Accountability, responsibility and collaboration
When it comes to key decision-making, it is especially
important that the right people are in the appropriate positions to make key
decisions and have the responsibility, seniority and authority to do so
effectively. They should also be known to have this responsibility and to be
accountable for decisions and performance that come under their delegation. Because
of the hierarchy and layers of groups that make decisions or provide advice
leading to major commitments to a specific capability development, there should
be a clear understanding of responsibility throughout the acquisition process.
In Part III of the report, the committee considers the
delegation of responsibility and accountability for major defence procurement
projects, the exchange of information and the transition of responsibility from
one group involved in an acquisition program to another.
Responsibility and accountability
Standards Australia noted that there should be designated individuals
who fully accept accountability, are appropriately skilled and have adequate
resources to check controls, monitor risks, improve controls and communicate
effectively about risks and their management to external and internal
In support of this advice, the Rizzo Report stated that 'strong accountability
is an important component of any high performing organisation, as it denotes
ownership of a result or action'.
In this chapter, the committee looks at responsibility and accountability—who
owns decisions and takes responsibility for performance in respect of major defence
Background to accountability—committees
In 2003, Kinnaird noted that accountability for managing the process of
defining and assessing capability and achieving robust outcomes was 'diffused
and overlaid by a complex system of committees'.
In his view, there was scope to streamline the multiple layers of committees. He
recommended a review of the committee system to ensure that committees 'fully
complement and support the capability definition and assessment function'.
Furthermore, he stressed that 'management and reporting structures need to be
clear, well understood, and, to the greatest extent possible, ensure that they
align authority, responsibility and accountability'.
Despite measures to reform the committee system, eight years later Dr
Rufus Black reached a similar conclusion about the existence of too many
committees. In December 2009, he was commissioned to conduct a review into
accountability and governance in the Defence Department. Dr Black presented his
final report to the Secretary and CDF in early 2011 (Black Review).
He found that Defence had a complex accountability system that had evolved over
many years but had reached a point where there was 'a strong case to redesign' it.
He was of the view that current arrangements were under stress, resulting in poor
performance such as delivery failures for capability projects, poor or
inappropriate procurement decision-making, and a lack of cost consciousness in
the management of day-to-day activity. According to Dr Black, the existing
accountability arrangements also 'constrain leadership capability and
management capacity by reducing the ability of decision-makers to exercise
strategic control over the construction and implementation of decisions'.
Dr Black also found that the committees 'create diffused and confused
accountability and their operation is often characterised by poor procedures'. He
Decision-making and accountability systems need to ensure
that Defence functions as a single, integrated enterprise, and that
accountability systems function as a force for organisational cohesion. Defence
decision-making lacks the framework of clear priorities and direction which
would flow from an enterprise level corporate plan.
In his assessment, an accountability system must among other things 'create
internal and external clarity and transparency about who is responsible for
making decisions'. The system must 'reach down into the organisation right to
front line staff who are ultimately responsible for actual delivery'.
He noted that Defence could achieve stronger decision-making and strategic direction
by redefining committee structures and processes.
It should be noted that soon after the release of Dr Black's review, the
minister noted the difficulty he had in gaining information on the people
responsible when 'things have gone wrong'. The minister wanted to know who had
senior oversight: who had responsibility. He explained:
It's been very difficult to provide answers to those
questions, largely because very many of the decisions have been made at
committee level where the responsibilities to date have been diffuse and hard
A witness familiar with major defence acquisition projects was also highly
critical of the trend toward excessive bureaucracy and a committee organisation
where 'accountability is too diffuse to be useful and there is too much
This view aligns with the committee's description of Defence's risk management
practices and the many groups that contribute to identifying, assessing and
mitigating risk, including those who oversee risk management activities. With
so many groups involved in this so-called process of continuous refinement, the
committee had difficulty isolating and identifying any single group responsible
and accountable for mistakes or shortcomings in procurement projects. It would
seem that everybody yet nobody is responsible. The committee accepts that the
committee system as presently operating in the defence procurement domain blurs
accountability. Moreover, it would seem that the number of committees has grown
in response to identified problems on the assumption that another oversight or
advisory body will fix the deficiency, when in fact it has only added another
After the release of the Black Review, the minister announced that the
number of committees would be reduced: that committees would be advisory and
there would be individual decision-makers.
In August 2011, Air Marshal Harvey told the committee that Defence was working through
the implications of the Black Review and would be reviewing the committee
Ms Fran Holbert, ANAO, also informed the committee that Defence was aware of
the need for increased clarity about who makes decisions; and of the need to
'rein in the committee system'. In her view, it would be a matter of how that awareness
translates into action.
Even though Defence is considering, and acting on, Dr Black's findings,
the committee decided that it would go ahead and look closely at accountability
in defence procurement. The committee's attention, however, is not directed at the
numerous committees that feed into the process that produces a submission to
government on capability development. Its focus is directly on the key agencies
involved in the acquisition of major defence capital equipment.
Who is responsible?
During its site visit to South Australia and Western Australia, one
official from industry told the committee that his company struggles to understand
who is accountable in Defence. Although the Defence Capability Development
Handbook acknowledges that responsibilities for managing phases of the
capability development life cycle are shared across Defence, it does specify the
group responsible for particular aspects of capability development including:
- Strategic Policy Division—responsible and accountable for
the overarching strategic guidance, including the Defence Planning Guidance
- Force Structure Development Directorate—responsible for
the implementation of the government directed five-yearly capability planning
- Capability Development Group (CDG)—responsible and
accountable for the development of the DCP, drawing on the approved annual DPG,
supporting concepts, experimentation and futures work: it prioritises all of
Defence's major procurements in line with strategic guidance and recommends the
appropriate capability to meet the government's priorities;
- Capability Systems Division, within CDG—manages DCP
projects and leads the development of the capability proposals and supporting
documents that form the basis of the ministerial or cabinet submission
- Integrated Project Team—headed by a desk officer from the
Capability Systems Division—is responsible for the success of a particular project.
- Capability Investment and Resources Division—responsible
for ensuring that the DCP is appropriately programmed and for independently
reviewing capital and operating costs for all projects going to the Defence
committees. According to Defence's supplementary submission, the Division is
responsible for drafting initial, first and second pass cabinet submissions. It
has two branches:
- Investment Analysis Branch—responsible for providing
advice, independent of Capability Systems Division, on capability proposals;
- Cost Analysis Branch—provides cost analysis, again
independent of Capability Systems Division, on capability proposals to support
the development of ministerial or cabinet submissions.
- Capability and Plans Branch—responsible for ensuring that
the outputs of strategy formulation and capability planning are used
consistently across CDG and for providing Group level support to Chief of CDG
(CCDG) and other areas of CDG.
- Capability Managers—responsible for delivering the agreed
capability to government, through the coordination of the Fundamental Inputs to
Capability (FICs)—ultimately, the capability manager is responsible for
ensuring an integrated view of the delivery of capability across the Defence
and the DMO.
- DMO—responsible for the acquisition of the majority of
capital equipment assets and the sustainment of these assets throughout
their in-service life.
- Acquisition team responsible for managing an acquisition.
- DSTO—principal source of science and technology advice to
inform government on capability development decisions.
There are numerous other bodies, such as the Defence Support Group and
the Chief Information Officer Group that are responsible for providing support
to a project. The committee's main concern, however, is with the principal
groups—CDG, capability managers and DMO. As one witness explained:
CDG shapes the capability, DMO buys the capability and the
Navy, in this case [the capability manager], uses the capability.
The committee also considers the role and responsibilities of the DSTO.
Capability Development Group
The CDG has a range of responsibilities but overall its job is to
provide 'decision-quality advice' to government in delivering capability
described in the DCP'. Although the CDG develops the options to be presented to
government for consideration, it does not come up with ideas for new
capability, rather it converts 'high-level strategic needs identified into
capabilities that can be delivered by industry'.
It is responsible for ensuring that project proposals put to government have
reliable capability, cost, risk and schedule estimates.
At second pass, CDG is responsible for getting the project approved. It holds
the money in the unapproved project and transfers the money across to DMO at
It is important to note that while CDG has overall responsibility for
the capability proposal, the relevant capability manager and enabling groups
develop some documents.
As the ultimate customer for the capability, capability managers have a
strong vested interest in the early stages of a procurement process for major
capital equipment through to taking delivery of the product and its in-service
operation. Often they are the ones who advocate and put forward an initial
Since the Kinnaird Review, Defence has given much attention to ensuring
that capability managers take a more active and engaged role throughout the
acquisition process. In 2003, Kinnaird argued that:
Capability managers, the most prominent being the Service Chiefs,
should be made responsible and accountable for monitoring and reporting to
government on all aspects of approved defence capabilities.
This responsibility would be for 'the whole of capability from the point
where government approves a particular capability option, that is at second
pass approval, through to the time that the capability is retired from service'.
Capability managers should also be responsible for ensuring that the capability
development process and options for government approval are in line with
In addition, capability managers should be held accountable during the
acquisition phase for the development of all Service-related inputs required
for the introduction of the equipment into service. Kinnaird stated further:
It is the responsibility of capability managers to ensure
government is alerted to any significant prospective change in the cost,
timeliness or scope of the capability it expects. In particular, they should
ensure that government is fully aware of the implications of the changes.
The Kinnaird Review stated clearly that capability managers 'would not
assume management responsibility in other functional areas in Defence or exercise
control over budgets or funding in these areas'.
The Mortimer Review also considered the responsibilities of the capability manager.
It recommended that they should be required to sign the capability submission
acknowledging their understanding of the capability being requested and the
proposed acquisition strategy.
In response to Mortimer's findings, Defence recognised that the purpose for requiring
the capability manager to sign the capability submission was 'to put more
discipline, rigour and an accountability framework around Defence’s internal
consideration of capability proposals and the entry of the project to the DCP'.
Defence explained that to enhance opportunities for the capability managers and
other stakeholders to be involved early in the process and to keep government
better informed about key stages in capability development:
CCDG, in conjunction with CEO DMO, has developed a statement
of the capability development process designed to clarify key roles.
To make clear respective responsibilities and provide a firm baseline
for the delivery of equipment, Mortimer recommended that capability managers
should sign the Materiel Acquisition Agreements.
Defence concurred with the view, stating that this requirement would 'help to
confirm the agreed baseline levels of capability against which the delivery of
equipment would be measured'. It indicated that CCDG would coordinate this
Mortimer also noted that as a fundamental principle, the relevant capability
manager should exercise oversight and coordination of all elements necessary
for the introduction of a capability.
In this regard, Defence agreed that capability managers should act in a
stronger assurance role to ensure the appropriate oversight and coordination of
all the relevant elements.
Three years on in 2011, the Rizzo Report further underlined the need for
the Chief of Navy as capability manager to exercise his authority to accept or
reject new naval capability against the government approved scope through an
independent, rigorous and transparent evaluation process.
Several witnesses to the inquiry similarly acknowledged that capability managers
had been left on the sidelines and called on them to have greater responsibility
and be accountable for relevant key aspects of procurement. They wanted to see capability
managers assume a more active and stronger role throughout the acquisition
process, and to be held accountable for their performance.
Dr Thomson argued that returning control to the Services in some areas 'would
lead to better outcomes because it would clarify accountability and remove what
is, at the end of the day, moral hazard'. He explained:
Moral hazards occur when somebody is doing something for
someone else and they have different priorities and they do not bear the
consequences. All of these interfaces in Defence, between the support groups
and the services, introduce moral hazards where people can shrug their
Defence responded to concerns about capability managers not being
sufficiently engaged in the acquisition process by highlighting that they are
now involved 'right up front'.
While such assurances are encouraging, the committee notes that capability
managers have much ground to recover. They must regain authority over key areas
of capability development, particularly the responsibility for determining the
technical specifications they require for acceptance into service. Capability managers
must also have adequate and appropriate resources, including a core of trained
professional engineers, in order to carry out their responsibilities. If
capability managers are to be empowered; if they are to exert greater control over
the acquisition of a capability they will use, then DMO's role must change as
Defence Materiel Organisation
The Defence Capability Development Handbook recognises DMO as a
stakeholder in the capability development cycle.
Although responsible for the acquisition of the majority of capital equipment
assets and the sustainment of those assets throughout their in-service life,
DMO is also involved in the capability development process from an early stage.
For example, it is represented on the Project Initiation Board; it works as
part of the Integrated Project Team to develop the required project
documentation; and prepares an acquisition strategy pre-first and again
Following second pass approval, the equipment requirement, together with
the concept of operation, is passed to DMO to manage the acquisition (and
subsequently in-service support and disposal phases). The head of DMO is then
the single point of accountability for all aspects of the acquisition up to and
including contractual acceptance, and is responsible for delivering equipment
to the agreed functional specification and within the agreed budget and
Distinct and complementary
Kinnaird and Mortimer recognised that capability managers and DMO have
quite separate responsibilities. For example, Kinnaird suggested that:
During the acquisition phase, the capability manager monitors
the development of all capability elements, including equipment delivery by the
DMO. This responsibility does not imply any authority to directly instruct the
DMO on any aspect of its function as the manager of equipment acquisition.
Kinnaird noted that the DMO would provide advice on acquisition, and
Thus, the head of DMO 'would report to government on detailed issues including
tendering and contractual matters related to acquiring and supporting equipment'.
On the other hand, capability managers would report as appropriate to the CDF,
Secretary of Defence, or the minister 'any concerns regarding the inability to
deliver capabilities agreed to, and funded by government'.
The Mortimer Review recommended that DMO should be held to
account for delivering equipment and services as set out in the Materiel
Acquisition Agreements (MAAs).
Defence agreed to the recommendation, indicating that this requirement
reflected 'a sound approach to emphasising DMO’s accountability'.
It indicated that the Defence-DMO charter, the MAAs and the redeveloped and
clarified capability development process would 'provide the transparency needed
to ensure reinforced accountability'.
Despite Defence's positive response to Mortimer's recommendations
intended to clarify respective responsibilities and require relevant parties to
sign off on agreements, ANAO, Pappas and Rizzo found a definite need for
clearer more specific arrangements. For example, in its audit report on
acceptance into Service of Navy Capability, the ANAO noted that at key stages
of each project, all parties would benefit from a definite agreed view of the
risks that must be managed in order to achieve a successful outcome.
For Defence's current organisational and management models to
work more effectively to deliver the anticipated efficiencies, there is a need
for clearer, more specific agreements and accountabilities between the various
organisations that assist the Chief of Navy to acquit his overall
responsibility for delivering the Navy capability outcomes agreed to by
According to the ANAO, the current customer-supplier model results in
the Chief of Navy 'having no direct authority over key Defence Groups
(including DMO) that develop capability elements needed to achieve these
outcomes'. It concluded that this situation was 'a significant issue in any
matrix management model such as that employed by defence'.
The ANAO audit was certain that Navy, CDG and DMO needed to place greater
emphasis on 'maintaining a shared understanding of the risks to the delivery of
the Navy capability agreed to by government'.
At the end of the audit, ANAO understood that CDF and the Secretary were
considering proposed changes to Defence’s accountability and authority
The committee's concern is that Defence may look to promote 'shared
responsibility' without considering the individual responsibilities of groups
such as CDG, DMO and capability managers. It is important that their respective
responsibilities align correctly with the ultimate objective of delivering a
product that meets the government's strategic requirements as well as the capability
manager's fit-for-service requirements. Evidence to this committee shows that
the current blurred and ill-defined roles and responsibilities frustrate this
objective and, by focusing on shared responsibility at the expense of
individual accountability, Defence's efforts may prove futile. In the
committee's view, the priority should be on giving the capability manager
appropriate control over the acquisition, ensuring all the while that the
responsibilities of CDG, DMO and the capability managers are complementary.
Based on its audits, ANAO informed the committee that 'the challenges of
managing inherently complex projects are compounded when roles and
responsibilities are not clear at all stages of the capability development
It concluded that 'Ongoing responsibility and accountability for defining and
managing scope and schedule is, without doubt, a very important issue...'
Pappas also advocated making the responsibilities of capability
managers, CDG and DMO more specific and those responsible more accountable
through written agreements. He suggested:
the CDG and capability managers jointly write the capability
- the DSTO writes the section relating to technical risk; and
- the DMO writes the section relating to the acquisition strategy.
The committee agrees with Pappas' view that the responsibilities of the
CDG, DSTO, DMO and capability managers should be clearly defined and they
should be held to account for the way they exercise that responsibility. The committee's
concern is with the actual responsibility that they hold and whether the
current management framework is the appropriate one.
Dr Black argued that the accountability system 'must support the
creation of an organisational culture that systematically and rigorously looks
to understand and address the root causes of underperformance as early as
possible'. He also suggested that the framework needed to provide 'internal and
external clarity about who is responsible for making decisions' (see also
Consistent with this observation, the Rizzo Report recognised that Navy 'experienced
a challenge in accountability similar to that felt more broadly across Defence
and DMO'. Rizzo was of the view that this challenge flowed from 'a lack of
clarity in objectives, overlapping and blurred responsibilities, a lack of
continuity in position and inadequately developed skill sets'. He believed that
his audit supported the broad thrust of Dr Black's findings and recommendations
and that the prompt implementation of them would assist with the resolution of
this cultural issue.
Again the committee agrees with the need to clarify and define responsibilities,
but the first step must surely be to ensure that the responsibilities are the
appropriate ones. The committee believes that the key issue is about the
current structure and Defence's unwillingness to address difficulties in
management discipline or organisational relationships.
Many witnesses also had concerns about accountability in Defence's
Dr Thomson observed that although Defence is full of very hard working people
dedicated to delivering good outcomes to the people in the Services...'they are
hampered by a profoundly dysfunctional system that disaggregates control of
resources from responsibility for delivering things.'
Dr Davies stated that 'what is really required is a reduction in the amount of
diffusion of responsibility and decision making'.
Miller Costello and Co noted that poor accountability was a clear causal issue
in many, if not all, areas of poor performance.
Another witness to the inquiry suggested that Defence should implement
fully the Mortimer Review recommendations about the Service Chiefs acting formally
as capability manager, ensuring adequate resources and authority for the
In his view, over management (as recommended by various reviews) has resulted
in boundary overlap, which has led to civilian staff number increases, exodus
of senior specialists, and growth in committees.
In line with the recommendations of people such as Kinnaird and
Mortimer, a number of witnesses suggested that the way to strengthen
accountability was to have clearly defined boundaries and tasks—precise
(usually written) definitions of boundaries. One witness recommended having 'clearly
defined, almost contractual, mutual accountability businesslike relationships
between the parties that would 'properly define the responsibilities and
accountabilities and expected outputs of each party and ensure projects overall
are delivered properly'.
He suggested that improvement would come through 'process re-engineering': by simplifying
the large process chart and locking-in the Customer-Supplier relationship with
DMO. He was clear:
...on each project CDG must specify and write down exactly what
the ADF wants (MAA) and government agrees. DMO must then supply strictly in
accordance with that specification unless prior written agreement to vary is
According to the witness, testimony to parliamentary committees over the
last five or so years had shown that problems emerge when this Kinnaird Review
recommendation/discipline is not strictly followed.
In his submission, Air Commodore (retired) Bushell argued similarly that the Defence
organisation as a whole 'needs to be reviewed to ensure that roles and
accountabilities are clearly identified and aligned and that the resources
needed to discharge those accountabilities are also properly identified and
The committee notes the above observation that evidence over the years
has shown that 'problems emerge when the Kinnaird Review recommendation/discipline
is not strictly followed'. Thus, despite the reforms implemented since 2003,
problems persist suggesting that the model may well be broken and tinkering
with it is a waste of effort.
Measures to strengthen accountability
In its submission, Defence advised the committee that reforms to improve
project management included:
- Capability Managers are now co-signatories with CDG of DMO's MAAs—reinforces
their acceptance of the equipment being acquired for their use; and
Project Charters are developed for managers of complex and
demanding projects to provide individual accountability for project delivery.
The committee considers these written agreements below but
starts with the project directive.
Joint project directive
A project directive enunciates the government's intention. It is a high-level
statement about who is going to do what to bring a capability to bear—CDG, DMO
and the capability manager. The handbook states that prior to first pass and in
consultation with the capability manager and the acquisition agency, the
Secretary/CDF issue a Joint Project Directive. After first pass approval, the
Secretary and CDF sign the joint directive, which assigns accountability and
responsibility for the project from first to second pass approval to:
- CCDG for progressing the project from first to second pass, in
accordance with what was agreed at first pass;
- the capability manager and acquisition agency for assisting to
develop the capability requirements and for providing agreed resources;
- other key enablers, such as the Chief Information Officer, Deputy
Secretary Defence Support and Chief Defence Scientist, for the provision of
elements of FIC, and Deputy Secretary People Strategies and Policy for the
management of the Department’s workforce allocations via the Workforce Guidance
- CCDG, in consultation with key stakeholders, for developing specific
arrangements for change consideration (including thresholds), which are documented
in the Joint Project Directive.
Following a similar process, after second pass approval the Secretary
and CDF issue a joint project directive. It assigns accountability and
responsibility for the project up to the closure of the acquisition business
- the capability manager for overall responsibility for the
in-service realisation of the capability;
the CEO DMO through the terms and conditions in the (post second
pass) MAA; and
- other key enablers, such as the Chief Information Officer, Deputy
Secretary Defence Support and Chief Defence Scientist, for the provision of
elements of the FICs, and Deputy Secretary People Strategies and Policy for the
management of the Department’s workforce allocations via the Workforce Guidance
Air Marshal Harvey noted that the joint project directive creates
certainty by specifying the role of the capability manager.
Materiel Acquisition Agreements
MAAs form part of a framework of agreements between DMO and Defence
which were introduced following the establishment of DMO as a Prescribed Agency
in 2005. Described by the Secretary as 'robust and disciplined
purchaser-provider arrangements', they are intended to outline the
responsibilities and arrangements between the relevant agencies and provide the
basis on which the DMO receives most of its budget. An MAA is supposed to state
in concise terms what services and product the DMO (as supplier) will deliver
to CDG and when.
A draft first to second pass MAA should be ready for signing immediately
following first pass approval.
For second pass, the draft MAA details 'the scope and cost of the capability to
be acquired', and commits 'the signatory agencies to completing assigned tasks
and providing the necessary resources and assets to ensure effective management
of the Acquisition Phase'. This draft MAA is finalised and approved after
As mentioned previously, the relevant capability manager, CDG and DMO are
co-signatories to an MAA.
Air Marshal Binskin noted that when the capability manager signs off on
an MAA, a clear up front understanding of what the capability manager wants or
has agreed is established. The DMO deliver to that MAA.
With regard to the MAA, Mr King explained further:
It is a capability manager that is signing up to say, in
effect, 'If CDG and DMO deliver me this aircraft, ship or whatever by such and
such a time, with the spares, with the manuals, with whatever, the facilities,
then I will bring this capability to bear and make it available to the nation
by this time.'
This statement seems to suggest that, having signed off on the MAA, the
capability manager then steps to the sidelines to await delivery. The committee
is strongly of the view that at this stage of an acquisition the capability
manager should be front and centre in the process. As noted earlier, Kinnaird
recommended that capability managers 'should be made responsible and
accountable for monitoring and reporting to government on all aspects of
approved defence capabilities'. (See also paragraph 7.16.)
Air Marshal Harvey explained the reason for CDG also signing the MAA. He
noted that CDG was responsible for getting the project approved. It holds the
money in the unapproved project—so at second pass approval the money is
transferred across to DMO. He stated:
We basically hold the contract in terms of what was agreed by
government, what was agreed on cost schedule capability and all the details
that go there. Effectively, while the capability manager is the ultimate
customer, we are the ones developing the contract for DMO to deliver at that
stage. We are the keepers of the requirements agreed by government.
It should be noted, however, that the ANAO has identified in past
performance audits several instances where:
...projects did not have an MAA in place at the time of the
Second pass approval and one instance where a project appeared on Projects of
Concern list and did not have a finalised MAA.
The ANAO suggested that the challenges associated with major equipment
acquisitions increase when 'the MAA does not include sufficient clarity and
detail about the project's intended cost, delivery schedule and capability
For example, in its audit report on acceptance into Service of Navy Capability,
Navy as Capability Manager, and DMO as acquirer, not fully
and formally setting out their respective roles and responsibilities in the
form of comprehensive CDG-DMO-Navy Materiel Acquisition Agreements for all
acquisition projects. This requirement was agreed to in 2009, and developing
these agreements for Navy projects has been a slow process, with completion now
expected by December 2011.
In the committee's view, Defence's measures designed to define the lines
of responsibilities and accountability such as the requirement for the
capability manager, CDG and DMO to co-sign an MAA, will prove ineffective. It
notes ANAO's comment about the importance of MAAs being sufficiently clear and
detailed about their respective roles and responsibilities. The committee also
draws attention to the record of poor adherence to procedure and a lack of
attentiveness to risk. There is nothing in the evidence indicating that recent
initiatives such as an MAA will change such behaviour. The key issue is about
changing management structure and not simply adding more to the process.
The committee questions why CDG retains such a strong and prominent role
after second pass approval—the capability has been defined and government has
approved the project deemed to be the best option to deliver that capability.
Surely the capability manager must take responsibility for ensuring that the
requirements agreed by government are met and that the end product will be
accepted into service. There is no point acquiring an acquisition that meets
the government's broad requirements but at the time of delivery is not fit for
To ensure that capability managers have the authority to exercise their
responsibility, they require the authority that now resides with the CDG as
departmental coordinator and centre of power. The committee recommends that
the capability manger should not only have expanded responsibility but also the
financial responsibility after second pass. Under the committee's preferred
model, the capability manager would be the sole client with the contracted supplier,
through the agency of the DMO. The DMO is a contract and project management
specialist advised on technical issues by the capability manager. This model
would remove the unnecessary layers of current vested interests and streamline
the process through a single point of accountability.
Ministerial Directive to the
Defence Materiel Organisation
One witness who gave in camera evidence to the committee noted that the
key accountability document for Defence capital projects between 2005 and 2008
was the carefully negotiated and discussed Ministerial Directive to CEO DMO
which existed under the three Defence Ministers of that era.
This Ministerial Directive provided 'a mechanism to define the
relationship between the minister and the CEO DMO'. It established 'the CEO
DMO’s direct obligations to the Minister for Defence, his overarching
responsibilities and his management priorities in relation to DMO's business
outcomes'. The minister directed the CEO DMO in relation to his
responsibilities by virtue of the minister's executive power to administer the
Defence portfolio under section 64 of the Constitution.
According to the witness:
Despite its name, this was a boundary defining statement set
at the highest levels so it couldn't be disputed. It carved out a defined
specialist role for DMO and wrote down the specific accountabilities precisely.
Everyone knew their job. And they got on with it.
DMO's submission explained that the Ministerial Directive established
the accountability of the CEO DMO to the minister to achieve, inter alia:
timely, accurate and considered advice in your role as principal
adviser to me on equipment acquisition and through-life support of materiel for
The submission notes that the current Ministerial Directive was issued
to the former CEO DMO on 28 July 2008 and has not been updated. DMO notes that
although it still operates within the principles established by the Ministerial
Directive, it may be appropriate, given recent appointments, to review the Ministerial
Directive and update it as necessary.
The committee supports this proposal. The committee discusses the independence
of agencies such as the DMO and their role as devil's advocate in the chapter
on contestability which strengths the committee's support for this proposal.
As noted earlier, Dr Black suggested that the accountability system must
'reach down into the organisation right to front line staff who are ultimately
responsible for actual delivery'.
For complex and demanding projects, Mortimer recommended that the
authority, responsibility and accountability of the project manager should be
formally set out in a project charter. Project managers should be held to
account for meeting the financial and non-financial performance targets
detailed in their charter.
Defence agreed and responded to the recommendation by indicating that the CEO
DMO and CCDG were 'to ensure that such a project charter system is quickly put
in place and that specific approvals made by Government can be clearly traced
to the charters'.
Defence's response did not mention the capability manager.
Consistent with this recommendation, one witness argued that
accountability comes from 'clearly defined boundaries and tasks'. He suggested
that specialist managers should manage their resources, and be held
individually accountable for 'outcomes, with a performance management system
that has rewards for good performance and meaningful and timely sanctions for
Defence informed the committee that complex and demanding projects are defined
as ACAT I and ACAT II projects and that project manager charters had been
instituted for all such current projects.
Even so, an industry representative told the committee his company had
witnessed a lack of empowerment to individual project managers and their
inability to respond to rapid changes and new ideas mainly because of a large
bureaucracy. In his view, these effects lead to inefficiencies, as:
...program managers are forced to deal with multiple
stakeholders with different interests and requirements and the result is that
temporary problems and programs can lead to risk adverse decisions rather than
focusing on long-term capability and cost optimisation.
Mr Robert Tonkin, Australian Industry and Defence Network, referred to
an ineffective structure of delegated authority within DMO that fails to
empower people who manage or approve projects to carry out their
responsibilities. He argued that 'they do not have a sufficient level of delegated
authority to get on with it':
If every decision that is made is more complex, embracing
more players, then, by nature you delay the process. Efficiency...is about
focusing on what is required getting clarity of what is required, making a
decision and then getting on with it.
The Australian Industry Defence Network suggested allowing jurisdiction
delegation levels to flow down to 'the appropriate working level where the
Manager has a good knowledge of the platform and capability technologies'.
Some independent members of the gate reviews suggested that people need
to feel empowered 'to go and do things to achieve results' but that the
management layers and structures constrain them.
Mr Williams stated:
Ideally you would give them control of the budget and the
flexibility to make decisions, but I think that we do have a complex process.
We have committees making decisions, which then removes the responsibility and,
of course, the accountability from those individuals. So I think that anything
that can be done to remove some of that to make sure that we get good people
but then empower them to run the project would be a benefit.
Clearly, there are a number of aspects to improving the performance of
project managers and their teams including the introduction of project charters
with clearly defined boundaries and tasks. But the charters will be ineffective
if project managers are not equipped with the appropriate skills and project
management experience to fulfil their responsibilities or if unnecessary layers
of management encumber their ability to exercise their responsibilities and
Lessons to be learnt and
Despite the various measures taken by Defence to clarify
responsibilities and have people enter into signed agreements, it remains
unclear who is held to account when 'things go wrong'. The lessons learned
sections in the MPR hold a clue. They are not directed at any identifiable
group, unit or section. Taking just the one example of the MRH-90 helicopter
where DMO identified the following lessons learned:
it is essential that the maturity of any offered product be
clearly assessed and understood; and
elements of a chosen OTS solution may not meet the user
These observations are so broad and vague as to be useless. Worryingly,
not only are the lessons self-evident but they also provide no indication of
who should be responsible for acting on them. In the committee's view, it would
be far more helpful for these lessons to be targeted. For example, the lessons
should identify where the initial underestimation of technical maturity
occurred and why; where the misunderstanding of user requirements originated;
and where in the process those responsible for identifying these mistakes
failed to do so. Otherwise the lessons are so general that no one is
responsible, or held accountable, for ensuring that they are learnt—in other
words they remain lessons to be learnt.
The committee suspects that Defence cannot identify the source of the
problem because of the diffusion of responsibility and the blurred lines of
accountability that troubled Kinnaird, Mortimer, Pappas, Rizzo and Black and
continues to be a source of concern for this committee.
In this regard, the committee in the previous chapter referred to
documentation and instances where the project team, while fully focused on
detail, sometimes missed the important matters. Dr Davies observed that the
thoroughness of the documentation set was never a problem but then went on to
If we are talking about accountability and responsibility, in
fact the thoroughness of the documentation set actually tends to blur all of
those lines. There are so many people who have a finger in the pie of drawing
up operational concepts and project definition statements; whereas, ultimately,
accountability and responsibility is being able to point at something and say
their job is to do X or the person responsible for Y is'. 
In this regard, Air Commodore (retired) Bushell argued that if
accountability is to be demanded, it must:
- be traceable directly to the functional objectives of the
- be defined clearly, unambiguously and not diffused or
- be realistic and achievable;
- ensure that those held accountable have the authority and
resources required to discharge their accountability; and
- have a continuous performance measurement system
(feed-back management loop) in place to provide timely advice of
departures from organisational plans and objectives to aid those held
accountable and governance oversight.
In his view, those whose accountabilities were now being reinforced by
amendments to joint project directives, MAAs, materiel sustainment agreements
and project charters would still be unable to discharge their accountabilities
because the five prerequisites for accountability were not in place. His fear
was that Defence’s 'reorganisation, sharpening of accountabilities, and the
resulting load of process will achieve nothing other than to add further
complexity, confusion and inefficiency to a failed organisation'.
The committee notes, however, that real authority comes through financial
Indeed, as an example of an overburdened bureaucracy, the committee
cited project managers disempowered by a complex process that robs them of the
ability to carry out their delegated authority. Clearly, project directives,
MAAs and project charters need to be part of a system that enables those
directly charged with authority and tasks to exercise their responsibilities
effectively. Otherwise such documents are mere window dressing. To be
effective, such agreements must be consistent with a management structure in
which responsibility and accountability reside in the appropriate authorities.
The committee questions the current structure.
Throughout the acquisition process, there are numerous groups involved
in developing, refining and reviewing capability proposals as well as preparing
specialist advice and documentation before a proposal is presented to government
for approval. For many years, reviewers and analysts have been concerned about
the lack of accountability for decisions and project performance and the
blurring of responsibilities. All have made recommendations to rectify these
failings, without much effect.
Defence has responded to their advice, by introducing a number of
measures to strengthen accountability. The committee notes these initiatives but
is concerned, however, that they will be merely cosmetic if attitudes or
management structures do not change. It is of the view that a range of other
measures need to be taken into account in order to simplify and streamline the
organisation by changed roles and new accountabilities supported by real
authority in one person or position—not an amorphous coordinating group such as
The committee recommends a realignment of responsibilities in a proposed
new management model that is detailed in chapter 15 (recommendations 1–11 in
In the following chapter, the committee again looks at the main groups
involved in defence procurement. Its focus, however, is on how well they communicate,
meld and transfer their responsibilities and overall work as an integrated enterprise.
Navigation: Previous Page | Contents | Next Page