Chapter 3 Committee review
Although the Committee observed that there has been overall improvement
in the preparation and presentation of data in the 2010-11 MPR, there are a number
of ongoing issues that continue to require attention.
The Committee still has concerns over the presentation of financial data
and the inconsistency of information across projects.
The ANAO has identified a steady increase in the schedule slippage
experienced by the major projects being tracked in the report.
This slippage raises a number of issues with regard to budget implications and
the overall performance of the DMO.
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.
This chapter covers these issues and, in addition, examines the
government response to recommendations from the Committee’s previous review of
the 2009-10 MPR, particularly with regard
to clarity and timeliness.
This chapter covers the following topics:
n presentation of
n business processes;
n exit criteria;
n timeliness and
quality of responses; and
n MPR identified as a
Presentation of financial data
Since the inception of the MPR, the Guidelines have required contract
values and project expenditure be reported in ‘base date’ dollars. This
requirement has not been met in the previous MPRs in 2007-08, 2008-09, 2009-10 or
the current 2010-11 MPR, resulting in qualified audits for each of these MPRs.
This issue has been the focus of discussion between the Committee, DMO
and ANAO in successive years. The DMO has argued that the original proposal for
reporting in base date dollars is not workable. At one stage the DMO proposed
to use Assets Under Construction (AUC) data however, it was unable to implement
this approach. Other suggested reporting
methods have included ‘constant’ dollars and ‘out-turned’ dollars.
The Committee’s primary concern is for ‘project expenditure information
to be reported on in a constant manner’. The Committee seeks
accessibility of the information presented and increased transparency through
an approach that allows:
... for a constant set of expenditure information to be
presented, allowing for ease of comparison between years, identification of any
project concerns and overall more effective and efficient scrutiny.
In order to reach a final solution, the Committee recommended in its
report on the 2009-10 MPR that DMO prepare a report for the Committee examining
the possible methods for the presentation of financial information in base date
dollars, out-turned dollars and current dollars. Further, the report from DMO should
provide a comprehensive proposal for transitioning to the proposed new
arrangement. The Committee requested that the ANAO review the final proposal.
The DMO’s response to this recommendation proposed that financial
information in the PDSSs be presented in out-turned dollars. The DMO argues
that presentation of financial information in out-turned dollars:
n allows cost
objectivity and is consistent with the historical cost convention;
n is consistent with
the way that Defence and DMO financially manage projects;
n is consistent with
the way that project financial information is reported through other public
n allows the JCPAA to
readily assess the past cost performance and make judgements about likely cost
While supporting the proposal to move to an out-turned dollar
presentation, the ANAO initially cautioned that care would need to be taken to
ensure that ‘sufficient disclosures are maintained to allow assessments to be
made of project performance against budget’. The ANAO suggested that
such disclosures should include:
n budget at first and
second pass approval;
n indexation amounts;
n foreign exchange and
The ANAO’s primary concern was DMO’s suggestion to ‘report project
indexation at an aggregated level, in both the budgetary and expenditure
sections of the PDSSs’. In the ANAO’s opinion
this would reduce the amount of information provided.
After consultation, the DMO and ANAO provided the Committee with an
agreed modified proposal for the presentation of financial data consisting of
two formats, one for projects that received Government Approval prior to July
2010 and one for projects that received Government Approval after June 2010.
To offer further clarification, the DMO and ANAO proposed that a
‘Project Assurance Statement’ be made available in the PDSSs that would
‘provide an overall assessment of the project’s budgetary position’.
The Statement would indicate ‘whether there is sufficient budget remaining to
deliver the materiel element of capability at the agreed Final Materiel Release
At the public hearing on 21 March 2012, the Committee asked the
Auditor-General if he was satisfied with the new financial reporting proposal.
He told the Committee that he was satisfied and that the suggested Project
Assurance Statement was a significant step forward:
... instead of readers having to make their own assessment
about how the project is going, and they may still do that, DMO will be
providing an assessment from their perspective as to whether there is
sufficient budget to complete this project to expectations.
The Committee observed that, contrary to the Auditor-General’s initial request,
the proposed format for the presentation of financial data for post June 2010
projects did not contain any indication of price indexation figures. The DMO maintained
that indexation was unnecessary to provide the clarity the Committee was looking
In the view of the DMO, indexation could be misleading as the DMO has to
create indexation figures and it is therefore ‘an artificial artefact of the
pricing’. The DMO informed the
Committee that predicting indexation figures is complex because of the number
of factors involved, including labour and materials:
Sometimes there can be 50 or 60 indexes or just a global
government indexation because you cannot break it apart.
On the other hand, the DMO explained that the inclusion of the Project
Assurance Statement would provide transparency regarding whether or not a
project will be completed ‘under the approved budget’.
The DMO believe that the relevant information is ‘whether we are doing it in
the time frame that we said we would do it for government’.
With regard to the financial reporting framework, the DMO considers that
identifying changes to the actual cost and the scope of a project are the most
important information to be disclosed in the MPR.
The DMO believe that the proposed format for financial reporting will:
... make it very clear to the committee what was approved by
government, what the cost impacts and budgetary accumulations have been to
date, and what in our judgement is our ability to complete that project inside
the government approved funding.
To demonstrate the complexity and uncertainties of calculating
indexation, the DMO provided the example of the Air Warfare Destroyer Build
(SEA 4000 Ph 3) from the current MPR. This project went to contract in 2007
before the effects of the global financial crisis began to be felt. The DMO
calculated the long-term cost demands for materiel and labour over a 10 year
period across the economies of the countries that would contribute to the
project, including Australia, Spain, America and Norway. However the DMO
explained that the fluctuations caused by the onset of the global financial
crisis severely affected the DMO’s projections:
Early in the project, the world inflation indexes, just
before the global financial crisis, were going very strongly and we were seeing
demanding pressure coming in on a number of those indexes, which were
outstripping what we had anticipated. Since then, the global financial crisis
has had a significant slowing down on the impact of a lot of those indexes –
prices for steel and copper, and a lot of copper pipework and labour was coming
from overseas – so a lot of that pressure has gone away. Broadly, as reported
in [the MPR], we are still operating inside what we projected.
While noting this argument, the Committee questioned why the information
on indexation could not be made public considering that the DMO had made the
calculations for each project. The DMO conceded that providing the information
‘would not be impossible but it would be a considerable amount of work’.
The DMO told the Committee that there is a difference between calculating an
estimated indexation figure at the beginning of a project and disaggregating
that figure annually as invoices are paid:
The building up of the initial cost model ... – and it could
be 60 or 70 indices ... – is only an estimate in terms of the total cost. That
total cost is the approval value, not an itemised breakdown of the cost.
The Committee suggested that perhaps an approximate estimation of the
indexation on a project could be publicly disclosed. However, the DMO
reiterated that the information is not made public and is not part of the
proposal that goes to government:
That information is not normally public. The cost model is
normally signed off by the department of finance in terms of how those costs
are developed but the breakdown – again, getting back to that itemisation – is
not part of the proposal that goes to government. It is a total cost.
Asked again if he supported the DMO proposal, the Auditor-General told
the Committee that, after robust discussions with the DMO, the ANAO has been
persuaded that the proposal will provide the information required. The
Auditor-General admitted that, as budgetary figures are now being presented in
out-turned dollars, ‘any indexation figures that would be included would be
notional’. He also indicated that
the ANAO had considered the administrative cost of providing the indexation
In summary, the Auditor-General told the Committee that the ANAO
accepted the strength of the DMO argument for the proposed financial reporting
framework and that the Project Assurance Statement would provide:
... a more comprehensive and valuable statement for the
committee to get than an additional notional line on what the indexation figure
would be presented in an out-turn basis. I think it is a better figure for the
committee to have, because you are interested in the big picture, not the
detail, generally speaking.
The Committee appreciates the work that the DMO and the ANAO have
undertaken to progress the ongoing issue of the presentation of financial data
in the MPR, despite this work only occurring after pressure was applied by the
The Committee accepts the argument to move to out-turned dollars for the
financial performance reporting in the MPR for all new projects. The Committee
acknowledges that this method is consistent with the Commonwealth budgetary framework
and accounting conventions.
The Committee therefore endorses the proposed out-turned presentation
for future MPRs.
Further, the Committee accepts the Auditor-General’s recommendation that
there is no need for a transitional arrangement for the 2011-12 MPR showing
both base date dollars and out-turned dollars for the 11 projects previously
providing information in base date dollars.
Some Members of the Committee remain concerned that the lack of
indexation information will hinder appropriate scrutiny. However, the Committee
accepts the Auditor-General’s assurance that the proposed format for financial
reporting for the MPR will provide sufficient information on projects to
satisfy transparency and accountability requirements.
The Committee therefore endorses the proposed format, including the
inclusion of a Project Assurance Statement for each project.
However, the Committee expects the DMO to work constructively with the
ANAO to ensure that Project Assurance Statements provide a level of scrutiny
and commentary on a project that the ANAO, and subsequently the Committee,
deems appropriate for maintaining transparency and accountability.
In this regard, the Committee will closely monitor the reliability of Project
Assurance Statements over time and will revisit the issue if needed.
During the inquiry the Committee was given the impression that the DMO
did not actively monitor and manage project budget risks due to indexation effects.
This is of concern to the Committee, considering that indexation represents a
major budget component.
Nevertheless, the Committee notes that the move to out-turned dollar
budgeting puts the onus on the DMO to manage indexation within existing
budgets. Therefore, overall the Committee acknowledges that the DMO will be
compelled to proactively manage indexation risk and anticipates that the approved
new format for financial reporting will be sufficient for the time being.
As in previous MPRs, the ANAO found inconsistency of information
recorded across projects, however, it acknowledged that the DMO is taking steps
to address the issue. In particular the ANAO
identified difficulties resulting from ongoing inconsistency with regard to
financial management, risk management and document management systems.
With regard to risk management, the ANAO noted that corporate awareness
of the issue had improved. However, the ANAO found that little progress had
been made at project level to improve the ‘consistency of risk management
across the Major Projects’.
This is a concern shared by others. In his submission to the review,
Mr E.J. Bushell, Air Commodore, RAAF, Retired, informed the Committee that the ongoing
poor standard of risk management can be traced to the continuing use of a
commercial model of project management. Mr Bushell maintains that the ‘primary
cause of project risk lies in the operational and technical areas of the
project’. He advocates a return to
what he calls ‘engineering management’ to combat the problems and refocus on
Effective capability management requires that all capability
functions – operational, systems and equipment engineering, test and acceptance
functions and support requirements, including their associated risks, must come
under tight Project and Systems Engineering management, and that commercial
management must be constrained to contract management that supports project management
The DMO was asked by the Committee to provide further information on
progress regarding the rationalisation of its business systems and improvements
to risk management training for staff in questions on notice.
The DMO’s response focused on risk management only, stating that DMO is
working to reduce the number of risk management tools used and is currently
developing a risk categorisation framework for dissemination in 2012. DMO has
also been undertaking risk management training, including using online learning
The Committee is concerned with the continuing inconsistency of
information across projects as it affects the reliability of the information in
the PDSSs and ultimately lowers the quality of the MPR.
The Committee is concerned that despite some action being taken to
improve consistency of information the expected improvements have not yet been
achieved. Previous evidence to the Committee indicated that the problem dates
back to around 2000 and that it would take time to resolve.
However, the Committee believes that, after some 12 years, more progress should
have been made to address the issue.
The Committee understands that some improvement has been made, and notes
the work underway on risk management practices. The Committee is encouraged to
by the additional risk management training (in particular the use of online
training approaches), and the development of a risk categorisation framework.
However, it was not clear what efforts were being made on financial
management or document management systems. As such, the Committee expects to
see concrete evidence of results and progress to achieve consistency of
information across projects reported in the next MPR.
The ANAO found that of the 28 major projects in the 2010-11 MPR, 14
projects have experienced schedule slippage. Total slippage across
the major projects is 760 months, a 31 per cent increase on the original
planned schedule for achieving Final Operational Capability (FOC).
ANAO analysis shows that the DMO received a total of an additional $295 million
in price indexation (up to 30 June 2011) to account for this slippage.
Although the ANAO review found that none of the major projects have
‘exceeded their approved budgeted cost’, the ANAO indicate that
schedule delays do increase the overall costs as both staffing and
administrative resources are ‘tied up for longer than planned’.
The DMO classify acquisition projects as either Military-Off-The-Shelf
(MOTS), Commercial-Off-The-Shelf (COTS), Australianised MOTS, or Developmental.
While the ANAO identified a number of reasons for schedule slippage, it singled
out misclassification of projects under this procurement system as Off-The-Shelf
(OTS) instead of Developmental as a significant contributor to slippage.
The Committee asked the DMO to provide additional information on the possible
drivers for slippage, what is being done to improve the classification of
projects, and the cost impacts of slippage.
DMO listed the possible drivers of slippage as:
n initial optimism;
n the realisation of
n platform availability
and higher priority operational requirements;
n stability and clarity
of requirements; and
n technical regulatory
DMO suggested that the move to the Two Pass Process, Gate Reviews and
several other initiatives, are expected to reduce these drivers of slippage.
Regarding the misclassification of projects, the DMO listed several
initiatives they are taking to improve outcomes and to be more realistic about
project delivery times. In addition to the Gate Reviews, these included:
n the use of Emerging
Project Teams – where DMO works with the Defence Capability Development Group
to ensure the process for first pass approval is more robust and DMO expertise
is engaged earlier in the process;
n offer Definition
Activities – where DMO works with shortlisted tenderers to ensure risks and
schedules are more realistic; and
n the planned use of
Implementation Risk Categories –to be introduced in 2012 to assist project
teams in the initiation phases with the classification, early identification,
and comprehensive assessment of technical and implementation risks.
Regarding the costs of slippage, the DMO contended that there are
several factors which mitigate the costs of slippage, including: that price
indexation is factored into project budgets; that contractor caused slippage
costs are claimed by DMO through liquidated damages; and that slippage caused
by Defence is covered by a project’s contingency budget in the first instance.
DMO acknowledged that where ‘a project’s contingency budget is estimated
to be insufficient to cover any additional costs ... then the Project must seek
approval for a Real Cost Increase or a reduction in scope.’
DMO’s submission shows that only two projects since July 2005 have required
real cost increases.
However, DMO also acknowledged that several slippage related costs are
not part of the project budget, such as those associated with sustainment of
legacy platforms, or needing to lease capability systems from other countries
in order to fill temporary capability gaps. Furthermore, additional costs
associated with prolongation of DMO workforce are funded through DMO’s direct
The steady increase in schedule slippage over the life of the MPRs is of
major concern to the Committee, both in terms of timely delivery of capability
to the ADF and in budgetary terms.
The Committee finds the narrow focus on claiming that project budgets
are not exceeded despite significant slippage unhelpful. The Committee
acknowledges that there are several factors that minimise the risk of cost
blowouts to government above a project’s initial budget approval, but it is
clear that there are additional cost impacts which are possibly significant.
It is the Committee’s understanding that indexation is only factored in
to a project’s budget for projects commencing after 2010 and that indexation is
a separate line item for projects commencing before this date. Therefore, poorly
estimated or unmanaged indexation risks for pre-2010 projects have a real
effect on Government expenditure, which is not acknowledged in DMO’s
Furthermore, the broader impacts of sustaining legacy platforms,
possibility leasing capability, and ongoing administration costs are all ‘off
project’ increases of the total cost to Government. Given the duration of
slippage these costs may be significant.
The reality is that projects which take longer to complete cost the
Australian taxpayer more, even if the project is technically within budget.
Although DMO now have some mechanisms in place to improve the initial
classification of projects and to reduce slippage, the Committee emphasises the
importance of focused action in this area.
The Committee believes that the transparency of initial classification
decisions could still be improved. Specifically, the Committee wants to see
that MOTS and COTS options have been explicitly considered and eliminated for
particular reasons before final procurement decisions have been made. The
Committee wishes to see this information included in the MPR for all new
The Committee notes the planned 2012 introduction of the Implementation
Risk Category process and hopes this supports teams during the initial project
planning phases. To complement this and other DMO initiatives the Committee suggests
that the DMO consider additional staff training regarding the classification of
The Committee acknowledges that the evidence suggests the majority of
the schedule slippage is made up of legacy projects and indicates that
initiatives to improve processes are having an effect on minimising slippage.
However, the Committee recommends that a section be included in future MPRs
that specifically provides explicit information on the activities being
undertaken to minimise schedule slippage and the tangible results of these
initiatives – so that these can be explicitly monitored and scrutinised over
||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.
In its report on the 2009-10 MPR the Committee recommended that the exit
criteria be the point at which both Final Materiel Release (FMR) and Final
Operational Capability (FOC) is achieved. Additionally the
Committee asked the DMO to provide a report to the JCPAA on an assessment of
the difference in scale, size and incidence of requirements to be completed
between FMR and FOC in order that the appropriateness of these exit criteria be
In its initial response to the Committee, the DMO indicated that it
considered that FMR was the ‘logical end point to trigger the removal of a
project from the MPR’ as it is the ‘point in time at which the DMO has
satisfied its responsibility for acquisition of the materiel element of
The DMO explained that FMR relates to the materiel element of
capability, which is only one of the eight Fundamental Inputs to Capability
(FIC). As a project must attain
all eight elements of FIC to reach FOC and these elements are managed by
various Defence agencies, the DMO argues that FMR is the reasonable point at
which to remove a project from the MPR.
In an additional response to the Committee the DMO proposed the
n DMO reports progress
to FMR through full disclosure in the PDSSs. The PDSS is then assured by the
Þ the DMO’s
delivery to FMR is the materiel element of the mature capability, which
accounts for approximately 95% (range of 85% - 100%) of the Government approved
funding and normally the majority of project schedule.
n Defence (through the
relevant Capability Manager) reports progress to FOC ‘post-FMR’. This report
would not be subject to ANAO assurance. The Defence reports would be an
addendum in the MPR, and separate to the PDSS.
The Committee asked the DMO for an assurance that the proposed reporting
format would be simple and explicit and allow stakeholders to compare and
contrast information. The DMO assured the Committee that the process would
conform to the current format and be transparent:
The detailed PDSSs will be up to FMR. Once FMR is declared,
we will then move the projects into an addendum to the report, where we will
report the activities from FMR to FOC that is looking at the fundamental inputs
to capability, additionally to the materiel components.
The Committee asked the Auditor-General if he would be able to supply an
assurance audit on the proposed new reporting format, particularly for the FOC
‘post-FMR’ reporting. The Auditor-General explained that as a range of parties
would be involved in ‘providing support to the provision of the final
capability’, he would only be able to provide limited assurance:
We can modify our report to make it clear what we are giving
assurance around, but I would foreshadow that some of these other functions
that have to be provided would be problematic for us to give assurance around.
The Committee asked the DMO to provide further clarification of the
proposed changes to the exit criteria for projects from the MPR in questions on
notice, including what consultation had been undertaken with Defence and the
ANAO on the proposal.
DMO’s Question on Notice responses clarify that the Defence Capability
Managers have been consulted in the development of the proposal and have raised
no objections. However, no information
was provided on consultation with the ANAO.
As part of their Question on Notice response the DMO also provided a
worked example of the format for the proposed post-FMR report and clarified
that in their opinion the achievement of FMR is a single point in time that is
The Committee has reservations about the proposed changes to exit
criteria for projects from the MPR. The Committee wishes to see more detail of
any proposed new reporting format; to be assured that the ANAO has been
consulted on and is supportive of the proposal; and believes that the
practicalities of the proposed change warrant further consideration before
making a decision to move away from the current exit criteria arrangements.
The Committee notes that the DMO estimates that delivery to FMR accounts
for approximately 95% of the Government approved funding for a project and that
a project ‘post-FMR’ largely becomes the responsibility of the relevant
Capability Manger. However, the Committee also notes that evidence from MPRs to
date suggests that some projects experience considerable difficulties ‘post-FMR’,
and that the DMO continues to share responsibility for these projects. This
indicates to the Committee that schedule slippage and budget could both be
affected to some degree, in the ‘post-FMR’ period. Therefore, although there
may be a technically clear distinction between DMO’s achievement FMR and
subsequent FOC initiatives, in reality the process is more complex and
The Committee is aware that changes to the exit criteria for projects
from the MPR have substantial implications for the purpose and aim of the MPR,
and hence should be approached with caution.
Therefore, the Committee believes that the type and amount of
information provided in any ‘post-FMR’ reporting format will have to be more carefully
considered to maintain visibility of cost and scheduling as well as capability.
The Committee also believes that any future ‘post-FMR’ reporting format should
also be included in the MPR Guidelines endorsed by the Committee, even if
separate to the PDSSs, in order to maintain an appropriate level of
transparency and accountability.
Therefore the Committee retains its previous opinion and believes that
reporting on both FMR and FOC should be included in the MPR and in the PDSSs
for the time being.
Historically, the Guidelines for the PDSSs have been developed by the
DMO in consultation with the ANAO. The Guidelines are then endorsed by the
JCPAA and form a base for the ANAO review of the major projects report.
The Committee considers that the Guidelines are now a stable document,
reflecting the requirements of the MPR. The Committee believes that the
Guidelines should continue to be developed jointly by the DMO and ANAO.
However, as the Guidelines provide the basis for the ANAO audit, the Committee recommends
that, in the interests of administrative efficiency, the ANAO should take
administrative responsibility for updating the Guidelines and their submission
to the JCPAA for endorsement.
||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.
The JCPAA was instrumental in instigating the development of the MPR to
provide both the Parliament and the wider Australian community with accessible,
transparent and accurate information about the status of Defence’s major
acquisition projects. The original aim was to encourage transparency and
accountability by providing a basis for longitudinal analysis of project
The Committee was interested to know if the MPR was useful to the DMO in
terms of an overarching project management resource. The DMO notes in the
2010-11 MPR that the Report provides a valuable ‘organisational perspective’ on
major project work and performance for the DMO, as well as enhancing the
quality of trend analysis.
In his opening statement to the public hearing, the CEO of the DMO
confirmed the benefit of the MPR to the DMO:
... I hold a firm belief that the major projects report
provides my organisation with an ideal opportunity to demonstrate a high level
of accountability and transparency to government, parliament and the Australian
public on DMO’s performance in managing the acquisition of Defence’s largest and
most technically challenging projects.
In a question on notice the Committee asked the DMO how the MPR is used
by other agencies or groups, and if any evaluation had been done of the use of
the MPR by external stakeholders.
DMO’s response reaffirmed the internal value of the MRP, as well as its
use by Defence, other parliamentary committees, and potentially the United
Kingdom Minister of Defence. DMO noted that to date they have not evaluated the
use of the MPR by other Government agencies, and by default other external
The Committee is pleased to hear that the MPR is providing a useful
organisational resource for the DMO and within Defence.
The Committee is satisfied that the current format of the MPR is largely
achieving the original goal for the Report, of increasing the transparency and
accountability of major defence procurements. Therefore, it is now timely to
consider the future direction of parliamentary scrutiny of the MPR.
As part of this consideration, the Committee intends to consult broadly
with other relevant parliamentary committees, and potentially other users of
the report, regarding their use of the MPR. This consultation will focus on how
the various parliamentary committees can work more effectively together to
sustain, and indeed improve, the scrutiny of the MPR and related defence
capability development projects.
Despite the Committee considering the future parliamentary scrutiny of
the MPR, the Committee stresses that the MPR is and will continue to be a
critical resource into the future. There are further improvements still to be
made to the report itself, as well as improvements on the issues the report exposes.
To assist it in its deliberations the Committee is interested in gauging
how extensively the MPR is utilised by external stakeholders. Therefore, the
Committee recommends that the DMO include a discussion on the use by, and value
of, the MPR by external stakeholders, such as private companies or industry
associations, in the 2011-12 MPR.
||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.
Timeliness and quality of responses
In order to streamline the MPR process, the Committee recommended that
the DMO provide the proposed MPR Work Plan, including the MPR Guidelines, to
the Committee by 31 August each year for its endorsement.
The Committee also requested the response to recommendation 7 for Report
422: Review of the 2009-10 Defence Materiel Organisation Major Projects Report
by 31 August 2012.
The DMO was unable to meet these deadlines.
Additionally, the 2010-11 MPR which was expected to be tabled in
November 2011, was not tabled in the Parliament until December 2011, after the
Parliamentary sitting period had finished.
As well as issues with the timeliness of providing responses and
information to the Committee, there has been some difficulty with the clarity and
quality of information.
The initial Government response to the Committee’s recommendations for Report
422: Review of the 2009-10 Defence Materiel Organisation Major Projects Report
included a number of anomalies, compelling the Committee to seek clarification
on several ambiguous and incomplete answers.
Furthermore, the responses to the Committee’s Questions on Notice were
delivered several weeks late, hindering the Committee’s inquiry.
The Committee is disappointed at the repeated failure by the DMO and the
Government to provide timely and complete responses to its reports and
requests. These delays and incomplete responses have hindered the inquiry and
ultimately also hinder improvements to the quality of the MPR.
The Committee set the proposed deadlines for the receipt of information
from the DMO in an attempt to ensure that the MPR process would proceed in a
timely manner. The suggested deadlines would have afforded the Committee more time
to scrutinise the information and provide a more considered response, or
allowed additional discussion of the issues as needed.
In the case of the questions on notice following the public hearing, the
Committee understands that it set a tight timeframe for the responses. However,
this was unavoidable given the previous delays by the DMO which resulted in issues
remaining unresolved during the year.
Regarding the quality of responses, the Committee believes that the
initial Government response could have been clearer, more precise and more
complete. In future, the Committee expects the DMO and the Government to
provide considered, relevant, and appropriately detailed responses to Committee
recommendations and requests, in order to minimise the need for subsequent
Finally, if there is continued evidence that DMO may not be respecting
the Parliament and its committees the JCPAA will look on this extremely
MPR identified as a priority audit
Under the recent amendments to the Auditor-General’s Act 1997, the
Committee may identify an assurance audit as a priority for the
Auditor-General. The provision allows the Auditor-General to use the
information gathering process under the Act rather than relying on the
agreement of the entity being audited. In effect, this circumvents delays and
provides for a quicker auditing process.
Considering the importance of the MPR and the tight timeframe that it
operates in, the Committee has identified future MPRs as priority assurance
reviews to the Auditor-General.