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Joint Committee of Public Accounts and Audit
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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
Chair
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Mr Robert Oakeshott MP
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Deputy
Chair
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Ms Yvette D’Ath MP (until 06/02/13)
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Ms Gai Brodtmann MP (from 13/02/13)
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Members |
Hon Dick Adams MP |
Senator Mark Bishop |
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Mr Jamie Briggs MP |
Senator Louise Pratt |
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Ms Gai Brodtmann MP |
Senator Anne Ruston |
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Mr Darren Cheeseman MP |
Senator Dean Smith |
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Mr Josh Frydenberg MP |
Senator Matt Thistlethwaite |
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Mr Harry Jenkins MP (from 22/04/13) |
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Mr Shayne Neumann MP (from 06/02/13 until 22/04/13) |
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Ms Deborah O’Neill MP |
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Ms Laura Smyth MP |
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Hon Alex 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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Mr James Nelson
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Research
Officer
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Mr Nathan Fewkes (until 15/02/13)
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Administrative
Officers
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Ms Jazmine Rakic
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Ms Louise Goss (until 28/03/13) |
List of abbreviations
AMOTS
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Australianised Military Off-The-Shelf
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ANAO
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Australian National Audit Office
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COTS
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Commercial Off-The-Shelf
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DMO
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Defence Materiel Organisation
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FMR
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Final Materiel Release
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FOC
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Final Operational Capability
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IPA
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Independent Project Analysis,
Inc.
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JCPAA
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Joint Committee of Public
Accounts and Audit
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JPD
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Joint Project Directive
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MAA
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Materiel Acquisition Agreement
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MOTS
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Military Off-The-Shelf
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MPR
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Major Projects Report
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PDSS
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Project Data Summary Sheet
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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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