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. Defence established Support Command Australia in August1997 to coordinate materiel support to Navy, Army and Air Force, and to help Defence do more with less. The following paragraphs provide an overview of the contents of the 201516 performance documents. Defence does not yet have a completed register of its acquisition and sustainment contracts though, since January2016, it has had a facility in place and had commenced populating it. Similarly, in an international seminar on Defence acquisition in July2000, an issue identified by Defence at the time was the challenge to be a smart buyer. The report includes performance summaries for the Top 30 major acquisition projects, all major acquisition projects reported in the Major Projects Report and the Top 30 sustainment products. See Defence Portfolio Budget Statements 201718, Table 68: Top 30 Sustainment Products by End of Financial Year Outcome 201718, pp. There are no standardised reporting mechanisms (reporting is informal, anecdotal, local or crisis based) or management processes, with all divisions having different methodologies and management systems. 71 11
Note:For 200506 to 201415, expenditure was made through the Defence Materiel Organisation. The number of SPO staff supporting activities such as planning, contract management, and assurance may not be sufficient and this is a risk to achieving FPR goals (including SPO reform) and ongoing delivery of [Integrated Investment Program] activities. Source:Defence, Portfolio Budget Statements and Additional Estimates Statements, 200506 to 201718. Decision-makers are empowered and held responsible for delivering on strategies and plans within agreed resourcing. 1.4Parliamentary committees over several years have stated an interest in Defences reporting of its sustainment performance and, in particular, obtaining greater insight into that performance.7 In May2014, the JCPAA recommended that the DMO prepare a suitable methodology for reporting sustainment activity and expenditure, within six months.8 The Government disagreed on the basis that current arrangements balanced Parliamentary scrutiny of sustainment expenditure with the protection of classified information on the military capability, readiness and availability associated with that sustainment.9 In September2014, the Committee sought a sustainment options paper from the ANAO, which was made public by the Committee. The framework had enabled Defence to clearly identify roles and responsibilities at a functional level, and individual agreements documented funding, deliverables, risks and performance measures for sustainment products. Defence had not developed robust capability and cost baselines for all capabilities, did not fully understand sustainment cost drivers nor whole-of-life costs for platforms. 108-115, available from [accessed 20 April 2017]. 3.6SPMS was introduced, first, for Navy (MayJuly2015) following work to develop its sustainment performance framework with a standard suite of performance indicators.37 The system was being implemented in Air Force and Army from late 2015 through 2016. 64The instruction was Defence Instruction (General) LOG 45004 Defence Policy on LifeCycle Costing Analysis; this was updated on 14 November 2003. In its submission to the JCPAA inquiry into sustainment expenditure about this project (February2017), Defence advised that: [Capability Acquisition and Sustainment Group] Systems Project Offices Reform project is undertaking a review of all SPOs across [Capability Acquisition and Sustainment Group]. 30Defence, Going to the Next Level, the report of the Defence Procurement and Sustainment Review [Mortimer Review], 2008, p. 49, Recommendation 4.2; Defence, Plan to Reform Support Ship Repair and Management Practices, [Rizzo Review] July 2011, p. 46. In 201516, Defence spent about $6.3billion21percent of its total departmental expenditureon sustainment of specialist military equipment. The Commonwealth's discretion, and a reasonableness test, will apply with regard to the use of the Cost Principles for tendered contracts. An output measure, which directly reflects achievement against the Materiel Availability outcome. It has the agility to refine those strategies as new information becomes available. collaborating with a university recipient would be subject to 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. Will future rises in fuel prices be subtracted from savings? (The Cost of Defence: ASPI Defence Budget Brief 201213, 2012, p. 138). 3.42To provide the historical cost data to support analogous or parametric cost estimates, Defences Chief Finance Officer will build a database of historical costs and cost attributes. 20. 62Until the implementation of the full system, project performance review data will continue to be captured using spreadsheets. As noted in Figure 3.2, Systems Program Office staff have numbered between three thousand and four thousand over the last decade. 4.19Notwithstanding Defences effort to keep track of the claimed and planned savings from Smart Sustainment, Defence has not been able to provide the ANAO with adequate evidence that the savings were realised. 190Defence Portfolio Budget Statements 201516, Section 2: DMO Outcomes and Planned Performance, p. 151, available from [accessed 20 April 2017]. Systems Program Office consolidation and reform is one of the largest reforms to Capability Acquisition and Sustainment Group deriving from the 2015 First Principles Review. For example, the 201217 Defence Corporate Plan refers to reduced cost of ownership as a Key Benefit of certain strategies addressing capability development, acquisition and sustainment. Progress in implementing the quoted recommendation has not been explicitly tracked with the other recommendations such as 2.12 and 2.13 in regular reporting on progress of the First Principles Review. The CASG Cost Principles apply to all procurements. 18. Unclear sustainment requirementsDefence lacked a clear unclassified top-level operational requirement for the platform. Defence had multiple repositories and versions of asset management information making it hard to assess whether Defence was aligned to best practice. Final Operational Capability was declared in April2016 and ministerial advice was noted on 3May2016. The ANAO has recommended that Defence institute a risk-based quality assurance process for information included in the Quarterly Performance Report. 71Defence, Rizzo Review, Chapter 4, p. 29. 3.36Numerous reviews and audits have urged greater focus on whole-of-life costs and better knowledge of the total costs of ownership of military assets, including sustainment, but have found that Defence has struggled to establish the skills, systems and data for this activity66: 3.37In recent years, Defence has generally estimated whole-of-life costs when seeking government agreement to a proposed acquisition. 149Defence, The Australian Defence Aerospace Sector Strategic Plan: Strengthening Military Aerospace Capability in Australia, 2003, Recommendation 4, p. 8. 3.61The Defence Annual Report 201516 includes financial information and some descriptive material for the same Top 30 sustainment products reported on in the PBS and PAES.91 However, the Annual Report does not report the actual expenditure for Defences Capability Sustainment Program, for which estimates were reported in the Defence PBS and PAES.92 Additionally, there is no reconciliation of the total sustainment product funds available amounts reported in the Annual Report93 and the total funding for the Capability Sustainment Program reported in the PBS and PAES tables. The anticipated transfer transactional workloads to industry will therefore increase the unit cost of capability delivery as far as the [Capability Managers] are concerned, regardless of the expected overall improvement in Defences budget.83, 3.47Systems Program Offices have had between three and four thousand staff over the last decade (Figure3.2, below). 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.. 43The Quarterly Performance Report, introduced in late 2015, has evolved from earlier management reporting designed to identify potential problems in the formative stages of the project life cycle (Defence advice of March 2017). Defence conducts reviews of sustainment performance through sustainment gate reviews that help Defence to obtain insight into a project or products progress and status. The year-end spend performance indicator is blank. Defences pubic reporting of program level estimates over time. 152Defence, Next Generation Performance-Based Support ContractsAchieving the Outcomes that Defence Requires (PBC Discussion Paper v1.0), February 2010. No estimates of the reduction are stated. The documentation does not specify which elements remained relevant. This chapter examines Defences governance and operational arrangements for managing the sustainment of specialist military equipment. Defence suppliers have access to potentially commercially sensitive Defence financial information which could provide an unfair advantage to some service providers. Defence advised that a contract variation has been applied to accommodate this additional work, bringing the total cost to $16.3million. 60Defence, Jim McDowell Workshop, First Principles Review Implementation, 15 August 2015. Procurement Framework 3. In June2017, Defence advised the ANAO that implementation plans for significant reforms to Systems Program Offices would be developed in the second half of 2017. Reform is expected to lead to greater outsourcing of functions currently performed in-house by Defences Systems Program Offices. This chapter examines Defences performance framework to support the management and external scrutiny of materiel sustainment for specialist military equipment. or an F&A cost Necessary costs incurred by a recipient for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. The tasks articulated in the Directive cover the full range of Defence activities from humanitarian assistance and disaster relief to peace and stability operations, while ensuring the joint force retains the necessary baseline posture to mobilise in the self-reliant defence of Australia. 1.7The objective of the audit was to assess whether Defence has a fit-for-purpose framework for the management of materiel sustainment. 4. 5At the strategic level, guidance is given by the Chief of the Defence Forces Preparedness Directive. Typically, sustainment entails repair and maintenance, engineering, supply support and disposal of equipment and supporting inventory.4 Effective sustainment of naval, military and air assets is essential to the preparedness of the ADF and to enable Defence to conduct operations in accordance with the Governments requirements.5, 1.2Defence has commented that sustainment management is not a technical discipline: it is an over-arching business-oriented management function focused on meeting the outcomes required of Capability Acquisition and Sustainment Group customers.6. [19], Capability Acquisition and Sustainment Group, Last edited on 19 February 2023, at 03:28, "First Principles Review: Creating One Defence", "Department of Defence Annual Report 202-21 | Performance Criteria | Criterion 10 | Manage the investment, acquisition and sustainment of Defence equipment, supplies and services to meet Government and Defence requirements", "DMO appoints industry supremo to drive reform", "Going to the Next Level The Report of the Defence Procurement and Sustainment Review", "Address to the Department of Defence Senior Leadership Group", "Fact Sheet: Smaller Government: Defence Materiel Organisation: Reintegration into the Department of Defence", "Defence extracts new deputy secretary from industry", Mortimer Review into Defence Procurement and Sustainment, https://en.wikipedia.org/w/index.php?title=Capability_Acquisition_and_Sustainment_Group&oldid=1140236078, Military Equipment Acquisition and Sustainment, inadequate project management resources in the.
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