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Chapter 3 - Annual performance statements


Annual performance statements

Statement of preparation

I, as the accountable authority of the Department of Defence, present the 2016–17 annual performance statements of the Department of Defence, as required under paragraph 39(1)(a) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). In my opinion, these annual performance statements are based on properly maintained records, accurately reflect the performance of the entity, and comply with subsection 39(2) of the PGPA Act.

Greg Moriarty's signature

Greg Moriarty
Secretary of the Department of Defence
3 October 2017

Section 39 of the PGPA Act requires Commonwealth entities to prepare annual performance statements. The annual performance statements for 2016–17 provide an assessment of Defence’s performance in achieving our purposes, by reporting on the performance measures and criteria set out in the 2016–17 Defence Corporate Plan and the performance criteria listed in the Portfolio Budget Statements (PBS) and Portfolio Additional Estimates Statements (PAES) for 2016–17. The annual performance statements provide a clear link between our planned performance for the financial year and our actual performance over the financial year.

The annual performance statements bring together relevant non-financial performance information into this chapter, much as the financial statements (Chapter 11) consolidate the financial performance information presented in Chapter 4. The annual performance statements certify the actual performance against the PBS, the PAES and the corporate plan, present results against the performance criteria, and provide an analysis of what we achieved and factors that contributed to our performance against the purposes and outcomes.

To enhance readability of the annual performance statements, the performance measures and criteria are organised around the three purposes described in the 2016–17 Defence Corporate Plan:

Purpose 1:

Provide advice to Government

Purpose 2:

Deliver and sustain Defence capability and conduct operations

Purpose 3:

Develop the future capability Defence needs to conduct operations

Together with the corporate plan, the PBS and PAES identify the outcomes, programs and performance criteria against which Defence’s performance is assessed. Outcome statements describe what Government requires Defence to achieve using the resources allocated to us through the Commonwealth budget process. In 2016–17, Defence had three outcome statements:

Outcome 1: The protection and advancement of Australia’s national interests through the provision of military capabilities and the promotion of security and stability
Outcome 2: The advancement of Australia’s strategic interests through the conduct of military operations and other tasks as directed by Government
Outcome 3: Support for the Australian community and civilian authorities as requested by Government

The relationship between Defence’s purposes and outcomes is shown in Figure 3.1.

Figure 3.1: Relationship between Defence’s purposes and outcomes

Figure 3.1: Relationship between Defence’s purposes and outcomes

Defence’s annual performance statements were developed in accordance with guidelines provided by the Department of Finance. To enhance the content of the annual performance statements, we have included page references to relevant supplementary information, and we have clearly identified performance measures and criteria with the relevant source—the PBS and PAES, the corporate plan, or both.

Key

The annual performance statements detail actual performance in achieving each Defence purpose, including a ‘snapshot’ assessment against each performance criterion, using the following key:

Achieved—where the intended result was achieved as planned

Partially achieved—where the intended result was not fully achieved during the reporting period.

Note: Due to national security considerations, not all targets are able to be published.

Performance snapshot

Figure 3.2 summarises Defence’s performance results against each of its purposes in 2016–17.

Figure 3.2: Performance results against Defence purposes, 2016–17

Figure 3.2: Performance results against Defence purposes, 2016–17

Purpose 1—Provide advice to Government

Analysis of performance against Purpose 1

Defence achieved Purpose 1 in 2016–17, with significant enhancements to the relevance and clarity of Defence advice to Government through the establishment of a strong strategic centre in Defence. The strategic centre is the senior management structure in Defence that sets priorities, manages resources and sets direction for all Defence activities in support of achieving Government-directed outcomes.

The establishment of new capability management and contestability processes has improved the timeliness and quality of advice to Government to support decision-making and value-for-money considerations concerning capability acquisitions, sustainment and disposals. In October 2016, the Contestability Division restructured and implemented a new, risk-based contestability model focused on contestability throughout the capability life cycle and the provision of clear, accurate and timely advice to key decision-makers. The inclusion of the Department of the Prime Minister and Cabinet and the Department of Finance representatives as full members of the Investment Committee has improved contestability of investment decisions through these members informing and challenging Defence policy advice and building central agency knowledge of the issues involved in specific investment decisions.

Defence continues to engage with whole-of-government and Defence stakeholders in the development of advice for Government on matters of national significance, including cyber policy in support of Australia’s Cyber Security Strategy, intelligence, counterterrorism policy, foreign investment and critical infrastructure.

Effective corporate planning and performance monitoring are vital to ensure the direction set in the strategic centre is cascaded effectively through the organisation and that leaders are held accountable for their performance. As required by the Public Governance, Performance and Accountability Act 2013 (PGPA Act), Defence continues to improve the way it uses risk to plan, prioritise and manage resources to achieve Government-directed outcomes. The development, approval and implementation of a number of key governance frameworks, such as the Strategy Framework, the Enterprise Performance Management Framework and the Defence Risk Management Framework, are improving Defence’s capacity to translate government policy direction into enterprise requirements.

The Defence Enterprise Performance Management Framework was endorsed in November 2016. The statutory outputs of the framework are the Defence corporate plan and the Defence annual report, containing the financial statements and annual performance statements. Implementation of the framework facilitated the development of new Defence purposes and outcome statements for 2017–18, which formed the basis for the 2017–18 Defence Corporate Plan and Portfolio Budget Statements 2017–18.

Complementing the allocation of enterprise performance management accountabilities and responsibilities, supporting enterprise risk management guidelines and accountabilities were introduced under a ‘three systems of risk’ model agreed by the Enterprise Business Committee in February 2017. This work has aligned the key enterprise accountabilities and responsibilities across enterprise planning, and performance and risk management processes in Defence. Work continues to mature Defence’s key governance frameworks, with the Defence Strategy Framework endorsed for implementation in the second half of 2016–17 and the Defence Compliance Framework to be introduced in 2017–18. Once implementation of these frameworks reaches fully maturity, Defence will have the governance system it needs to respond quickly and effectively to changes in our strategic operating environment and in policy direction from Government.

Completion of the two-year implementation plan of the First Principles Review saw Defence transform its organisational structures, business model and major business processes to ensure it is able to deliver Government- directed policy outcomes both now and into the future. To ensure that One Defence reforms continue to achieve their intent, Defence will continue the Implementation Committee and Oversight Board for a further 12 months. In addition, an evaluation framework will be implemented in 2017–18 to assess the effectiveness of One Defence reforms.

The Australian Government Security Vetting Agency’s performance in 2016–17 was in accordance with the requirements set out in the remediation strategy. Achievement of standards at the lower clearance levels (baseline to NV2) was strong in 2016–17. No backlogs remain at the end of the year and average processing times were consistently below benchmark timeframes through the reporting period; however, positive vetting average benchmark processing times remain high, with remediation activities to continue in 2017–18 to deliver sustainable improvements over time.

Detailed performance information related to Purpose 1 is in tables 3.1 and 3.2.

Table 3.1: Performance results for criteria relating to Purpose 1

Defence performance measure Source Results
Measure: Government has confidence in the relevance and quality of Defence advice. Methodology: Biannual survey of the relevant Ministers and the central agencies. 2016–17 Defence Corporate Plan, p. 6 Achieved. The relevance and clarity of Defence advice to Government was significantly enhanced by the establishment of a strong strategic centre in Defence underpinned by a more holistic, integrated approach to enterprise performance management through the One Defence business model. The strategic centre is the senior management structure in Defence that sets priorities, manages resources and sets direction for all Defence activities in support of Government outcomes. The establishment of a new capability life cycle, Smart Buyer framework and contestability function has improved the timeliness and quality of advice to Government to support decision-making and value-for-money considerations concerning capability acquisitions, sustainment and disposals. An immense volume of strategic policy was developed in close collaboration with government agencies through Defence Ministers to Government over the course of the performance period, including the release and implementation of the 2016 Defence White Paper. Through multiple exchanges and interactions in developing the White Paper and supporting policy guidance, the Ministers expressed high to very high confidence in the relevance and quality of Defence advice received. Defence continues to look at options for earlier engagement with the Minister for Defence in the preparation of policy, and ways to improve Defence responsiveness in progressing Government requirements.
Measure: Government is assured that Defence advice has been appropriately contested. Methodology: Biannual survey of the relevant Ministers and the central agencies. 2016–17 Defence Corporate Plan, p. 6 Achieved. Defence’s Contestability Division provides an independent review of investment proposals to ensure alignment with strategy and resources. In October 2016, the Contestability Division restructured and implemented a new, risk-based contestability model focused on contestability throughout the capability life cycle and the provision of clear, accurate and timely advice to key decision-makers. During the reporting period, the Contestability Division provided contestability advice on 83 per cent of the items considered by the Defence Investment Committee. The contestability function provided decision support to the Investment Committee on the majority of estate and information and communications technology proposals, except for low-complexity projects such as minor estate mid-term refreshes. The Contestability Division provided contestability on 100 per cent of capability manager gate reviews. The inclusion of Department of the Prime Minister and Cabinet and Department of Finance representatives as full members of the Defence Investment Committee in November 2015 and August 2016, respectively, has improved contestability of investment decisions through these members informing and challenging Defence policy advice and building central agency knowledge of the issues involved in specific investment decisions.
Intended result Performance measure Target Source Results
The Minister receives policy advice that supports effective Government has confidence in the relevance and quality of Defence Minister expresses high to very high confidence in Defence advice. 2016–17 Defence Corporate Plan, p. 7
PBS 2016–17, Program 1.1: Strategic Policy and Intelligence, p. 37
Achieved. The establishment of Defence’s new strategic centre has strengthened the organisation’s ability to provide quality, coherent and timely policy advice to Government on Defence strategy, capability and resourcing. The strategic centre now drives strengthened decisionmaking and accountability across Defence, with the Minister for Defence meeting biannually with the Defence Committee to consider a formal strategic assessment of the alignment between Defence strategy, capability and resources. Defence is investigating options for earlier engagement with the Minister in the preparation of strategic policy, and ways to improve Defence responsiveness in progressing Government requirements. These changes ensure that the Minister continues to receive policy advice that supports effective decision-making; and assures confidence in the relevance and quality of this advice.
Defence strengthens its engagement on policy development with other national security participants and other relevant parties. Decision-makers understand Australian defence and national security policy issues. Stakeholders express high confidence in Defence engagement. 2016–17 Defence Corporate Plan, p. 7 Achieved. Defence continues to strengthen its engagement on policy development with other national security participants and other relevant parties through several collaborative initiatives, including:
  • permanent central agency representation from the Department of the Prime Minister and Cabinet and the Department of Finance on the Defence Investment Committee
  • collaboration with whole-of-government and Defence stakeholders, as well as international partners, to support management of Defence’s international relationships and the Defence Cooperation Program, and develop policy guidance for ADF operations and international defence activities
  • a new approach to working across Government with Defence Industry Policy Division officers seconded to the Centre for Defence Industry Capability, housed in the Department of Industry, Innovation and Science
  • working with the Department of Education and Training to select a provider or consortium to establish a naval shipbuilding college in South Australia, under a ‘hub and spoke’ model involving existing education and training providers across Australia
Defence continues to engage with whole-of-government and Defence stakeholders in the development of advice for Government on matters of national significance, including cyber policy in support of Australia’s Cyber Security Strategy, intelligence, counterterrorism policy, foreign policy, foreign investment and critical infrastructure, including through contributions to wholeof- government taskforces.
Assured data is available to support the design of good performance measures. Performance information uses validated information to support decisionmaking. All performance information is supported by a reliable and validated data source. 2016–17 Defence Corporate Plan, p. 7 Partially achieved. The development, approval and implementation of a number of key governance frameworks have established robust foundations to provide relevant business intelligence to managers across Defence. Through implementation of the Enterprise Information Management Strategy 2015– 2025, there was also progress in improving information management practices and integrity within information systems. The focus for 2017–18 will be on developing the capacity across Defence required to determine business intelligence requirements, and sourcing the required information to support development of good performance measures.
Appropriate risk appetite is actively exercised based on all available information. Performance information uses validated information to support decisionmaking. All performance information is supported by a reliable and validated data source. 2016–17 Defence Corporate Plan, p. 7 Partially achieved. Training across 40 per cent of the Defence senior leadership helped build a common understanding of how to identify and manage shared risks under the new Commonwealth Risk Management Policy. Supporting guidelines and accountabilities, under the ‘three systems of risk’ model, were agreed by the Enterprise Business Committee in February 2017. This provided the key strategic accountabilities and responsibilities, linking risk management to key planning, performance and decision-making processes in Defence. Enterprise risk management capacity building will continue in 2017–18, and the introduction of a legislative compliance framework and supporting guidelines provide greater assurance that Defence activity is being undertaken in accordance with Commonwealth legislative and related policy requirements.
Managers across Defence have a view of performance within their work area that is based on true information, enabling them to make more robust decisions. Performance information uses validated information to support decisionmaking. All performance information is supported by a reliable and validated data source. 2016–17 Defence Corporate Plan, p. 7 Partially achieved. During 2016–17, organisational performance reporting across Defence continued to mature. In 2017–18, Defence will focus on developing organisational capacity to better plan, monitor and measure how well the organisation performed in achieving whole-of-Defence intended results.

Table 3.2: Performance results against criteria relating to delivering the outcomes of Purpose 1

Source Performance measure Target Results
PBS 2016–17, Program 1.8: Defence Executive Support, p. 63 Enterprise planning and performance monitoring processes are delivered in line with he requirements of the Public Governance, Performance and Accountability Act2013. Defence meets its non-financial performance management and risk management obligations under the Public Governance, Performance and Accountability Act 2013. Achieved. Defence’s enterprise planning, non-financial performance management and risk management processes met the performance and accountability requirements of the PGPA Act. Defence is taking an iterative approach to the design and development of its planning, performance and risk frameworks, practices and processes. Once implementation of these frameworks reaches full maturity, Defence will have the planning, performance and risk system it needs to respond quickly and effectively to changes in our strategic operating environment and in policy direction from Government.
Business outcomes are improved as part of broader Defence reform. Defence reform is achieved as agreed with Government and in accordance with the First Principles Review implementation plan. Partially achieved. As at 30 June 2017, Defence completed implementation of the two-year First Principles Review implementation plan. Implementation of the One Defence business model, major business processes and management practices, including the capability life cycle and the Smart Buyer approach, continued to progress during the reporting period. The requirement to complete ongoing reform in the areas of capability life cycle, service delivery, information technology, behaviours and systems program office reform will require an extension of oversight arrangements in 2017–18. It is expected the remaining six recommendations will be completed in 2017–18.
Security and vetting services are delivered to Defence, whole-ofgovernment and industry customers. Note: Also a performance measure in the 2016–17 Defence Corporate Plan, p. 10. Security services are delivered in accordance with the security and vetting services service offer. The Australian Government Security Vetting Agency meets its service charter. Partially achieved. The Australian Government Security Vetting Agency met its service charter during the reporting period. Performance at the lower clearance levels (baseline to NV2) continues to be strong, and average processing times have been consistently within benchmark timeframes through 2016–17. Positive vetting average benchmark processing times remain high, but remediation activities continue to deliver sustainable improvements. A new service level charter and key performance indicators will be introduced for 2017–18.
PBS 2016–17, Program 1.13: Chief Finance Officer, p. 77 Quality and timeliness of financial advice to the Minister, Secretary and Chief of the Defence Force. Financial advice meets the Minister, Secretary and Chief of the Defence Force’s requirements. Achieved. In 2016–17, the Chief Finance Officer Group provided precise and timely written and verbal advice to the Minister for Defence, the Secretary and the Chief of the Defence Force. All financial information was supported by reliable and validated data sources in Defence’s financial systems, meeting the Minister, Secretary and Chief of the Defence Force’s requirements.
Production of Defence’s budget, financial statements and the annual Defence management and finance plan. Produced in accordance with agreed statutory timeframes. Achieved. During the reporting period, the Chief Finance Officer Group produced Defence’s budget, financial statements and the annual Defence management and finance plan within agreed statutory timeframes.
Status of financial statements. Financial statements are unqualified. Achieved. In 2016–17, the Chief Finance Officer Group produced audited Defence financial statements for publication in the Defence annual report. The Australian National Audit Office determined that the Defence financial statements:
  • were unqualified and contained no Category A findings
  • complied with Australian Accounting Standards and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015
  • presented fairly the financial position of Defence as at 30 June 2017 and its financial performance and cash flows for the year.

Purpose 2—Deliver and sustain Defence capability and conduct operations

Analysis of performance against Purpose 2

Defence achieved Purpose 2 during the 2016–17 reporting period. Preparedness levels were achieved within agreed target ranges and operational deployments met requirements of Government policy. The specifics of preparedness achievement over the reporting period are contained in the classified quarterly Defence Preparedness Assessment Summary and Preparedness and Concurrency Ministerial Advice.

Defence continued to provide support to operations in support of a stable and secure near region. This included the successful conduct of ongoing operations in the Middle East (Operation Manitou), Afghanistan, South Sudan, Egypt, and the Golan Heights, and in support of border protection (Operation Resolute) and regional surveillance operations. Maritime surveillance patrols, such as those conducted in support of Operation Gateway, protected national interests and supported regional neighbours. Operation Solania supported enforcement of the Pacific Island countries’ fisheries laws, specifically through the Pacific Islands Forum Fisheries Agency.

Substantial progress was made in delivering the Integrated Investment Program. The first Integrated Investment Program Update was accepted by the Minister for Defence on 30 January 2017, with subsequent endorsement by Cabinet. The resulting changes to appropriations were reflected in the Portfolio Budget Statements 2017–18. The new capability life cycle supported a materiel sustainment focus through clear definition of end-to-end accountabilities and responsibilities with no hard handovers, as well as a stronger consideration of whole-of-life or asset management strategies through the Smart Buyer decision-making framework.

Promoting good mental health and providing effective care and support to military personnel who are wounded, injured or ill remains one of our highest priorities. Defence worked with the Department of Veterans’ Affairs to develop improved transition processes to boost early recognition of mental health problems. The Defence Work Health and Safety Committee continued its focus on organisational issues, including development of the Mental Health and Wellbeing Strategy 2017–2021 (inclusive of Australian Defence Force and Australian Public Service personnel). Defence also supported Australian Defence Force members and their families with future employment, family needs during transition, and wellbeing post separation.

Workforce diversity increased during the reporting period, with notable improvements in the representation of women in the Australian Defence Force and Australian Public Service—increasing to 16.7 and 41.8 per cent respectively. There were also increases in the number of Indigenous members and staff in the Australian Defence Force and Australian Public Service, and representation of Australian Public Service employees who identify as a person with disability has grown by 0.2 per cent (refer to pp. 109–115 for further information). All key actions and review recommendations set out in the Pathway to Change program were finalised as at December 2016. One of the key challenges for 2017–18 will be implementing a total workforce management model across a large and complex organisation that delivers a range of military and corporate services in support of Government’s strategic objectives both now and into the future.

Defence’s corporate and enabling services range from supporting the Australian Defence Force in the conduct of operations through information and communications technology services, logistics and health support, to building and remediating the Defence estate. Throughout 2016–17, the corporate and military enabling services continued to implement service delivery reforms, with customer satisfaction survey responses demonstrating that overall levels of satisfaction were increasing over time.

Detailed performance information related to Purpose 2 is in tables 3.3, 3.4 and 3.5.

Table 3.3: Performance results for criteria relating to Purpose 2

Defence performance measure Source Results
Measure: Required preparedness levels are achieved. Methodology: Assessment of preparedness against the Chief of the Defence Force Preparedness Directive. 2016–17 Defence Corporate Plan, p. 8 Achieved. Defence manages preparedness of more than 220 Defence elements. Across the 2016–17 financial year, preparedness of available Defence elements improved from 76.3 per cent to 80.8 per cent. Defence successfully managed preparedness pressures and consistently met all tasking requirements from Government.
Measure: Operational outcomes meet the requirements of Government policy. Methodology: Assessment of operational deployments against operational outcomes agreed with Government. 2016–17 Defence Corporate Plan, p. 8 Achieved. All operational requirements of Government were met during 2016–17, including the deployment, sustainment and reconstitution of operational forces.
Measure: The capability delivery process maintains the integrity of the Integrated Investment Program and delivers the required capability for the force-in-being. Methodology: Assessment of delivery against the Integrated Investment Program. 2016–17 Defence Corporate Plan, p. 8 Achieved. During 2016–17, substantial progress was made in delivering the capability for the force-in-being as described in the Integrated Investment Program (IIP). A total of 74 capability-related submissions were agreed by Government against an initial plan of 62 as outlined in the 2016 Defence White Paper. These approvals comprised 15 first pass approvals, 31 second pass approvals, 15 other types of IIP project approvals, and 13 capability-related submissions. The capability-related submissions were Government priorities that are either on the IIP or will be included in the IIP in the future. The submissions included the Naval Shipbuilding Plan, Future Submarine Design and Construction, and a range of updates to Government on projects and programs such as the status of offshore patrol vessels and future frigates.
Department of Finance and Department of the Prime Minister and Cabinet participation on the Investment Committee was integral to managing the IIP. Their participation strengthened submissions and facilitated smoother passage through Government, as evidenced by the approval of an increased number of capability proposals without changes or issues identified.
Information on the management of Defence’s major acquisition projects is available online (see Appendix B).
Measure: Military capability is sustained consistent with Government requirements. Methodology: Assessment of sustainment against capability manager requirements. 2016–17 Defence Corporate Plan, p. 8 Achieved
Acquisition
At 30 June 2017, Defence was managing 203 active major and minor capital equipment projects worth $105.9 billion. Military equipment projects are being delivered within the agreed parameters for scope and cost. Where schedule slippage has occurred, Capability Acquisition and Sustainment Group project managers are working closely with capability manager representatives to manage the impacts. Additional information on selected major capital equipment projects can be found in the Major Projects Report, which is provided annually to the Joint Committee of Public Accounts and Audit.
Eleven major acquisition projects were closed in 2016–17. These projects had a combined budget of $4.058 billion and a final spend of $3.706 billion, which is 8.7 per cent less than the budget approved by Government.
Sustainment
At 30 June 2017, the Capability Acquisition and Sustainment Group was managing 112 active materiel sustainment agreement product schedules with an annual budget of $5.6 billion. The Group supported capability managers in achieving preparedness levels and operational outcomes, through the delivery of sustainment of military equipment to agreed availability targets. A small number of major sustainment products have demonstrated variances in the areas of availability and/or cost performance, including the Canberra class landing helicopter dock, Armidale class patrol boats and the multi-role helicopter. Products of interest are reported to Government on a quarterly basis.
Information on the management of Defence’s top 30 sustainment products is available online (see Appendix B).
Intended result Performance measure Target Source Results
Government is able to deploy defence capability to support Government policy objectives. Chief of the Defence Force preparedness levels meet Government requirements. Chief of the Defence Force preparedness levels are achieved as agreed with Government. 2016–17 Defence Corporate Plan, p. 9 Achieved. While there was pressure on the availability of some Defence elements in 2016–17, overall preparedness levels were achieved and maintained over the reporting period. Defence was able to manage preparedness levels within existing resourcing.
Joint forces are able to be deployed and sustained efficiently and effectively, and in accordance with Government timeframes.
Operational
outcomes meet
the requirements
of Government
policy.


All operational
requirements
are met.
2016–17
Defence
Corporate
Plan, p. 9
Achieved. All operational requirements of Government were met during 2016–17, including the deployment and sustainment of operational forces.
Defence intelligence services enable efficient operations across national security agencies. Defence intelligence outputs align with Government intelligence priorities. Whole-of-government and Australian Defence Force intelligence requirements are met. 2016–17 Defence Corporate Plan, p. 9 PBS 2016–17, Program 1.1: Strategic Policy and Intelligence, p. 37 Achieved. As the intelligence capability manager, the Strategic Policy and Intelligence Group ensures wholeof- government and ADF intelligence requirements are met. Defence continued to deliver intelligence services that contributed to Government-directed operations and enabled efficient operations across national security agencies.
The three Defence intelligence agencies delivered timely and accurate intelligence services against the National Intelligence Priorities to Defence and the whole-ofgovernment stakeholders, including maintaining a watch function to ensure continuous 24/7 situational awareness for the ADF.
Specifically, the Australian Signals Directorate continued to support ADF operations and provided direct support to the Australian Cyber Security Centre and Australia’s Cyber Security Strategy.
The Australian Geospatial-Intelligence Organisation provided intelligence and operational support to Defence, including timely and accurate geospatial intelligence in support to military operations and domestic and regional security priorities, and an evolving geospatial intelligence capability supporting a broad range of Australian Government customers.
The Defence Intelligence Organisation delivered key intelligence assessment support to Defence and wholeof- government stakeholders across the reporting cycle, including the provision of intelligence strategic-level assessment support to ADF operations, Defence and Government.
Effective and efficient health support and welfare services are provided. Quality of health and welfare services delivered to Australian Defence Force members and families. Delivery meets agreed standards. 2016–17 Defence Corporate Plan, p. 9 Achieved. Health readiness supported all operational requirements. Health services provided to the Australian Defence Force in 2016–17 were improved by strengthening critical business processes and continuing improvements in patient-centric health service delivery. This is evident through results of the 2016 customer satisfaction survey, which identified 73.2 per cent of respondents were satisfied or very satisfied with the health services provided to them. There was an overall increase in the take-up of the National ADF Family Health Program by 1,477 in the financial year to a total of 46,671 dependants.
Defence develops organisational capability that ensures it can achieve Governmentdirected outcomes. Implementation of the First Principles Review recommendations. Implementation is achieved by 30 June 2017. 2016–17 Defence Corporate Plan, p. 9 Partially achieved.As at 30 June 2017, Defence completed implementation of the two-year First Principles Review implementation plan. Implementation of the One Defence business model, major business processes and management practices, including the capability life cycle and the Smart Buyer approach, continued to progress during the reporting period. The requirement to complete ongoing reform in the areas of capability life cycle, service delivery, information technology, behaviours and systems program office reform will require an extension of oversight arrangements in 2017–18. It is expected the remaining six recommendations will be completed in 2017–18.
Defence has the corporate and military enabling services it needs to support preparedness and operational requirements. Enabling services meet requirements. Satisfaction with the service delivery system increases over time. 2016–17 Defence Corporate Plan, p. 10 Achieved. The corporate and military enabling services continued to implement service delivery reforms throughout 2016–17, with customer satisfaction surveys demonstrating that overall levels of satisfaction increased over time. Customer satisfaction survey data was also used to inform decision-making around what further adjustments to the service delivery frameworks and/or practices might need to be made in 2017–18 to ensure the service delivery system is meeting agreed standards.

Table 3.4: Performance results against criteria relating to delivering the outcomes of Purpose 2

Source Performance measure Target Results
PBS 2016–17, Program 1.2: Navy Capabilities, p. 40 Required preparedness levels are achieved and maintained. As agreed with the Chief of the Defence Force. Achieved. The Navy met its commitments to generate forces to meet Government-directed activities, despite some issues with platform availability that affected the Navy’s ability to achieve all training and task group certification objectives for 2016–17.
Operational outcomes meet the requirements of Government policy. All operational requirements are met. Achieved. All operational requirements were met in 2016–17. Operation Manitou deployments were lengthened in duration but reduced in number over the course of the 12-month reporting period, thereby providing greater flexibility for the tasking of frigates.
PBS 2016–17, Program 1.3: Army Capabilities, p. 44 Required preparedness levels are achieved and maintained. As agreed with the Chief of the Defence Force. Achieved. All preparedness requirements were met, with known deficiencies being managed toward effective remediation. The Army refined its preparedness management guidance to ensure better alignment across Defence and improved reporting on preparedness. The Army introduced a new tool (Defence Requirements Management Module) during the reporting period to enhance preparedness management.
Operational outcomes meet the requirements of Government policy. All operational requirements are met. Achieved. Force elements for scheduled operations and contingency plans were prepared and deployed as required by Government, through the force generation cycle and accompanying preparedness requirements.
PBS 2016–17, Program 1.4: Air Force Capabilities, p. 47 Required preparedness levels are achieved and maintained. As agreed with the Chief of the Defence Force. Achieved. In 2016–17, the Air Force achieved and maintained Chief of the Defence Force–directed preparedness levels, with no significant risk to maintaining Chief of the Defence Force preparedness levels in 2017–18.
Operational outcomes meet the requirements of Government policy. All operational requirements are met. Achieved. The Air Force met all Government requirements for multiple, concurrent joint operations.
PBS 2016–17, Program 1.5: Joint Operations Command, p. 51 Operational deployments meet requirements of Operational deployments meet requirements of Government policy. All operational requirements are met. Achieved. All requirements of Government policy relating to operational deployments were met. This included successful operations in the Middle East, Afghanistan, South Sudan, Egypt, and the Golan Heights, and in support of border protection and regional surveillance operations.
PBS 2016–17, Program 1.6: Vice Chief of the Defence Force, p. 57

Required preparedness levels are achieved and maintained.

Preparedness levels are achieved and maintained as directed by the Chief of the Defence Force.
Achieved. Preparedness performance improved in 2016–17, with the percentage of available Defence elements increasing from 76.3 per cent to 80.8 per cent. Defence successfully managed pressures caused by limitations on specific Defence elements and consistently achieved all tasking from Government.
Strategic military advice supports Government decision-making. Government expresses a high level of confidence in strategic military advice. Achieved. Defence provided advice on Australian Defence Force operations and activities in support of national security objectives. Defence engaged across departments and agencies to deal with a variety of issues, ranging from short-notice issues relating to the Australian Defence Force’s operations in the Middle East, to longer-term complex issues such as counterterrorism and future operations requiring Government consideration. Regular feedback from ministerial staff indicates satisfaction with the level of support provided.
Integrity of the Integrated Investment Program. Integrated Investment Program is delivered as agreed with Government. Achieved. Substantial progress was made in delivering the Integrated Investment Program (IIP). In 2016–17, a total of 74 capability-related submissions were agreed by Government against an initial target of 62 in the 2016 Defence White Paper. Within the total of 74 approvals, 61 were IIP project approvals and 13 were capability-related Government submissions that provided advice to Government on current and future capability. Realignment of the IIP was agreed by Government through the IIP biannual update process, including updating the Government Forward Work Program and the establishment of approval authorities. This cyclic process maintains the ongoing integrity of the IIP by providing Government with a greater level of oversight of the IIP, and better enables trade-offs and prioritisation of proposals from one year to the next as strategic circumstances evolve.
PBS 2016–17, Program 1.9: Estate and Infrastructure, p. 66 Estate proposals, once approved by Government, meet agreed schedule and are delivered within agreed costs and scope. The Facilities and Infrastructure Program1 is delivered within scope, budget and schedule. The Facilities and Infrastructure Program is compliant with legislative and other statutory requirements, standards and policies. Achieved. Defence sustained facilities on the Defence estate and supported new capability in accordance with planned performance. Defence referred 11 infrastructure projects to the Parliamentary Standing Committee on Public Works and completed eight public hearings during 2016–17, with eight projects receiving parliamentary approval. The remaining three projects will be heard by the committee in the 2017–18 financial year. This will set up expenditure for future years, as expenditure rises to approximately $2 billion in 2018–19.
The estate is aligned with the requirements of the current and future force. Surplus estate is disposed of as agreed with Government. Achieved. Defence continues to develop a Future Defence Estate Profile, which will be implemented in 2017–18 to ensure the estate is aligned to the current and future force. During the reporting period, Defence achieved 11 property divestment outcomes, as agreed with Government. This is an excellent result and the most divestments achieved in a single financial year since 2004. Defence retained approximately $53.65 million in gross revenue in 2016–17.
Estate services enable Defence capability requirements. Estate services are delivered within budget and meet service requirements. Achieved. Defence enhanced service delivery and improved responsiveness to capability managers through a focus on integrating the delivery of enabling services, the implementation of a range of integrated service delivery initiatives, and working closely with capability managers through a range of planning forums. As required by the First Principles Review, the Defence estate is being managed as a strategic asset. A revised base accountabilities model will be introduced in 2017–18 to clarify joint accountabilities across various roles and responsibilities involved in managing the Defence estate. The estate works program completed 494 projects in 2016–17 and achieved within 1 per cent of the target budget of $411 million for 2016–17. Additional control measures have been implemented to ensure estate services are delivered within budget in future years.
PBS 2016–17, Program 1.10: Chief Information Officer, pp. 68–69 ICT services meet requirements. Satisfaction with the service delivery system increases over time. Partially achieved. Increased satisfaction with service delivery was evidenced in customer satisfaction surveys, primarily due to improvement in system response times, ease of accessing services and support, and the improvement in confidence with information and communications technology support to the Integrated Investment Program. The implementation of the Infrastructure Transformation Program is expected to improve service delivery satisfaction in 2017–18 through improvements to terrestrial communication upgrades, improvements to centralised processing and improvements to end-user computing.
Effective development of next-generation ICT services. ICT capability development is in accordance with the Integrated Investment Program. Partially achieved. The Chief Information Officer Group implemented organisational changes to align ICT capability development processes to the capability life cycle and Integrated Investment Program (IIP) requirements. Key enabling projects and programs toward achieving the next generation of ICT services were approved in 2016–17. Some changes to the IIP baseline for ICT projects were required in order to account for more robust definition of requirements and an achievable pathway for Government approval.
Effective development of enterprisewide frameworks for information management architecture standards and master data management. Enterprise information management architecture is approved for implementation. Achieved. The enterprise information management architecture standards, logical and conceptual data architecture, master data management framework and technology portfolio assessment process were endorsed by the Architecture Management Review Board in September 2016. The implementation of the enterprise information management architecture will begin in 2017–18.
PAES 2016–17, Program 1.11: Defence People, p. 41 ADF members and families are supported through the delivery of the family support program, transition services and bereavement support. Support is delivered in a timely and professional manner. Employment initiatives are implemented in line with Government direction. Achieved. Defence supported ADF members and their families with future employment, family needs during transition and wellbeing post separation. A joint taskforce between Defence and the Department of Veterans’ Affairs was established to facilitate improved transition from the ADF to civilian life.
An individual case management service was introduced to assist Defence families across Australia to locate suitable childcare places.
Enhanced transition support services for ADF members to better prepare them for employment opportunities were implemented.
Bereavement support for families of ADF members who die in service is offered to all bereaved families regardless of cause of death.
PBS 2016–17, Program 1.11: Defence People, p. 72 Achievement of ADF
recruitment targets.
Meet recruitment targets as specified by the Services. Partially achieved. ADF permanent full-time recruitment performance, across all avenues of entry, improved from 92 per cent in 2015–16 to 97.4 per cent achievement in 2016–17. Recruitment targets for part-time (Reserves) increased from 74.1 per cent in 2015–16 to 80.4 per cent achievement in 2016–17.
Achieve ongoing cultural reform and workforce culture initiatives that embed diversity and inclusion. Workforce diversity has been increased. Cultural reform initiatives are implemented as set out in the Pathway to Change program. Achieved. Workforce diversity increased over the reporting period. The representation of women in the ADF and Australian Public Service (APS) increased to 16.7 per cent and 41.8 per cent respectively.
Representation of Indigenous ADF members increased from 2 per cent to 2.3 per cent and Indigenous APS staff increased from 1.8 per cent to 2 per cent. The number of ADF members who identify as culturally and linguistically diverse has grown from 23.9 per cent to 24.3 per cent, and representation in the APS has remained steady at 32.4 per cent. Representation of APS employees who identify as a person with disability increased from 3.5 per cent to 3.7 per cent. (Refer to pp. 109–115 for further information.)
All key actions and review recommendations set out in the Pathway to Change program were finalised as at December 2016. The implementation of the next phase of cultural reform will be implemented in 2017–18, with the introduction of a refreshed cultural intent statement and six Defence cultural reform priorities as outlined in Pathway to Change: Evolving Defence Culture 2017–2022.
An agile and skilled workforce through alignment and balance of workforce supply and demand. Workforce is aligned and managed in accordance with the workforce strategy and the ADF Total Workforce Model. Partially achieved. During the reporting period, the workforce continued to grow in line with 2016 Defence White Paper requirements. Workforce plans were developed to ensure that the Defence workforce has the agility and skills required to meet current and future demand. The Services completed their implementation of the Total Workforce Model on 1 November 2016 less Service Category 6 (flexible service by members of the Permanent Force). Service Category 6 will be implemented in two stages beginning in early 2017–18.
Complete implementation of the First Principles Review workforce and behavioural recommendations. Implemented as agreed with Government. Partially achieved. Activities relating to the implementation of recommendations about behaviours and performance management were progressed in 2016–17. All five recommendations relating to the workforce were successfully implemented. Work will continue in 2017–18 to ensure the intent of the recommendations is fully met.
PBS 2016–17, Program 1.14: Defence Force Superannuation Benefits, p. 83 Provision of timely payments to the Commonwealth Superannuation Corporation and quality administration of Defence Forces Retirement Benefits (DFRB) Scheme, Defence Force Retirement and Death Benefits (DFRDB) Scheme, Military Superannuation and Benefits Scheme (MSBS) and ADF Super employer and member contributions. Payments are provided within agreed timeframes to the Commonwealth Superannuation Corporation and quality administration of DFRB, DFRDB, MSBS and ADF Super employer and member contributions. Achieved. Employer and member contributions to the DFRB Scheme, the DFRDB Scheme and the MSBS were paid on time to the Commonwealth Superannuation Corporation throughout 2016–17. The related accounting entries were correctly recorded and reconciled in compliance with the monthly financial reporting timetable set by the Chief Finance Officer Group.
PBS 2016–17, Program 1.15: Defence Force Superannuation Nominal Interest, p. 84 Provide quality administration services for DFRB, DFRDB, MSBS and ADF Cover nominal interest transactions. Administration services are provided as agreed for DFRB, DFRDB, MSBS and ADF Cover nominal interest transactions. Achieved. The determination of the nominal interest transactions for the DFRB Scheme, the DFRDB Scheme and the MSBS was correctly made and recorded in compliance with the monthly financial reporting timetable set by the Chief Finance Officer Group.
PBS 2016–17, Program 1.16: Housing Assistance, p. 87 Members respond to and take up the scheme. 6,000 applications received with 3,800 members taking up the scheme. Achieved. Interest in the Defence Home Ownership Assistance Scheme continues to be positive, with 6,196 applications and 3,844 subsidised loans processed by the Department of Veterans’ Affairs as at 30 June 2017.
Ensure that interest rates provided to ADF members by the panel of home loan providers are competitive with other interest rates in the market. Interest rates offered are consistently lower than other interest rates in the market. Achieved. The three appointed home loan providers on the Defence Home Ownership Assistance Scheme panel provided competitive interest rates in accordance with their obligations under their respective deeds.
PBS 2016–17, Program 1.17: Other Administered, p. 88 Account and report ‘Other Administered’. Account and report ‘Other Administered’. Achieved. Transactions relating to ‘Other Administered’ were correctly determined and recorded in compliance with the monthly financial reporting timetable set by the Chief Finance Officer Group. ‘Other Administered’ comprises interest on overdue accounts, interest on operational bank accounts, interest on loans to build accommodation, dividends and tax equalisation receipts from Defence Housing Australia, and royalty receipts.v
PBS 2016–17, Program 2.1: Operations Contributing to the Security of the Immediate Neighbourhood, pp. 90–91 ADF operations meet requirements. Operations meet Government’s stated objectives. ADF forces are effectively deployed and sustained. ADF forces are withdrawn for reconstitution when they are no longer required. Achieved. All directed Defence support to operations was achieved during the reporting period, encouraging a stable and secure near region. Maritime surveillance patrols such as Operation Gateway protected national interests and supported regional neighbours. Operation Solania supported the enforcement of Pacific Island countries’ fisheries laws, specifically through the Pacific Islands Forum Fisheries Agency. Operational planning and performance oversight was conducted with strong stakeholder engagement. Forces were withdrawn for reconstitution successfully throughout the reporting period.
PBS 2016–17, Program 2.2: Operations Supporting Wider Interests, p. 93 ADF operations meet requirements. Operations meet Government’s stated objectives. ADF forces are effectively deployed and sustained. ADF forces are withdrawn for reconstitution when they are no longer required. Achieved. All directed global operations contributing to national objectives and supporting alliances were achieved. Deployed forces were committed in air operations in Iraq and Syria, partner capacity building in Iraq, the NATO-led mission in Afghanistan, and United Nations–led missions and other international efforts in the maritime domain and the Middle East region. Continuous performance oversight of forces was provided to ensure sustainment of enduring commitments and capability.
Operational design reviews ensured the force design construct, deployment period, preparedness, readiness and posture remained relevant to achieve the prescribed missions and tasks as directed by Government, while operational planning ensured forces were effectively deployed, sustained, and reconstituted when no longer required.
PBS 2016–17, Program 3.1: Defence Contribution to National Support Tasks in Australia, p. 97 ADF operations meet requirements. Operations meet Government’s stated objectives. ADF forces are effectively deployed and sustained. ADF forces are withdrawn for reconstitution when they are no longer required. Achieved. Domestic operations delivered the required outcomes against Government’s stated objectives. This included implementing a comprehensive Defence counterterrorism framework, meeting requests for domestic disaster relief, and surveillance operations to protect our maritime approaches. Defence continued to conduct exercises under the Shade series to practice counterterrorism capability.
Defence continued to observe and participate in state and territory police force exercises, maximising mutual understanding and interoperability.
Defence continued refinements of Operation Augury to bring greater coherence to the full suite of Defence capabilities that can be applied in support of Defence Force aid to civil authorities. The ADF supported the Queensland Government following Tropical Cyclone Debbie. The forces provided assistance to the civil community and were subsequently withdrawn and reconstituted.

Note: The Major Capital Facilities Program in the 2016–17 Portfolio Additional Estimates Statements is now referred to as the Facilities and Infrastructure Program of the Integrated Investment Program. This comprises approved and yet-to-be-approved major and medium projects.

Table 3.5: Performance against the performance criteria in the PBS and PAES 2016–17 for Purpose 2— unit availability days, HydroScheme products and flying hours

Source Deliverable 2016–17 revisedestimate 2016–17 actual
PAES 2016–17, Program 1.2: Navy Capabilities, p. 31 (unit availability days)1 Major combatants
3,389
3,332
Minor combatants
4,268
3,775
Amphibious and afloat support
1,150
964
Maritime teams
2,557
2,557
Hydrographic force
2,253
2,212
PBS 2016–17, Program 1.2: Navy Capabilities, p. 42 (HydroScheme products)2 Maritime safety updates
1,100
1,048
Charting products
15
9
Nautical publications
29
29
PBS 2016–17, Program 1.2: Navy Capabilities, p. 43 (flying hours) S-70B-2 (Seahawk)
1,200
1,112
AS350BA (Squirrel)
2,000
1,929
MH-60R
4,800
4,0373
MRH-90 Taipan4
Laser airborne depth sounder (LADS) aircraft
980
1,201
PAES 2016–17, Program 1.3: Army Capabilities, p. 32 (rate of effort—flying hours) CH-47F Chinook
1,850
1,388.05
CH-47D Chinook6
S-70 Black Hawk
4,552
4,124.57
Kiowa
5,150
4,592.68
Tiger armed reconnaissance helicopter
4,800
3,971.89
MRH-90 Taipan (multi-role helicopter)
7,000
5,348.710
2016–17 PAES, Program 1.4: Air Force Capabilities, p. 34 (flying hours) PC-9/A
17,648
16,703.2
PC-2111
KA350 King Air
8,300
7,428.0
C-130J Hercules
7,350
6,629.3
C-17A Globemaster III
7,000
6,600.4
C-27J Spartan
2,000
1,362.1
KC-30A multi-role tanker transport
6,000
5,355.5
737 Boeing business jet
1,600
1,506.5
CL-604 Challenger
2,161
1,633.5
AP-3C Orion
6,465
6,146.7
E-7A Wedgetail
3,600
3,465.9
F/A-18A/B Hornet
16,300
16,595.8
F/A-18F Super Hornet
4,000
4,728.4
P-8A Poseidon
450
519.3
Hawk 127
6,000
5,501.7
EA-18G Growler
800
470.8
F-35A Lightning II
500
407.5
Heron unmanned aircraft system (UAS)
1,000
295.4

Notes:

  1. Loss of unit availability days for major combatants was due to program changes associated with planned maintenance. Overall, the Navy achieved 84 per cent of the unit availability days target for amphibious and afloat support, due to system defects associated with the landing helicopter dock pod propulsion systems. The Navy achieved 88 per cent of the target for minor combatants; achievement of this target was affected by extensions to remediation dates, emerging defects and workup requirements.
  2. A reduced volume of maritime safety updates was required in the 2016–17 financial year and all updates were applied within required timeframes to support maritime safety. Charting projects planned for the year were not fully achieved due to staffing limitations and a reprioritisation of effort to maintain minimum maritime safety update services and emerging support tasks.
  3. Lower actual flying hours due to aircrew availability.
  4. While the Navy operates the MRH-90s, flying hour achievement is reported by the Army.
  5. Planned performance was not achieved due to a 25 per cent workforce deficiency against establishment. This has been addressed for 2017–18 onwards.
  6. Actual flying hours for the CH-47D Chinook during the 2015–16 period were published in the 2016–17 Portfolio Budget Statements. The CH-47D was withdrawn from service in July 2016 and was not included in the 2016–17 Portfolio Additional Estimates Statements.
  7. Delays in establishing a new deep-level maintenance support contract with industry in late 2016 and an ageing fleet resulted in airframe and component management challenges.
  8. During 2016–17, there was a reduced overall training due to the ability to absorb pilots into operational units. This is a flow-on impact from the underperformance of the Tiger armed reconnaissance helicopter and the MRH-90 Taipan.
  9. High maintenance liability continues to impact rate-of-effort achievement. There was reduced training throughput at the Army Aviation Training Centre due to the ability to absorb pilots into the operational unit.
  10. Reliability, availability and maintainability deficiencies continued to impact the fleet. Availability levels have not yet been achieved for transition of the MRH-90 into the Special Forces support role. Flying was suspended twice during 2016–17 due to technical information management issues, with corresponding impact on rate-of-effort achievement.
  11. The PC-21flying hours are zero as this aircraft is not yet in service.

Purpose 3—Develop the future capability Defence needs to conduct operations

Analysis of performance against Purpose 3

During the reporting period, Defence performed well and made strong progress in implementing the 2016 Defence White Paper, including implementation of the Integrated Investment Program, Defence International Engagement Policy and Defence Industry Policy Statement. This will ensure Defence has the necessary relationships with national, regional and global allies and partners to deliver and sustain the required capability for the current force and the future force, as described in the 2016 Defence White Paper.

Early and consistent consideration of Australian industry as a Fundamental Input to Capability has been embedded in the new Defence capability life cycle, and more explicit requirements on tenderers under the Australian Industry Capability Program have been put in place to maximise consideration of Australian industry involvement in materiel procurements of $20 million and above. The strengthened Australian Industry Capability Program requirements were applied in the SEA 1180 and SEA 5000 requests for tender and, as announced by the Minister for Defence Industry on 29 June 2017, have now been embedded as the standard across all materiel projects in this threshold.

The Smart Buyer detailed design was approved by the First Principles Review Implementation Committee in October 2016. Feedback has been overwhelmingly positive on Smart Buyer as an approach for improving environmental understanding and subsequent strategy development. Plans are underway to continue to expand Smart Buyer across the capability life cycle over the next 12 to 24 months, with better leveraging of industry a priority.

Intelligence capability continues to be developed in accordance with the Integrated Investment Program to develop the next generation of capability, including the creation of a unified geospatial enterprise in Defence. The Australian Geospatial-Intelligence Organisation continues to grow and evolve technologies, capabilities and partnerships to improve the provision of services to customers.

The Next Generation Technologies Fund ($730 million over 10 years), launched in March 2017, began funding collaborative research initiatives to address priority areas identified in the Integrated Investment Program.

In accordance with the 2016 Defence Industry Policy Statement, the Centre for Defence Industry Capability and the Defence Innovation Hub were launched in December 2016. Their establishment supports a more strategic partnership between Defence and industry to deliver the right capability outcomes and investment in future skills. The Centre for Defence Industry Capability demonstrated its value as the front door to Defence for Australian industry through the provision of business and advisory services to Australian companies, including through Capability Improvement Grants, and supporting industry development and export programs, including the Global Supply Chain Program and Team Defence Australia initiatives. The Defence Innovation Hub consolidated Defence’s disparate innovation programs into a single whole-of-Defence program focused on bringing Australian innovation into Defence capability and providing a single entry point for Australian companies—increasing the efficiency and effectiveness of Defence capability innovation.

The focus for 2017–18 will be on designing and delivering the Defence capability required by Government in the 2016 Defence White Paper within the costing envelope described in the Integrated Investment Program. The complex nature of Defence capability requires a robust and fit-for-purpose capability life cycle, integrated and contested capability acquisition and sustainment policy and practice, and deep engagement with Defence industry both in Australia and overseas.

Detailed performance information related to Purpose 3 is in tables 3.6 and 3.7.

Table 3.6: Performance results for criteria relating to Purpose 3

Defence performance measure Source Results
Measure: The Integrated Investment Program is managed effectively and comprises all investment and sustainment inputs, incorporating the Fundamental Inputs to Capability. Methodology:
  • Regular independent assurance of the Defence capability development process by the Defence Audit and Risk Committee.
  • Regular reviews of the Integrated Investment Program in consultation with the Minister and central agencies.
2016–17 Defence Corporate Plan, p. 11 Achieved. The new Defence capability life cycle process implemented in 2016–17 emphasises the importance of early consideration of all Fundamental Inputs to Capability. In consideration of capability proposals for Government approval, the Defence Investment Committee reviewed the Fundamental Inputs to Capability and ensured that appropriate planning and resource allocation occurred over the reporting period. Department of Finance and Department of the Prime Minister and Cabinet participation in the Investment Committee was integral to Defence’s successful delivery of the Integrated Investment Program in 2016–17. Their participation strengthened submissions and facilitated smoother passage through Government, as evidenced by the approval of an increased number of capability proposals without changes or issues identified. The Vice Chief of the Defence Force provided regular updates to the Defence Audit and Risk Committee on the implementation of the new capability management processes.
Measure: Emerging capability and technology is used to support development of best value-for-money capability. Methodology: Regular assessment of how Defence’s strategic research builds understanding of future Defence capability. 2016–17 Defence Corporate Plan, p. 11 PBS 2016–17, Program 1.12: Defence Science and Technology, p. 75 Achieved. A refined process was developed in 2016–17 to assess, prioritise and balance Defence science and technology investment to provide best value in response to Defence needs. A Defence science and technology client forum ensured a balanced investment in both Defence science and technology capabilities and the delivery program for which formal approval is sought from the Defence Investment Committee.
Measure: Defence capability development leverages industry to promote innovation. Methodology: Regular assessment of the value of Defence engagement with industry. 2016–17 Defence Corporate Plan, p. 12 Achieved. Defence made significant progress implementing the Government’s 2016 Defence Industry Policy Statement to leverage industry to promote innovation. Early and consistent consideration of Australian industry as a Fundamental Input to Capability has been embedded in the new Defence capability life cycle, and more explicit requirements on tenderers under the Australian Industry Capability Program have been put in place to maximise consideration of Australian industry involvement in materiel procurements of $20 million and above. A dedicated defence industry forum with the state and territory governments was established in July 2016, meeting four times in 2016–17, and with a working group meeting twice. The forum addressed the full range of defence industry initiatives and established a new level of partnership in developing Australia’s defence industry. Defence industry and innovation awareness and engagement events for industry have been presented at a large range of forums across Australia, including LAND 400 (Land Combat Vehicle System), SEA 1180 (Offshore Patrol Vessel), SEA 5000 (Future Frigate) and SEA 1000 (Future Submarine) industry events. This deep engagement has been reinforced by the Naval Shipbuilding Taskforce’s and other Groups’ regular engagement with relevant defence industry sectors, which has been recognised by Australian industry and the states and territories. The recently established Centre for Defence Industry Capability and Defence Innovation Hub have been shortlisted for the 2017 Public Sector Innovation Awards, recognising their achievements in bringing new cultural and business approaches to Defence’s partnership with Australian industry. The Next Generation Technologies Fund ($730 million over 10 years), launched in March 2017, has commenced funding collaborative research initiatives to address priority areas identified in the Integrated Investment Program. Major programs that commenced in 2016–17 include the Grand Challenges program and new Defence Cooperative Research Centres program.
Intended result Performance measure Target Source Results
Defence develops the capability it needs to meet Government’s requirements now and into the future. Effective implementation of the 2016 Defence White Paper. The 2016 Defence White Paper Implementation Plan is delivered as agreed with Government. 2016–17 Defence Corporate Plan, p. 12 Achieved. The 2016 Defence White Paper Implementation Plan remained on schedule during the reporting period. Implementation was supported by annual reviews of Defence’s classified strategic planning documents that factor emerging challenges into policy settings and planning. Implementation will continue in 2017–18.
A competitive Australian industrial base is able to support defence capability. The intent of the 2016 Defence Industry Policy Statement is met. The Centre for Defence Industry Capability and the Defence Innovation Hub operate in accordance with the 2016 Defence Industry Policy Statement. 2016–17 Defence Corporate Plan, p. 12 Achieved. In accordance with the 2016 Defence Industry Policy Statement, the Centre for Defence Industry Capability and the Defence Innovation Hub were launched in December 2016. This establishes a more strategic partnership between Defence and industry to deliver the right capability outcomes and investment in future skills. The Centre for Defence Industry Capability participated in SEA 5000 Future Frigate and SEA 1000 Future Submarine roadshows across Australia, ran a number of ‘Working with Defence’ activities for Australian companies, and received more than 5,000 unique website views in June 2017 alone. The Centre for Defence Industry Capability has received more than 650 contact centre enquiries, 165 new requests for advisory services since its launch, and provided 10 Capability Improvement Grants to Australian small to medium-sized enterprises. The Defence Innovation Hub received more than 200 innovation proposals over the reporting period. On 27 June 2017, the Minister for Defence Industry announced the first three innovation contracts worth more than $887,000.

Table 3.7: Performance results against criteria relating to delivering the outcomes of Purpose 3

Source Performance measure Target Results
PBS 2016–17, Program 1.7: Capability Acquisition and Sustainment, pp. 59–60 Capability proposals, once approved by Government, meet agreed schedule and are delivered within agreed costs and scope. Deliver Government approved acquisition projects to budget, schedule and agreed capability scope. Deliver sustainment of military equipment to budget and agreed availability target. Timeliness and quality of advice meets Government and Defence requirements. Achieved.
Acquisition At 30 June 2017, Defence was managing 203 active major and minor capital equipment projects worth $105.9 billion. Military equipment projects are being delivered within the agreed parameters for scope and cost. Where schedule slippage has occurred, Capability Acquisition and Sustainment Group project managers are working closely with capability manager representatives to manage the impacts. Additional information on selected major capital equipment projects can be found in the Major Projects Report, which is provided annually to the Joint Committee of Public Accounts and Audit. Eleven major acquisition projects were closed in 2016–17. These projects had a combined budget of $4.058 billion and a final spend of $3.706 billion, which is 8.7 per cent less than the budget approved by Government.
Sustainment
At 30 June 2017, the Capability Acquisition and Sustainment Group was managing 112 active materiel sustainment agreement product schedules with an annual budget of $5.6 billion. The Group supported capability managers in achieving preparedness levels and operational outcomes, through the delivery of sustainment of military equipment to agreed availability targets. A small number of major sustainment products have demonstrated variances in the areas of availability and/or cost performance, including the Canberra class landing helicopter dock, Armidale class patrol boats and the multi-role helicopter. Products of interest are reported to Government on a quarterly basis.
Capability acquisition and sustainment advice
Government, ministerial and departmental expectations and timeframes were met for provision of policy, advice and support and delivery of industry programs.
Procurement of Defence capability better leverages industry, is more agile and reduces the cost of doing business. Develop the Smart Buyer function, which better leverages industry, delivers capability more rapidly and reduces the cost of doing business for Defence and industry. Achieved. The Smart Buyer detailed design was approved by the First Principles Review Implementation Committee in October 2016. As at 30 June 2017, 44 Defence capital projects have completed the Smart Buyer process, with 32 of these in preparation for ‘Gate 0’ Investment Committee consideration and six scheduled for ‘Gate 1’ consideration. Feedback from Gate 0 workshop participants agreed that the Smart Buyer approach supported improved environmental understanding and subsequent strategy development. Plans are underway to continue to expand the Smart Buyer approach across the capability life cycle over the next 12 to 24 months, with better leveraging of industry a priority.
PBS 2016–17, Program 1.12: Defence Science and Technology, p. 75 Defence’s strategic research builds understanding of future Defence capability. Strategic research activities are aligned with Integrated Investment Program priorities. Achieved. The Defence Science and Technology Group’s strategic research program was developed in accordance with domain-specific science and technology strategies. This program included the Next Generation Technologies Fund, in line with strategic research priorities identified in the Defence Integrated Investment Program.
Defence science and technology capability is enhanced through the delivery of collaborative partnerships with international research agencies, industry and academia. Collaborative activities with industry, academia and allied defence research agencies are aligned to 2016 Defence White Paper and Defence Industry Policy Statement priorities. Achieved. The Next Generation Technologies Fund program was launched by the Minister for Defence Industry in March 2017, and expanded the range of Australian research partnerships addressing the priorities of the 2016 Defence White Paper and the 2016 Defence Industry Policy Statement.