The Auditor-General has been unable to provide an unqualified Independent Assurance Report for 2016–17 as a number of matters were identified, in the course of the ANAO’s review, that resulted in the qualification of progress and performance as reported in one Project Data Summary Sheet (PDSS).
The review Guidelines define a project as the acquisition or upgrade of Specialist Military Equipment. The Guidelines provide that the scope of Defence reporting includes the performance of selected major equipment acquisitions and associated sustainment activities, where applicable.
The ARH Tiger Helicopters PDSS has been prepared on the basis of the Defence acquisition project, which is narrower than the scope established in the Guidelines.
The project maturity score in Section 6.1 of the ARH Tiger Helicopters PDSS reports a total of 69 out of a maximum of 70 (98.6 per cent) at the time of transition from acquisition to sustainment in April 2017. Noting the caveats, capability deficiencies and obsolescence issues at the declaration of FOC in April 2016, and considering that only two of the nine caveats applying at FOC have been lifted by the Capability Manager (in July 2017), this score does not accurately or completely represent the project’s maturity as at 30 June 2017. The Auditor-General’s conclusion has had regard to the July 2017 events.
In addition, a material inconsistency has been identified in the forecast information. Section 4.1 in the ARH Tiger Helicopters PDSS reports that materiel capability delivery performance is at 100 per cent, indicating that materiel capability delivery performance has been met. Rate of effort continues to be lower than planned, and expert analysis commissioned by Defence in April 2016 indicates that the program will remain incapable of fully meeting expectations relating to reliability, availability, maintainability and rate of effort.
The Auditor-General also drew attention to these matters in the Independent Assurance Report for 2015–16.
With the exception of the matters above, the Auditor-General has concluded in the Independent Assurance Report for 2016–17 that ‘…nothing has come to my attention that causes me to believe that the information in the 27 Project Data Summary Sheets in Part 3 (PDSSs) and the Statement by the Secretary of Defence, excluding the forecast information, has not been prepared in all material respects in accordance with the 2016–17 Major Projects Report Guidelines (the Guidelines), as endorsed by the Joint Committee of Public Accounts and Audit.’
Additionally, in 2016–17, a number of administrative issues were observed in the course of the ANAO’s review, as summarised below:
non-compliance with corporate guidance resulting in inconsistent approaches taken to contingency allocation (Section 1 of the PDSS). See further explanation in paragraphs 1.36 to 1.40;
a change to the basis of financial reporting and the application of incorrect exchange rates when managing contracts (Section 2 of the PDSS). See further explanation in paragraphs 1.41 to 1.43 and paragraph 2.25;
a lack of oversight, non-compliance with corporate guidance and the use of spreadsheets in the management of risks and issues (Section 5 of the PDSS). See further explanation in paragraphs 1.44 to 1.50;
outdated policy guidance for the project maturity framework 21 (Section 6 of the PDSS). See further explanation in paragraphs 1.51 to 1.57; and
an increase in the number of MPR projects which have achieved significant milestones with caveats. See further explanation in paragraphs 1.58 to 1.60.