ANAO Report No. 2 (2017-18) Defence’s Management of Materiel Sustainment
Conclusion (pp. 7-8)
The fundamentals of Defence’s governance and organisational framework for the management of materiel sustainment are fit-for-purpose. 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.
Defence has clear and long-standing governance and organisational arrangements for managing the sustainment of specialist military equipment.
Research and reviews conducted for Defence have revealed a range of specific operational problems that are detracting from the efficient and effective sustainment of Defence capability, including the functioning of Systems Program Offices. Defence has initiated a reform project as part of its First Principles Review implementation.
The development of an effective sustainment monitoring system remains a work in progress, and the effectiveness of Defence’s internal reporting system for sustainment could be improved in several areas. Opportunities also remain to increase the completeness and transparency of publicly reported information regarding materiel sustainment.
The 2015 First Principles Review was preceded by earlier major reform initiatives, notably the Strategic Reform Program (SRP) begun in 2009. 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. However, Defence did not adequately assess the outcomes from the ‘smart sustainment’ reforms.
Reforms to the management of sustainment flowing from the First Principles Review remain at an early stage, and this stream of activity is likely to take much longer than the expected two years. For example, the Systems Program Office reviews are not yet complete and Defence has provided no evidence that decisions have been taken on changes to their structure and functioning.
Defence has engaged industry expertise to guide and help it with the First Principles reforms relating to acquisition and sustainment, including $107 million with a single company where the contract for services is not performance-based. Reform is expected to lead to greater outsourcing of functions currently performed in-house by Defence’s Systems Program Offices.
Recommendations (p. 13)
Recommendation No.1
The ANAO recommends that Defence institutes a risk-based quality assurance process for the information included in the Defence Quarterly Performance Report.
Defence response: Agreed
Recommendation No.2
The ANAO recommends that Defence develop and implement an evaluation plan to assess the implementation of the recommendations of the First Principles Review.
Defence response: Agreed