current SAP AusTender Contract Reporting data capture and reporting solution. 209Defence, Defence and Industry Policy Statement 2007, p. 28: Defences in-house S&T organisation, DSTO, enables the ADF to be a smart buyer, user and adaptor of military technology. For some Defence systems the planning documentation includes a description of the system followed by a statement of the primary focus for that asset for the forthcoming financial year, and in the annual report there is an account of what has been achieved. The cost principles The government-wide principles, issued by OMB (or, in the case of commercial organizations, the Federal Acquisition Regulation [48 CFR 21], or, in the case of hospitals, 45 CFR 75, Appendix IX, "Principles For Determining Costs Applicable to Research and Development Under Grants and Contracts with Hospitals"), on allowability and unallowability of costs under federally sponsored agreements. Defence expects full implementation to take a further two years. As noted in paragraph 5.14, in July2016, a former senior Bechtel executive was seconded to the position of First Assistant Secretary Program Performance in Capability Acquisition and Sustainment Group, under the day-to-day direction of the senior Capability Acquisition and Sustainment Group leadership. Second and Combined approvals were selected, as Defence is expected to understand costs better at the Second Pass approval stage, than at First Pass. Defences 201516 public reporting of sustainment activity included expenditure information and other descriptive material. Grouping of polymers in relation to the specific registration requirements, in order to facilitate cost-effective registration of PRR in line with the 'one substance, one registration' principle and to reduce testing costs and avoid unnecessary testing (e.g. Defence lacked a single set of accurate information to inform decision makingThe review found that, whilst significant levels of information and analysis exist across the Collins Class Sustainment Program, the basis for long-term decision making was not always consistent or accurate, with multiple systems and datasets in use for financial, maintenance and supply chain activities. Procurement Framework 3. Army refer to the reviews as Sustainment Financial Screens, and Air Force call their reviews Sustainment Assessment Reviews. Defence later recognised that gate reviews also have potential value for sustainment, especially where it allows management to become aware of maintenance problems that might otherwise remain hidden. PDF Caracal paper on polymers - Politico Europe
