Preliminary Pages
Foreword
The 2010-11 Defence Materiel Organisation (DMO) Major
Projects Report (MPR) is the fourth MPR to be produced by DMO and the third to
be reviewed and reported on by the Joint Committee of Public Accounts and
Audit. The Committee originally supported the production of the MPR to improve
the transparency and accountability of the Defence acquisition process.
The Committee is pleased to report that there has been an
overall improvement in the preparation and presentation of data in the 2010-11
MPR but notes that there remains a number of outstanding concerns that require
further work.
In its review of the 2009-10 MPR, the Committee recommended
that DMO address the ongoing issue of the presentation of financial data in
base date dollars. After considerable effort, DMO and the Australian National
Audit Office (ANAO) have finally produced an acceptable method and format for
the presentation of financial data and the Committee has endorsed the move to
an out-turned dollar presentation. The Committee has also accepted the proposal
to include a ‘Project Assurance Statement’ regarding the remaining budget for
each project instead of more detailed indexation information. However, I
acknowledge the different opinions within the Committee on this issue, in
particular the views of Senator Mark Bishop as contained within the attached
dissenting report. The Committee will continue to monitor the issue of
financial reporting, and in particular the reliability of the proposed Project
Assurance Statement, and will revisit the issue if needed.
The steady increase in schedule slippage which has been identified
over the life of the MPR is of major concern to the Committee, both in terms of
timely delivery of capability to the Australian Defence Force and in budgetary
terms. The Committee acknowledges that the evidence suggests the majority of
the slippage is made up of legacy projects and indicates that initiatives to
improve processes are having an effect on minimising slippage. However, to
improve transparency and accountability in this area the Committee recommended
that a section be included in future MPRs that specifically provides
information on the activities being undertaken to minimise slippage and the
tangible results of those initiatives.
Another ongoing issue of concern to the Committee is the
inconsistency of internal management systems across projects. This issue
affects the reliability of the information in the Project Data Summary Sheets
and ultimately lowers the quality of the MPR. Despite some action being taken
to improve the consistency of processes and information, the expected improvements
have not yet been achieved. Previous evidence to the Committee indicated that
the problem dated back to around the year 2000, and that it would take time to
resolve. However, after some 12 years, more progress should have been made to
address the issue. The Committee expects to see concrete evidence of results
and progress reported in the next MPR.
The MPR is now well established and is a useful tool to
monitor Defence major acquisitions and capability. Given this, it is timely to
consider its future over the longer term, including the exit criteria for
projects and the role of parliamentary committees and other stakeholders.
Despite a proposal that projects exit the MRP at the point
of Final Materiel Release, the Committee has retained the current exit criteria
of Final Operational Capability. Reservations about the proposal included that
valuable information might be lost and that the ability to scrutinise Defence
projects could be reduced. The Committee will consider the matter further in
future reviews.
The Committee is satisfied that the current format of the
MPR largely achieves the original goal of the report but also intends to
consult with other relevant committees of the Parliament on ways that the
scrutiny of defence capability projects could be enhanced. The Committee would
also like to gauge how extensively the MPR is being utilised by external
stakeholders, and has therefore recommended that DMO include a discussion on
the use by, and value of, the MPR to external stakeholders in the 2011-12 MPR.
I believe that the implementation of the Committee’s
recommendations will contribute greatly to the continuous improvement that has
been witnessed throughout the history of the MPR, and thank DMO, the ANAO and
my fellow Committee members for their efforts throughout the inquiry process.
Mr Robert Oakeshott MP
Chair
Membership of the Committee
Chair
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Mr Robert Oakeshott MP
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Deputy
Chair
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Mrs Yvette D’Ath MP
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Members
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Hon. Dick Adams MP
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Senator Mark Bishop
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Mr Jamie Briggs MP
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Senator Helen Kroger
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Ms Gai Brodtmann MP
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Senator the Hon. Nick Sherry
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Mr Darren Cheeseman MP
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Senator Matt Thistlethwaite
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Mr Josh Frydenberg MP
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Ms Deborah O’Neill MP
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Ms Laura Smyth MP
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Hon. Alexander Somlyay MP
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Committee Secretariat
Secretary
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Mr David Brunoro
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Inquiry
Secretary
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Dr Narelle McGlusky
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Senior
Research Officer
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Mr Shane Armstrong
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Office
Manager
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Mrs Dorota Cooley
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Administrative
Officer
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Ms Louise Goss
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List of recommendations
Recommendation 1
The Joint Committee of Public Accounts and Audit recommends
that the Defence Materiel Organisation include in the 2011-12 Major Projects
Report a section specifically providing information on the activities being
undertaken to minimise schedule slippage and the results of those activities.
Recommendation 2
The Joint Committee of Public Accounts and Audit recommends
that the Defence Materiel Organisation and the Australian National Audit Office
continue to develop the Major Project Report Guidelines jointly but that the
Australian National Audit Office take administrative responsibility for
updating the Guidelines and submitting them to the Joint Committee of Public
Accounts and Audit annually.
Recommendation 3
The Joint Committee of Public Accounts and Audit recommends
that the Defence Materiel Organisation includes a discussion on the use by, and
value of, the Major Projects Report by external stakeholders in the 2011-12 Major Projects Report.