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Appendix A - Consultancies and Contracts


Consulting contracts

Defence engages consultants where it lacks specialist expertise or when independent research and assessment is required. Consultancy contracts are entered into with industry partners, academia and consultancies. The process for selecting consultants is consistent with Defence procurement policies and the Commonwealth Procurement Rules.

In 2015–16, Defence entered into 367 new consultancy contracts (248 with a value greater than $10,000) involving total actual in-year expenditure of $51.2 million (GST inclusive). In addition, 296 consultancy contracts remained active, involving total actual in-year expenditure of $39.5 million (GST inclusive).

This annual report contains information about actual expenditure on contracts for consultancies. Information on the value of individual contracts and consultancies is available on the AusTender website. Table A.1 records total in-year expenditure for consulting contracts rather than the full value of the contracts.

Table A.1: Total expenditure on consulting contracts, 2013–14 to 2015–16

2013–14
$m

2014–15
$m

2015–16
$m

Defence

38.3

71.3

90.7

Defence Materiel Organisation1

5.6

10.3

Note:
1. From 1 July 2015, the Defence Materiel Organisation was incorporated into the Department of Defence. It is no longer a separate listed entity.

Table A.2 shows a summary of 2015–16 consultancies let with a contract value greater than $10,000 (including GST).

Table A.2: Consultancies let greater than $10,000, by program, 2015–16

Program

Number of contracts let

Total contract value ($)

Program 1.1 Strategic Policy and Intelligence

15

3,454,032

Program 1.2 Navy Capabilities

1

32,525

Program 1.3 Army Capabilities

0

0

Program 1.4 Air Force Capabilities

4

2,420,489

Program 1.5 Joint Operations Command

1

29,783

Program 1.6 Vice Chief of the Defence Force

14

3,111,833

Program 1.7 Capability Acquisition and Sustainment

50

12,530,705

Program 1.8 Defence Executive Support

111

24,465,718

Program 1.9 Estate and Infrastructure

13

897,159

Program 1.10 Chief Information Officer

21

4,610,167

Program 1.11 Defence People

8

1,536,666

Program 1.12 Defence Science and Technology

5

349,831

Program 1.13 Chief Finance Officer

5

561,968

Total

248

54,000,875

Australian National Audit Office access clause

The Defence contracting templates include standard clauses providing for the Auditor-General access to contractors’ and major subcontractors’ premises, records and accounts. During 2015–16, Defence had 48 contracts that were exempt from the requirement to provide access to the Auditor-General (Table A.3).

Table A.3: Contracts that do not include the ANAO access clause, 2015–16

Group and company

Contract value ($)

Purpose

Capability Acquisition and Sustainment Group

Foreign Military Sale

186,124

Professional engineering services

Foreign Military Sale

372,108

Personal protective ensemble

Foreign Military Sale

471,604

Communication equipment

Foreign Military Sale

488,828

Training services

Foreign Military Sale

817,475

Cryptographic equipment

Foreign Military Sale

885,928

Light weapons and ammunition

Foreign Military Sale

892,418

Light weapons and ammunition

Foreign Military Sale

935,588

Light weapons and ammunition

Foreign Military Sale

954,849

Equipment and support

Foreign Military Sale

1,062,767

Explosive ordnance

Foreign Military Sale

1,075,952

Equipment and support

Foreign Military Sale

1,110,820

Explosive ordnance

Foreign Military Sale

1,201,926

Communication equipment

Foreign Military Sale

1,324,631

Communication equipment

Foreign Military Sale

1,396,650

Equipment and support

Foreign Military Sale

1,784,120

Communication equipment

Foreign Military Sale

1,928,739

Cryptographic equipment

Foreign Military Sale

2,057,284

Communication equipment

Foreign Military Sale

2,096,430

Feasibility study

Foreign Military Sale

2,166,834

Acquisition of mortar capability and support

Foreign Military Sale

2,227,619

Explosive ordnance

Foreign Military Sale

2,576,927

Equipment and support

Foreign Military Sale

2,789,318

Acquisition of inflatable craft

Foreign Military Sale

2,918,999

Supply liaison office administration support

Foreign Military Sale

3,245,338

Aircraft spare and repair parts

Foreign Military Sale

4,009,483

Communication equipment

Foreign Military Sale

5,656,120

Feasibility study

Foreign Military Sale

6,116,128

Cryptographic equipment

Foreign Military Sale

7,151,506

Mortar equipment, software support and training

Foreign Military Sale

15,823,212

Aircraft spare and repair parts

Foreign Military Sale

17,352,154

Ammunition

Foreign Military Sale

19,136,757

Communication equipment

Foreign Military Sale

22,159,031

Air defence hardware and software support

Foreign Military Sale

25,284,081

Light weapons and ammunition

Foreign Military Sale

25,527,523

Light weapons and ammunition

Foreign Military Sale

29,379,991

Acquisition of missiles

Foreign Military Sale

29,742,759

Explosive ordnance

Foreign Military Sale

31,676,447

Acquisition of mortar capability

Foreign Military Sale

56,726,986

Acquisition of heavy recovery vehicles

Foreign Military Sale

84,873,675

Technical and engineering services

Foreign Military Sale

85,732,021

Weapon spare and repair parts

Foreign Military Sale

111,943,639

Explosive ordnance and support equipment

Foreign Military Sale

117,739,260

System software and support

Foreign Military Sale

139,564,761

Acquisition of aircraft

Foreign Military Sale

167,104,069

Acquisition of aircraft

Foreign Military Sale

275,090,039

Acquisition of missiles and support equipment

Foreign Military Sale

282,806,000

System follow-on engineering and support services

Foreign Military Sale

1,736,882,490

Equipment and support

Total for Capability Acquisition and Sustainment Group

3,334,447,408

Note:
Figures are GST exclusive.

Defence uses the United States Department of Defense’s Foreign Military Sales program, which facilitates sales of US arms, defence equipment, defence services and military training to foreign governments. The standard terms and conditions of Foreign Military Sales contracts do not contain ANAO access provisions.

Exempt contracts

In 2015–16, Defence reported a total of 265 contracts, standing offers or variations, with a total value of $565,688,434.63, which were subject to an exemption under the Freedom of Information Act 1982. These exemptions were generally applied under the national security provisions of the Act.

Legal expenses

Expenditure on internal and external legal services in 2015–16 is shown in tables A.4 to A.6. Internal expenses include salaries for military and civilian staff, divisional operating costs and military justice reimbursements. External expenses are professional fees, disbursements and legal assistance at Commonwealth expense. The figures are exclusive of GST.

Table A.4: Estimated expenditure on internal and external legal services, 2014-15 and 2015-16

Type of Legal Expenditure

2014-15
$m

2015-16
$m

Internal

44.99

48.02

External

33.66

38.02

Total

78.65

86.04

Table A.5: Estimated cost breakdown of internal legal expenses, 2014-15 and 2015-16

Items

2014-15
$m

2015-16
$m

Salaries for military lawyers

19.20

19.83

Salaries for civilian staff

15.75

15.91

ADF Reserve legal officers

6.30

7.45

Operating costs of Defence Legal Division

3.34

4.41

Military justice disbursements

0.40

0.42

Total

44.99

48.02

Table A.6 Estimated cost breakdown of external legal expenses, 2014-15 and 2015-16

Items

2014-15
$m

2015-16
$m

Professional fees — Defence legal panel

29.67

35.48

Disbursements

2.89

2.19

Legal assistance at Commonwealth expense

1.10

0.35

Total

33.66

38.02

Note:
In 2015–16, the Defence Materiel Organisation was incorporated into Defence as the Capability Acquisition and Sustainment Group and is consequently presented here with Defence as one entity. In order to allow for comparison, the 2014–15 reported figures for both Defence and the Defence Materiel Organisation have been combined in tables A.4 to A.6.