Communication, integration and collaboration
In November 2010, the minister stated that when dealing with the
Secretary, the CDF and the CEO of the DMO, he was 'of course' dealing with 'One
Defence'. He was not confident, however, that below this level he received a
'One Defence' view, but rather a perspective from a silo. He indicated that
this situation could occur when ministerial submissions had not been properly
considered across the portfolio or where appropriate meaningful consultation
with external agencies had been absent.
Almost a year later, he again referred to a lack of integration within Defence with
parts of the organisation working in silos.
Also in the previous chapter, the committee cited Dr Black who referred to
'organisational cohesion' and the importance of Defence functioning as a
'single integrated enterprise'.
One witness noted that Defence is not like most departments. He explained:
In the military, ADF people put their lives on the line, and it
has to execute and implement (rather than concentrate on policy work), which
means the ADF needs a lifelong career development structure to do so...the
intelligence organisations require linguists and specialists, as does DSTO with
scientists. DMO requires a separate commercial culture staffed with business
savvy experienced experts.
Defence's challenge is to have a structure that allows the views of
specialist groups to be expressed, questioned and debated. While their views
may not prevail in the final decision, they should nonetheless be listened to
as part of that consideration. In this chapter, the committee considers
the quality of communication between the major groups involved in Defence's
capability development process.
In 2003, Kinnaird noted that the concept of 'no secrets and no
surprises' has to be central to communication between government and agencies
responsible for capability development.
Government must remain confident that it has a current and
accurate understanding of the progress of capability development at every stage
of the cycle.
Kinnaird was unconvinced, however, that government had been receiving
advice and information sufficiently adequate to enable it to make strategic
decisions on an informed basis.
A number of projects cited in chapter two confirm this view. Indeed in some
cases expert advice was corralled even before it could be presented at a senior
committee level or was simply disregarded at this level.
Strategy Executive and its
relationship with CDG
With capability development, the first important exchange and transition
of knowledge and responsibility occurs between the Strategy Executive, CDG and
Kinnaird and Mortimer made a number of recommendations directed at
strengthening the linkages between Defence's strategy and capability decisions.
Defence responded to the Mortimer Review with the commitment to implement a
'planning process that institutionalises the links between strategic guidance,
force structure, capability priorities and funding that have been developed
during the White Paper process'. It was intended that the Strategic Policy
Division within the Strategy Executive of the Department of Defence, with the
support of CDG, would lead the strategic planning process and draft the classified
Defence Planning Guidance.
As part of an improved Defence planning process, the 2009 Defence White
Paper announced the adoption of a five-year planning cycle for major defence
decisions. This cycle would include an institutionalised Force Structure Review
process intended to improve 'processes for force structure development,
definition of capability requirements, and development of capability
As a consequence, a Force Structure Development Directorate was established
within the Strategic Policy Division to 'improve alignment between capability
The Strategy Executive is also responsible for drafting the Defence
White Paper. As the key national defence strategy document, the White Paper sets
out the government's defence strategy for the nation. The Strategy Executive is
required to translate the broad guidance of the White Paper into an annual
Defence Planning Guidance to provide a more refined assessment needs. At the
same time, the Strategy Executive must ensure that the development, acquisition
and evaluation of capabilities aligns with Defence's strategic priorities. According
to the Strategy Framework 2010, this alignment is achieved in close
collaboration with the CDG and capability managers.
Once capability plans are identified in the White Paper and Defence
Planning Guidance (DPG), CDG takes over and leads the identification and
development of capabilities which make up the DCP. Because the documents have
such a pivotal role, it is vital that they are based on robust analysis and
reflect a consistent approach to capability acquisition.
As noted in chapter 3, however, there is growing concern that the
capabilities prescribed in the White Paper and contained in the DCP will not be
delivered in accordance with the timeline articulated in the White Paper.
It would appear that there is a disconnect emerging between government
expectations of Defence to achieve an operational effect as set out in the
White Paper and the capability currently operational or logjamed within the
delayed procurement process. Any such discrepancy has implications for the
linkages between strategic guidance and capability development and hence the
efficacy of the capability process. In this regard, Henry Ergas and Mark
Thomson made the following observations about the DCP:
Were that plan efficient, it would ensure two things. First,
that the 'right' defence capabilities are sought consistent with prevailing
circumstances and strategy. Second, that planned defence capabilities are
deliverable with available resources––financial, human and bureaucratic.
The primary concern is that there could be a mismatch between the
acquisition and the retention of capability and strategic circumstances and
Similarly, Pappas provided a range of recommendations directed at reducing the
risk of misalignment between strategic requirements and procurement priorities
and specifications. They included establishing a Force Structure Development
cell responsible for 'integrating the end-to-end process of capability
development and a mandate to ensure tight alignment between strategy and
The Strategic Planning and Capability Development streams of the
Strategic Reform Program are believed to be 'putting in place improved
processes for strategic guidance, and better linkages between that guidance and
However, as Dr Black noted:
The Strategy Framework does not document the end products
expected of, nor how to create, what would be recognisable in other
organisations as a corporate strategy or plan.
Indeed, the process should work and the DCP should be achievable if the
DCP truly reflected a refined assessment of needs that align with strategic
priorities, and if priority funding were identified prior to the Strategy Executive
giving approval to CDG to develop the DCP. Clearly, this is not the case.
In August 2011, the Minister for Defence announced the establishment of
an Associate Secretary (Capability) position to implement the Black Review
recommendations. The Associate Secretary (Capability) was to be responsible for
reviewing capability proposals before being considered for inclusion in the
DCP, in order to ensure that they 'reflect the government's strategic
requirements and that all risks are well understood'.
This appointment is no longer going ahead and in this context the committee
notes the already heavy civilian overload of senior positions. Driven in part by
the complexity of the organisation and its processes, the number of deputy secretaries
has increased from 4 in 1993 to 14 currently.
One witness observed that with 'so many senior folk, it is no wonder that
coordination requires so many extra committees'. Committees consume time.
The primary step toward better alignment between strategy and capability
development would be to ensure that the White Paper—'the corner stone
document'—sets out a realistic and achievable program for capability
development. The committee has made a recommendation to this effect (see recommendations,
pp. 55 and 265).
In the following section, the committee looks at defence procurement as
a combined Defence effort and considers the communication network and the
degree of cooperation and collaboration across the numerous groups that
contribute to capability development once a project enters the DCP. Again the
committee draws attention to the hierarchy of advisory, review, oversight and
decision-making bodies whose work feeds into the capability development
Management matrix and linkages between groups
According to Babcock, the success of a major project requires an
'integrated enterprise approach operating a comprehensive asset management
model with shared data'.
But as noted earlier, there are many groups that contribute to the final
submission put to government for project approval and its ultimate delivery
into service. The main ones are: the capability managers (end users); the CDG,
(sponsors of the project); the DMO (acquisition agency); the DSTO (expert
technical adviser); and finally industry, which delivers the product. While
these four groups are the main ones, there are numerous others. Each has its
own priorities and notions of what the end product should be, do and cost. At
times, their views may clash even within Defence. Indeed, one industry
representative described Defence as 'a mass of bodies acting largely
Another witness observed that:
Defence is and probably always will be a tribal community and
culture made up of separate proud specialist units, each of which has its own
Thus, Defence must find a way to counter the tendency for the various
groups to work as segregated inward looking entities and create a structure
that encourages the free flow of information, the exchange of ideas and genuine
collaboration. Such a structure would be designed to prevent or at least
discourage situations from developing where expert technical advice is
corralled or misinterpreted, or CDG, DMO, and capability managers have
different expectations and understandings of an acquisition.
Such arrangements, however, are not intended to undermine
contestability. Contestability needs to be resolved at the strategic level with
all the elements of that advice going to coordinating agencies and government
so that the complexity of the cases being put is understood, along with all the
The Auditor-General told the committee that in Defence's search to
improve its performance, there had been a level of centralisation of particular
functions in key organisations, such as DMO. He explained that the great
benefit—the strong positive—was in placing a critical mass of people with the
right skills to deliver on project acquisitions and sustainment in the one
agency. According to him, however, there was a downside, in that it:
...creates greater organisational linkages across the
organisation for DMO and Navy to talk together and to communicate, and
similarly across the services. In the interests of getting the skills in a
central place and in getting the efficiencies and returning some savings to
budget, you pay the price in increasing the complexity of communication and
liaison within organisations.
Evidence indicates that the correct alignment of best practice and
appropriate skilling in the organisation has not come to pass.
Also addressing the challenge of building healthy networks between the
various groups, Air Marshal Brown told the committee that as a direct
consequence of the matrix management system in Defence, 'the current
organisational construct puts high transactional costs and a lot of
communication between the groups'. He was of the view that there may be 'other
constructs that would probably be more effective and efficient than the ones we
have at the moment'.
In his view:
The thing you need to be careful of is that we have
constructed a whole lot of input-focused organisations; that is the way we are
at the moment. The reality is that we have an output that we have to produce.
It is much better if you can get everybody involved focused on the output
rather than what the inputs are.
According to Air Marshal Brown, one of the big disadvantages of a
14-group organisation is that an extraordinary amount of effort across the
groups is required to get anything done.
In the following section, the committee looks at those engaged in a major
acquisition program from an enterprise perspective.
Once a project is in the DCP, a number of witnesses pointed to the need for
smooth transitions from one phase to the next as a capability progresses toward
delivery and in-service operation. Mr Kim Bond, ANAO, explained that, during
its audit into acceptance into service of Navy capability, ANAO looked for the
overlying administration that would show adherence to basic systems engineering
steps. This examination covered the initial requirements phase in deciding what
is to be purchased, through to building, commissioning and decommissioning it.
We found a pattern of inconsistent application of steps...We show
that while you can find the bones of those processes throughout Defence, we did
not find them universally adhered to and we did not find them joined up. So
where one organisation may have been given responsibility for one stage of the
process, it has not necessarily smoothly handed over to the next phase of the
process. Nor was there sufficient overlap.
The committee has referred to the divisions between the various groups engaged
in defence procurement projects. Their ability and willingness to connect has
significant implications for the success of a project. For example, Mr Bruce
Green stated that DMO needs to be sure that it is 'not being
given a hospital pass'. He argued that the people running the procurement are the
ones at most risk if things go wrong and therefore need to be intimately
involved in the discussion on technology, risk, timing, budgets, procurement
methods and through life considerations.
He argued that the acquisition agency needs to be able to say to government
that 'it is confident it will be able to deliver the capability at the defined
cost and within the time determined as part of the Capability Definition
process and approved by Government'.
Dr Davies made similar observations about project risks coming home to
roost in DMO. He referred to comments made ruefully by DMO executives about the
Defence Capability and Investment Committee dreaming up a dead cat, which they
then throw over the fence for DMO to 'reanimate'.
Thus DMO needs to work cooperatively with CDG and capability managers to be
certain that all parties are fully aware of the requirements of the project and
the risks to its success.
Also in this context of collaboration, a number of defence analysts and
reviewers have remarked on the distance between capability managers and the
acquisition agency, most evident in the relationship between the Chief of Navy
and the DMO. In its audit performance into acceptance into service of Navy
capability, ANAO highlighted the importance of DMO and Navy working together to
avoid handovers to Navy becoming 'voyages of discovery' in the final stages of
The ANAO found:
...greater emphasis needs to be applied by Navy, CDG and DMO,
in maintaining a shared understanding of the risks to the delivery of the Navy
capability agreed to by government.
While the ANAO identified the need for the three groups to share
responsibility, as the committee noted earlier, each group should have distinct
responsibility for key components of an acquisition and should be held
accountable for their respective performance. The issue is ensuring that each
group has the appropriate allocation of responsibility and that the respective
responsibilities are complementary.
The audit then went further pointing to a need for the three groups to
share the responsibly for mitigating those risks, 'including in relation to
implementing effective recovery actions, when issues arise that threaten the
acquisition of that capability'. It stated that, among other things, without improved
communication and collaboration across the relevant parts of Defence during a
project’s lifecycle the necessary improvements in acquisition outcomes will not
Clearly, when different agencies or groups within Defence assume
carriage of a particular project, they must be fully aware of all aspects of
the acquisition particularly any risks to its successful delivery. There should
be no 'voyages of discovery', but more to the point, communication is most
effective when the communication is limited to as few as two players—the more
layers and more players, the more difficult communication becomes.
Involvement of capability managers
As noted in the previous chapter, Defence agreed that capability managers
should act in a stronger assurance role to ensure there is appropriate
oversight and coordination of all elements necessary to introduce a capability.
It noted, however, that from time to time there may be tension 'between the
DMO’s ability to deliver a capability to its approved scope and/or schedule,
and a Capability Manager’s judgement that this capability can no longer meet
his operational requirements (which may have changed since the original
Hence the committee believes that the client should be in charge with direct
accountability from the provider, not through intermediaries.
Commenting on the relationship between capability managers and the DMO in
his 2009 audit, Pappas also noted a breakdown in communication between them. He
observed that there appeared to be insufficient linkage between the acquisition
process for platforms and the delivery of their enablers (such as wharfs,
refuelling facilities and communications equipment).
He explained that as a result, 'platforms had arrived without the enablers they
needed to create a fully functioning capability, either due to poor programming
or insufficient consideration of the requirements'. In his view, this situation
was exacerbated 'by a lack of clarity as to who is responsible for delivering
each of the Fundamental Inputs to Capability (FIC), and appears to be more
severe for enablers that are separate projects (such as communication
architecture)'. He surmised from this situation that interdependencies between
projects were not as well understood as they could be.
This observation not only highlights the confusion and lack of clarity
surrounding the roles and responsibilities of those contributing to the
delivery of a capability but of the need for someone to exercise central
authority for integrating the whole process. Clearly, the capability manager
who accepts a capability into service and will use that capability is best
placed to be that central coordinating authority.
While Air Marshal Binskin acknowledged that prior to 2008 the capability
manager may have been 'fairly removed from the process', he indicated that they
were now more prominent: they were 'right up front':
...the capability manager signs off on projects as they
start—and it is all part of their maturement as they go through—that it will
meet the needs, will there be capability gaps or not, risks that are foreseen,
and whether the service or the capability manager can even accept that into
service in the time. So the capability manager is more up front now.
Mr King also accepted that there was a time post Kinnaird 'where the
centralisation of the capability development under CDG and the DMO operating as
the acquisition organisation 'appeared to disenfranchise the capability
managers in the process'. He stated that the situation led to 'a period where,
despite having the two pass process in place, the CM, CDG and DMO were not
interacting, coordinating and integrating as well as they might'. This
breakdown in communication was particularly evident in the maritime space. Mr
King explained in simplified terms what he thought had happened:
...the customer base―the capability manager―had
developed a feeling that DMO would just pass something or throw something over
the fence at them and they would have to take it. I think they had fallen into
a mode of 'Well, I'll see if I like it when I get it.'
He explained that although the correct processes were in place it was a
matter of culture and the attitude of the people in the organisation who were
I think we had allowed that to fall into a state that was not
as good as it could have been. I think we are working very hard and have worked
very hard and have already made significant improvements. In particular, DMO is
responding to and engaging with our capability managers and making sure that
they are fully engaged and fully understand what we are doing and the
challenges we are facing. I would be fairly confident or I would like to think
that they would agree that we are making big steps forward in that direction.
Air Marshal Harvey supported the view that capability managers now have
a strong say throughout the process.
Indeed, Defence is confident that some of the measures discussed in the
previous chapters, such as project charters and MAAs, would not only help clarify
responsibilities and improve accountability but also help to strengthen
linkages and relationships.
An important question for the committee is how such a situation, which
effectively disenfranchised the capability manager, was allowed to develop and whether
the very management structure gave rise to the damaging culture and attitude
cited by Mr King. While MAAs give the appearance of capability managers having
responsibility, being accountable and working in lockstep with CDG and DMO,
they do not of themselves enable the capability manager to exercise appropriate
control or authority.
Materiel Acquisition Agreement
In Mr King's opinion, the introduction of project directives and the capability
manager co-signing the MAAs has been an important shift toward improving the
relationship. According to Mr King, Defence now have 'a very structured
approach to not just how to deal with the materiel aspect but how to deal with
how we are going to introduce a capability into service. That has been a more
recent shift, which I think is positive'.
He noted further that the MAA protects against scope creep—an unauthorised
change or request for more capability. He explained:
So our project teams cannot operate outside the MAA. But if
there is a real and genuine need that has emerged, new threat, because projects
are long, then the process now in place is: we go back to the government and
advise them of the need, obviously supported by the sponsor, the capability
manager, and then government makes a decision to change its approval.
The ASLAV upgrade, which was cancelled within the last 12 months, shows
that this measure is not working.
The committee has also discussed the value of project directives,
project charters and the Ministerial Directive to DMO. Not only are such documents
key accountability tools but they also help to establish shared understandings.
One witness stated that forging a 'working together' approach could only be
achieved if built on 'well defined, written projects foundations'. He said:
The most critical of these is the clear definition of the
handoffs between those in the chain who contribute to the outcomes i.e. each
party must know exactly what is expected of them so that fuzzy arguments are
avoided about who is responsible.
If implemented and properly adhered to, such measures should go some way
to prevent DMO from receiving a 'hospital pass' or the capability manager, embarking
on a 'voyage of discovery' after taking delivery of a product. The committee
has noted, however, the record of failed reforms that have focused on process.
Despite Defence's confidence in its initiatives, the committee can envisage
that, with the passage of time, the same damaging behaviours are likely to
return to perpetuate the pattern of poor performance.
Defence has also introduced project initiation boards as an additional
means to bridge the differences between those involved in an acquisition
project and to bring them together as a group early in the process.
Project initiation and review board
In March 2012, Vice Admiral Peter Jones noted that during the recent DCP
review the Service Chiefs made clear that they wanted 'to be involved at the
very beginning, much more so than at the end, doing a final tick-off of the
paperwork at a defence capability committee'.
At the same time, Mr King informed the Parliamentary Joint Committee on Foreign
Affairs, Defence and Trade that the CDG had commenced a project initiation
board process, which involved CDG, DMO and capability managers. The board
replaces the Options Review Committee (ORC) According to Defence, until
recently projects were considered early in the capability development life
cycle by the ORC but experience had revealed shortcomings:
A large number of Groups and Services were represented, often
at junior level, making the committee unwieldy and lacking authority.
Vice Admiral Jones, who runs the board, explained that Defence was
putting a lot of emphasis on the board, on knowledge management and getting
general manager engagement. The membership of the board is smaller than that of
the ORC and is more senior. The board enables these senior people, who bring project
knowledge with them,
to 'nail down the scope [of the project] at the very beginning before people go
off too far'.
One of the benefits of doing the business cases in a joint
environment is that you have a much larger number of projects from which to
draw lessons across the environmental stovepipes. We see a lot of use at times
of bitter experiences and lessons feeding into the projects.
Although the initiation board is intended to capture knowledge from past
it should be noted that Air Commodore (retired) Bushell argued that the project
initiation board proposal, 'will not improve capital equipment acquisition'. He
maintained that at that high level, the board would 'have nobody who has the
faintest idea about the hard operational and technical aspects of the
capability, or how the project should be managed'. While agreeing that the
Service Chiefs need to be involved, he noted that they need to be genuinely
The committee agrees that the experienced hands and technical subject matter
experts need to be involved in the assessment and that dissenting voices must
have a way of being heard. The examples cited in chapter 2, clearly demonstrate
that in a number of cases critical technical advice on risk did not reach
senior levels—ill-informed decisions were made.
The committee notes the establishment and intention of the project initiation
board as a means of bringing capability managers, DMO and CDG together at an
early stage to build stronger communication networks and to lay the foundations
for a collaborative approach. Although accepting the reasoning behind the creation
of the boards, the point remains that they can only be as good as the
information and analysis that they have at hand and their ability to ask the
right questions. In this regard, the committee believes that much work remains
to be done to ensure that the boards are able to tap into a deeper
understanding of the feasibility of a proposal and reach a much better
appreciation of the operational and technical aspects of the capability under
consideration. This means that these most senior officers must ensure that the
board is not only a top-down exercise but that it draws on expert analysis and
the experiences of those directly involved in the project. Another niggling
concern is that the board will turn out to be a simple re-badging of the
Options Review Board and hence replicate the same shortcomings—an unwieldy
committee made up of a number of groups lacking authority and whose members are
too junior. The committee has heard nothing to indicate that, despite current
enthusiasm for the boards, they will not revert to form.
Earlier in this chapter, the committee noted the government's intention
to appoint an Associate Secretary (Capability). According to the minister, the
officer was to be responsible for the integration of work in relation to
capability development by Strategy Group, CDG, the DMO and the DSTO. He stated:
In particular, this officer will ensure the more effective
contestability and integration of advice at the early stages of the process, as
well as for ensuring the performance and accountability of the overall
capability development, acquisition and sustainment chain.
As noted earlier, the government is no longer proceeding with the
appointment but has yet to indicate how the identified problem is to be
Defence Science and Technology Organisation
DSTO is also an important participant in capability development. It has
a central role in providing technical advice and support. Indeed, the Chief
Defence Scientist is responsible for the provision of technical risk
assessments, technical risk certifications, the development of Science & Technology
(S&T) project plans and for providing other S&T support as required.
Pappas' audit found, however, that there was scope for DSTO to have a more
constructive engagement in pre-approval assessments. He noted that some DSTO
assessments were 'not always as helpful as they could be':
...a number of risks on the AWD project were unknown, but were
classified as 'High' (when they could have been anywhere from 'Low' to
'extreme')—which makes interpretation difficult. There is also the possibility
that assessments use the 'High' risk category often that other parties become
desensitised to risk.
He explained that a 'clearer indication of the most critical risks would
help those tasked with risk management to know where to focus'. Worryingly, he
also observed that:
DSTO involvement and assessments are not always paid the
respect they should be; scope and specification changes make the conduct of a
Technical Risk Assessment (TRA) very difficult and there does not appear to be
consistent criteria that determine the degree of initial and ongoing DSTO
involvement in retiring technical risk in projects. Closer cooperation will
have two mutually reinforcing benefits:
- The grounds for risk assessments and potential ways to
reduce/mitigate the major risks will be better communicated to and understood
by the project teams responsible for the project.
- The DSTO staff performing risk assessments will develop a deeper
understanding of how project teams can and do manage risk over time. This will
help inform future recommendations.
Furthermore, Pappas found that wording in DSTO technical risk analyses
was 'sometimes adjusted to conform to Cabinet submission writing conventions'. Although
the final Technical Risk Certification remains unchanged and the Chief Defence
Scientist agrees to the final version of the cabinet submission prior to
sign-off by the Secretary and CDF, Pappas suggested that there was a risk that 'key
messages and an independent perspective may be lost'.
It should be noted that Defence informed the committee that the Technical Risk
Certificate for each project is 'taken verbatim into the advice to Government'.
Clearly, Defence must ensure that the technical advice from DSTO is
provided to key decision-makers in a way that accurately reflects DSTO findings
and is able to be understood and fully appreciated by them. The troubling
history of persistent underestimations of the amount of developmental work
required to bring a capability into service suggests that either there is inadequate
or poor analysis or, as suggested by Pappas, DSTO assessments 'are not always
paid the respect they should be'.
In fact, it is said they are often ignored and written down so as to be meaningless.
Also, it is important to consider whether DSTO is currently being asked
to do more than it is capable of doing or whether it has the right people to do
the assessments. For example, DSTO personnel do not have an operational
background and may struggle to make a considered assessment on the impact that
a particular technical issue may have on capability, training or certification.
Finally, there is another matter of concern with possible conflicts of interest
or moral hazard in that the opportunities for collaborative activities and
funding have in the past driven DSTO to recommend a course of action that may
not be in Defence's best interest.
Many witnesses recognised that Defence's relationship with industry is
critical to the success of an acquisition. The committee has already noted the
importance of the early engagement of industry, even as early as the White
Paper stage, so that Defence is fully informed to prevent it from closing off
options prematurely or embarking on a project that is not feasible. But
engagement is also necessary as the project moves through the needs into the
The Australian Business Defence Industry Unit spoke of the importance of
having 'real partnerships between Defence and industry early in the development
of capability concepts' as well as throughout the lifecycle of systems'. In its
view, such a good relationship can 'only lead to better capability, better
technology and lower life-cycle cost'. According to the Unit:
Early industry involvement can lower Defence risk and can be
done in ways that maintain Value for Money objectives and market-based
competition. Defence should work together with industry to find ways to promote
One industry representative stated, however, that he was 'not convinced
that the right discussions go on to get the right capability and minimise the risk
we enter into'. In his view, there was a significant gap in the discussion—that
is the risk that industrial capability and capacity to deliver a project on
time and on budget was missing in the entirety of Defence's conversation with
In chapter 2, the committee noted a number of instances where there had
been a breakdown in the relationship between Defence and the contractor—Super
Seasprite and the FFG Upgrade, and serious misunderstandings with the AWDs. The
committee is firmly of the view that industry's relationship with Defence,
particularly the DMO, must not only start early but remain on a firm and
constructive footing throughout capability development, delivery and
sustainment. The committee looks closely at the relationship with industry in
Part VI of the report.
The committee has underlined the importance of Defence personnel being
aware of their responsibility and accountable for the performance of projects
under their purview. Ensuring that all engaged in procurement activities
clearly understand their responsibilities and how they interact with those of
others would be a firm step in the right direction. While on paper procedures such
as MAAs and project initiation boards look promising, the committee remains to
be convinced that in practice they would be effective. It has already raised
concerns about non-compliance with policy and guidelines, disenfranchised capability
managers and disempowered project managers.
Although groups may understand their responsibilities and be compelled
to sign agreements, they cannot be made to work together harmoniously if there
are structural, resource or skills impediments. In this regard, Defence needs
to pay close attention to creating an environment, especially through its
management structure, that is inclusive, counters the tendency for groups to
work in silos and allows those with responsibility to exercise their authority.
In doing so, Defence should also be intent on removing administrative layers
not adding to them. As explained in chapter 15, there should be direct
contractual agreements after second pass between clients (capability managers)
and contracted providers without third party involvement. Without such a
standard commercial approach, there will be no change, only more process, and
more bureaucratic layers clogging up the system.
The committee also notes the establishment of the project initiation
board but again reiterates its concern about such initiatives promoting form
over substance. MAAs and new boards might be part of the answer but if not accompanied
by deeper changes will only add another layer to an already complicated process
without improving communication and strengthening the relations between the
The committee's recommendations look beyond process to the more
important management matrix model.
The committee recommends that all matters concerning strategic planning,
capability planning, industry policy, costing and all matters for the
coordination of contestability from DMO, DSTO and industry should remain with
the current Strategic Policy Group and CDG in combination.
The committee recommends that accountability for all service specific
procurement items should be exclusively transferred with budgets to Service Chiefs,
who should be responsible for all procurement and sustainment of their
materiel. This transfer of responsibility occurs after proposals have been
thoroughly tested internally and externally and after government decisions are
made at second pass.
The committee recommends that the capability manager should have expanded
responsibility and importantly financial responsibility after second pass.
Under the committee's recommended model, for all acquisition projects, the
capability manager would be the sole client with the contracted suppliers; DMO's
role being limited to tendering, contracting and project management
specialities, strictly according to the terms of the second pass decision. All
specification changes should be monitored by CDG and put to government for agreement,
as currently the practice, with the capability manager to be fully accountable.
The committee recommends that all matters of coordination, overall
budget management monitoring and reporting after second pass should remain in
the current CDG, but without budgetary control.
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