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Preliminary pages

Foreword

Since coming to Federal politics in 2008, it has been a personal view of mine that the Defence Materiel Organisations (DMO) is an agency that needs a lot of improvement in a number of ways. This was captured in a dissenting report made to the Defence sub-committee in 2010.[1]

In recent times, my view is changing. Through oversight at many levels—and a demonstrated desire within DMO management to improve—efficiency, value for money and human management looks to be improving.

The dilemma the DMO wrestles with of delivering private sector principles to a public sector framework is laudable, but will be forever problematic. Such a logic denies a long history of administrative law and fails to admit the public sector can match, and beat, the private sector on value for money—not always, not enough, but certainly often enough to give it a chance, and often enough to not automatically assume it never happens.

The DMO itself, now more than ever, using public sector principles as first principles, is an example of where performance actually improves by doing so.

The 2011–12 Major Projects Report is the fifth to be reviewed by the Joint Committee of Public Accounts and Audit. This year’s report covers 29 projects with a combined approved budget of $47.3 billion.

The Committee is committed to ensuring the information presented in the Major Projects Report helps to maximise transparency and accountability in the Defence acquisition process for major projects managed by the DMO.

Specific areas of focus in the Committee’s review of this year’s report include the presentation of financial information, project schedule slippage, and governance and business processes.

The Committee’s report makes recommendations directed at:

• supporting the development of meaningful project financial assurance statements;
  
  
• disclosing information on the expenditure of project contingency funds;
  
  
• improving reporting on the DMO’s sustainment of capability functions;
  
  
• improving consistency in the application of project ‘maturity scores’; and
  
  
• taking a more strategic approach to business systems improvements.

The 2011–12 Major Projects Report also contains the findings of a survey of external stakeholders on the use by, and value of, the report. This survey came about as a result of a recommendation of the Committee’s previous review.

Although the response rate to the survey was low, the results appear to confirm that the Major Projects Report has become a valuable asset for improving the accessibility of information on major Defence projects. The results also indicate that there is more work that can be done to improve the transparency, clarity and accuracy of information in the report, suggesting a strong case for ongoing parliamentary oversight.

On behalf of the Committee, I would like to express my appreciation for the large amount of work by the DMO and the Australian National Audit Office (ANAO) that goes into producing the Major Projects Report each year. The ANAO’s role in both auditing the Project Data Summary Sheets and providing a comparative and longitudinally-focused overview of the report is invaluable.

I thank the witnesses from the DMO and the ANAO for their participation in the Committee’s review.

Rob Oakeshott MP
Chair

Membership of the Committee

Committee Secretariat

List of abbreviations

List of recommendations

Recommendation 1

To help ensure that project financial assurance statements continue to be robust and meaningful, the Committee recommends that, in consultation with the Australian National Audit Office, the Defence Materiel Organisation continue to seek independent financial assurance during the development of future Major Project Reports for an appropriately selected sample of projects.

Recommendation 2

The Committee recommends that, by 20 June 2013, the Defence Materiel Organisation submit a proposal, for incorporation into the 2013‑14 Major Projects Report Guidelines, on how project-level contingency fund data could be disclosed in future Major Projects Reports without being significantly prejudicial to taxpayers’ interests. At a minimum, projects that have utilised contingency funds during the previous financial year or are anticipated to use contingency funds in the forthcoming financial year, and the amount of such funds, should be identified in the reports.

Recommendation 3

The Committee recommends that the Defence Materiel Organisation review its current approach to assigning maturity scores to projects to improve the consistency of their application and their consistency with the Defence Capability Plan.

Recommendation 4

The Committee recommends that the Defence Materiel Organisation develop a business systems improvement plan which prioritises projects, assigns completion dates and allocates senior level ownership for implementation. A progress update on achievements against the plan should be included in the 2012–13 Major Projects Report.

Recommendation 5

The Committee recommends that, by 20 June 2013, the Defence Materiel Organisation reports to the Committee on how it intends to achieve greater transparency in relation to its spending on sustainment activities.

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