Chapter 3 Proposed Defence Logistics Transformation Program
The Department of Defence (Defence) proposes to consolidate Joint
Logistics Command staff and storage facilities across Australia to provide more
efficient logistic support to Australian Defence Force personnel.
The purpose of the Defence Logistics Transformation Program (DLTP) is to
deliver new or refurbished purpose-built infrastructure that enables the seven
Joint Logistics Command units to provide enhanced support to Australian Defence
Force elements and operations. This will provide consistency across all sites,
with safe modern and sustainable work environments that meet current and
anticipated future requirements.
The DLTP will modernise and enhance the wholesale logistics functions to
provide optimum support to Defence operations through efficient, effective and
safe work practices.
The cost of the project is $752.7 million, excluding GST.
The project was referred to the Committee on 20 June 2012.
Conduct of the inquiry
Following referral to the Committee, the inquiry was advertised in The
Australian on 27 June 2012.
The Committee received one submission and five supplementary submissions
from Defence. The list of submissions can be found at Appendix A.
The Committee received private briefings in Brisbane and Ipswich on
26 September 2012, Darwin on 27 September 2012, and Sydney on
4 October 2012.
The Committee conducted public hearings in Ipswich on
26 September 2012, Darwin on 28 September 2012, and Sydney
on 4 October 2012.
The Committee conducted an in-camera hearing on the project costs in
Sydney on 4 October 2012.
A transcript of the public hearing and the submissions to the inquiry
are available on the Committee’s website.
Need for the works
The current Defence wholesale storage network operates from outdated
infrastructure spread across 201 warehouses in 24 locations. The DLTP will
consolidate the wholesale logistics network to seven primary sites, supported
by nine specialty/retail sites.
The current wholesale storage network is not enabled by industry
standard technology and automation, has relatively high operating and maintenance
costs and does not deliver efficient or effective outcomes when benchmarked
with comparable commercial practices.
The current maintenance system also operates from outdated
infrastructure and facilities that fall short of comparable industry standards.
In many cases the workshop facilities across the network are converted World
War II warehouses. These outdated facilities contribute to increased cost of
service and sub-optimal maintenance outcomes as the facilities are not purpose
built for the function they currently serve.
As a whole, the existing network drives a relatively high operating cost
and does not deliver efficient or effective outcomes when benchmarked against comparable
Approximately 23 per cent of the available network warehousing space is
underutilised when compared with comparable industry benchmarks.
The Committee is satisfied that there is a need for the works.
Scope of the works
The project will deliver infrastructure in eight locations:
- Moorebank, NSW
- RAAF Base Amberley,
- Lavarack Barracks,
- Robertson Barracks,
- HMAS Stirling,
- Palmer Barracks,
- RAAF Base Edinburgh,
- Wadsworth Barracks,
East Bandiana, Vic.
The scope of works includes several common elements:
- general storage
- loan and repair
- dangerous goods
- land materiel
Details of the works at each site can be found in Submission 1.
Subject to Parliamentary approval, construction is planned to commence
in late 2012 at Moorebank, Wadsworth Barracks and Lavarack Barracks, with other
sites commencing progressively through early to mid-2013. All construction is
expected to be completed by mid-2015.
The Committee finds that the proposed scope of works is suitable to meet
Cost of the works
The overall project cost is $752.7 million, excluding GST. The Committee
received confidential supplementary submissions detailing the project costs and
held an in-camera hearing with Defence on these costs.
Defence elected not to deliver the project through a public-private
partnership as it would not deliver the required results or savings.
The Committee is satisfied that the costings for the project provided to
it have been adequately assessed by the proponent agency.
Consolidation of facilities
The DLTP will significantly consolidate warehousing facilities across
Australia. It will support Defence capability until at least 2030.
It will also provide major savings for Defence.
In part, this will be due to the disposal of rented land and facilities, with
the works to be undertaken on Commonwealth land.
Consolidating current facilities into newer, modernised warehouses and
storage areas will bring efficiencies to the network. Defence outlined the
deficiencies in the current warehousing network:
Basically at the moment on the warehousing side we have
around 201 warehouses across the nation that vary in age from the 1920s all the
way up to about the 1990s. Most of those particular types of warehouses that we
have are what we call low-rise warehouses, along with warehouses that have
large numbers of internal forests growing in them to stop the efficient
movement of MHE [material handling equipment] as well as the ability to rack
and stack. Modern warehouses traditionally have a high-rise warehousing
capacity that takes modern shelving and modern warehousing up to around six
pallets high. What that essentially means is that you have a reduced footprint
the size of your warehouse, but you maximise the amount of space that is in
your warehouse. In our current low-rise warehouses we lose, in many instances,
anything up to 60 per cent of the available warehouse space, simply because of
the beams. The lowness of those means you cannot stack all the way up to the
roof. You cannot therefore access those particular items. So, underutilised
space in our existing warehouse is based purely on the way the warehouses are
constructed. Removing those from our network means that we can consolidate our
footprint, making it much smaller in scope, but, more importantly, give greater
efficiency for moving the stock to the individual, as opposed to the individual
to the stock.
However, consolidation does provide a major challenge:
… we have to make sure that our distribution pipelines are
now much more effective, so our ability to move around the network has to be
much more critically aligned with various capacities and capabilities that the Australian
Defence Force has around Australia with regard to its raise, train and sustain
activities. So we are likely to hold less stock in certain locations than we
would have held there traditionally. To make sure that we can still provide
support to the Australian Defence Force, we need to have a greater
understanding of our distribution nodes and our distribution requirements, but
modern technology allows us to do that. Such things as RFID readers so that we
can track stock as it moves around the country will certainly reduce that risk,
and it saves Defence buying and holding stock for that just-in-case policy. We
will be able to actually manage that much more closely.
The Committee viewed various warehouses that were not built for the
purpose they presently serve. Most facilities were built during World War II
and many have hardwood support poles every five metres. The Committee observed
that this impinges on Defence’s ability to efficiently store and maintain
The Committee noted that the warehouses and other facilities it
inspected were difficult to heat, cool and ventilate effectively (particularly
in areas with significant weather variation such as Darwin) and required
‘workarounds’ to meet workplace health and safety requirements. These factors
reduce productivity and limit Defence capability.
The Committee is satisfied that consolidating facilities will prove
beneficial to the provision of logistic support.
This project aims to improve the efficiency of logistic support. This
requires improved infrastructure and technology, such as carousels. Such
improvements can increase the stock pick rate.
A pick rate is a productivity measure and represents the number of items
picked per person, per day.
Defence’s stock pick rates vary, due to Defence’s varied stock, from
small items such as bullets to large items such as bridges. The average is 13
However, infrastructure and technology could improve this pick rate to
26 or higher, which would allow
Defence to almost halve the contracted workforce:
So if we have a pick rate of 13 picks per day per person,
that equates to the workforce [at Moorebank] of around 126 personnel to meet
that requirement. If we can increase that pick rate to, say, 26, which is
coming towards the average within the industry we could reduce the number of
contracted workforce that we would have to do that pick rate, from around 126
to around 63. That is almost half of the total workforce required to do the same
amount of work. The intent behind increasing the pick rate, by improving the
facilities, is to actually bring us to an industry standard. The philosophy is
very simple: we want to take the best practices that are available commercially
and to actually bring those into the defence arena.
One way to increase stock pick rates for small items is the use of
carousels. These are rotating vertical storage spaces which eliminate the need
to store small items in warehouses. The Committee viewed a carousel in Darwin,
which would hold the same volume of small items as the 100-metre-long warehouse
that the Committee viewed in Sydney.
Carousels bring the stock to the individual, enabling employees to
locate items quickly and easily, without having to walk through a warehouse. This
provides health and safety benefits while also reducing the time required to
The Committee is satisfied that Defence is combining appropriate infrastructure
and technology to improve stock pick rates and therefore improve efficiency.
The Committee was impressed with the carousel it viewed in Darwin and
understands the benefits that such technology provides for the organisation and
distribution of small items.
Defence conducted extensive community consultation for the DLTP.
During the consultation process, noise was raised as an issue by residents
close to the Moorebank site. Defence explained that it had already mitigated
the impact of noise on local residents through its design of the proposed
… all of the low-traffic activities, such as dangerous goods,
aerial delivery equipment and all those low-movement activities, are placed
closest to the residential areas, limiting the amount of noise that they would
experience. We will also provide a bit of a buffer through that green buffer
zone, which will also reduce some of the noise impacts to the residential
Traffic was raised as an issue in Darwin. Defence outlined its process
for consultation in Darwin and stated that it was relatively positive:
On 14 June we had a formal consultation with the community,
mainly attended by residents of Knuckey Lagoons. Sixteen people turned up. Most
of them expressed their pleasure with what we had done to address this
solution. Most of them were in agreement that, yes, that would address what we
call the rat-running and the traffic going through the quiet residential area,
which currently happens.
Defence also provided a letter from the Chair of the Knuckey Lagoon
Recreational Reserve Board, confirming that the group was satisfied with the
In regards to the level of public consultation on the DLTP [proposed
works] at Robertson Barracks. I advise that we had media advertising, multiple
letter drops and a very well attended public information session. It is our
hope that this consultation model is used for all future development proposals
for the Barracks.
While in Darwin, the Committee also facilitated broader discussion of
Defence’s relationship with the community.
The Committee is satisfied with Defence’s community consultation in
relation to the DLTP and expects Defence to continue to consult with the
community for all future projects.
The Committee is particularly pleased with Defence’s communication with
the Knuckey Lagoon Recreational Reserve Board.
Road and traffic concerns
Three road and traffic issues were raised, at RAAF Base Amberley,
Robertson Barracks and Moorebank.
Around RAAF Base Amberley, traffic studies were undertaken at all
intersections leading into the base. These studies determined that increases in
traffic to the base during and after the proposed works will not exceed the capacity
of the existing traffic network.
On the day the Committee visited RAAF Base Amberley, the Cunningham
Highway turnoff to the base had been blocked by a traffic crash. Defence stated
that this intersection is poor and will be upgraded by the Queensland
Government to include a bypass. This will provide an exit and overpass, to
remove the need for vehicles to cross the path of oncoming traffic.
Concerns were raised over the proposed new western access road at
Robertson Barracks, NT. Defence outlined the process for determining the
location of the new western access road, including its consultation with the
local council, the landowner, the community and the NT government, as well as
environmental, flooding and traffic implications. The proposal has received the
Defence considered various options for the proposed new western access
road’s intersection with McMillans Road. Defence advised that a roundabout was
not deemed suitable:
The issues around putting a roundabout in that location were
more to do with the flow of traffic on McMillans Road. In putting in a
roundabout we would actually give preferential treatment to Defence traffic
coming onto the new road as opposed to the high volume of traffic on an 80
kilometre an hour road travelling through Darwin. It would mean we would have
to slow traffic down on that road to 60 kilometres an hour for about 200 metres
in either direction and you would get quite a significant traffic build up on McMillans
Road to the detriment of the wider community by doing that.
Defence also provided a letter from the Chair of the Knuckey Lagoon
Recreational Reserve Board, which stated that:
… the vast majority of residents are happy with the proposed
Western Access Road to Robertson Barracks. It goes a long way towards resolving
our long standing issues with Defence use of local roads.
In relation to the proposed works at Moorebank, Defence stated that
access to the site will be off Moorebank Avenue, not Anzac Avenue:
Again that reflects the fact that Moorebank Avenue is the
heavy transport route and will become potentially more so with future use of
that land. So it made sense from a planning perspective and also from New South
Wales’s perspective in our negotiations with them that we make our access off
that side to keep heavy vehicles off Anzac Avenue as best we could.
The Committee accepts that Defence has addressed road and traffic issues
at and around the project sites.
Three key environmental issues are the removal of trees near Robertson
Barracks, the transient population of koalas at RAAF Base Amberley and the
proximity of the Cumberland Plains Woodland to Moorebank.
The proposed works at Robertson Barracks, including the new access road,
will involve tree clearance. Defence stated that the Armstrong’s cycads (Cycas
armstrongii), declared vulnerable under NT legislation, would be relocated:
… we are planning to relocate the 450 cycads. As part of that
internal process for Defence, I will issue a directive in terms of an
environmental assessment report directing the project director to liaise
directly with the Northern Territory Department of Natural Resources,
Environment, the Arts and Sport to ensure that they are translocated in a
Defence confirmed that all required approvals had been sought and
granted for the project.
Koalas are known to be present at RAAF Base Amberley. Defence advised
that it had followed the required Department of Sustainability, Environment,
Water, Population and Communities protocols for vulnerable species and surveyed
the area surrounding the proposed works. As a result of these assessments, a
koala-friendly fence will be installed so that koalas can access vegetation.
The proposed works at Moorebank are in close proximity to a Cumberland
Plain Woodlands area. Defence stated that it has ensured a buffer zone between
the works and the woodlands:
We were certainly very conscious of the need to not impact on
the Cumberland Plain Woodlands area. As you are aware, that is a critically
endangered ecological community so there are certain obligations on us under
the various governing legislation. We endeavour to keep to the north of that
growth area and we have been able to do that. … We have designed a buffer … to
ensure that we do stay well clear of the Cumberland Plain Woodlands
The Committee is satisfied with Defence’s approach to environmental
Final Committee comment
The Committee’s site inspections included an armoury, a kitting store
and a parachute maintenance facility that were operating in buildings that were
not adequate for Defence’s needs. At these locations, the Committee also viewed
aged, inefficient and inadequate warehousing facilities that were not built for
purpose and were insufficient to support Defence capabilities. The Committee
noted that these operations require better configured facilities, with unobstructed
ceiling and floor space.
The Committee met various Defence personnel during this inquiry and
thanks them for their contributions to the extensive briefings and inspections.
The Committee was satisfied with the evidence provided by Defence
regarding the proposed Defence Logistics Transformation Program.
The Committee is satisfied that the project has merit in terms of need,
scope and cost.
Having regard to its role and responsibilities contained in the Public
Works Committee Act 1969, the Committee is of the view that this project
signifies value for money for the Commonwealth and constitutes a project which
is fit for purpose, having regard to the established need.
The Committee recommends that the House of Representatives
resolve, pursuant to Section 18(7) of the Public Works Committee Act 1969,
that it is expedient to carry out the following proposed work: Defence
Logistics Transformation Program.