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Annual Report 2014–15

Volume 1, Part 1 : Defence Overview

Appendix A
Consultancies and contracts

Overview

Defence engages consultants where it lacks specialist expertise or when independent research and assessment are required. The process for selecting consultants is consistent with Defence procurement policies and the Commonwealth Procurement Rules.

Consulting contracts

In 2014–15, Defence (including the Defence Materiel Organisation) entered into 465 new consultancy contracts (395 with a value greater than $10,000) involving total actual expenditure of $61 million (including GST). In addition, 206 consultancy contracts remained active, involving total actual expenditure of $20.6 million (including GST).

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 expenditure for consulting contracts rather than the full value of the contract.

Table A.1: Total expenditure on consulting contracts, 2012–13 to 2014–15

2012–13
$m

2013–14
$m

2014–15
$m

Defence

37.8

38.3

71.3

DMO

2.9

5.6

10.3

Table A.2 shows a summary sorted by Defence Group of consultancies let in 2014–15 with a contract value greater than $10,000 (including GST).

Table A.2: Consultancies let greater than $10,000, by Group, 2014–15

Group

Number of contracts let

Total contract value ($)

Office of the Secretary and CDF

0

0

Vice Chief of the Defence Force Group

14

1,807,976

Joint Operations Command

3

928,354

Navy

0

0

Army

3

275,298

Air Force

4

443,503

Capability Development Group

0

0

Chief Finance Officer Group

12

22,851,300

Chief Information Officer Group

17

3,368,718

Defence Science and Technology Organisation

5

387,552

Defence Support and Reform Group

272

33,364,814

Intelligence and Security Group

18

1,090,824

Defence People Group

14

1,458,476

Defence Materiel Organisation

33

24,849,875

Total

395

90,826,690

Australian National Audit Office access clauses

The Defence contracting templates include standard clauses providing for Auditor-General access to contractors and major subcontractors’ premises, records and accounts. Defence has identified the following contracts that are exempt from the requirement to provide Auditor-General access.

Table A.3: Contracts that do not include the ANAO access clause, 2014–15

Group and company

($)

Purpose

Navy

DMS Maritime Pty Ltd

87,000,000

Acquisition of multi-role aviation training vessel

Total for the Navy

87,000,000

Army

BAE Systems National Security Solution

400,406

Information technology acquisition

Indigenous Essential Services Pty Ltd

118,146

Electrical work

National Test Pilot School Inc

569,865

Specialist training

National Test Pilot School Inc

1,054,250

Specialist training

Boeing Information Space & Defense Services

460,167

Specialist training

Total for the Army

2,602,834

Intelligence and Security Group

Day Hodge Associates Pty Ltd

19,698

AGSVA communication and customer satisfaction research

Total for Intelligence and Security Group

19,698

Chief Information Officer Group

Optus Networks Pty Ltd

1,713,357

Blue Force Tracker Off-Platform services

Total for Information Officer Group

1,713,357

Defence Materiel Organisation

Foreign Military Sale

103,851

Light weapons and ammunition

Foreign Military Sale

112,457

Explosive ordnance

Foreign Military Sale

145,307

Engineering training

Foreign Military Sale

169,725

Explosive ordnance

Foreign Military Sale

242,985

Explosive ordnance

Foreign Military Sale

350,541

Pharmaceuticals

Foreign Military Sale

402,024

Spare parts for 60 mm mortar capability

Foreign Military Sale

479,879

Explosive ordnance

Foreign Military Sale

497,220

Patrol HF radios

Foreign Military Sale

586,280

Light weapons and ammunition

Foreign Military Sale

604,327

Supply liaison office administration support

Foreign Military Sale

653,680

Equipment and support

Foreign Military Sale

678,478

Explosive ordnance

Foreign Military Sale

761,817

Aircraft spare and repair parts

Foreign Military Sale

1,084,697

Aircraft spare and repair parts

Foreign Military Sale

1,116,866

Software support

Foreign Military Sale

1,129,450

Explosive ordnance

Foreign Military Sale

1,283,040

Equipment and support

Foreign Military Sale

1,297,236

Explosive ordnance

Foreign Military Sale

1,422,831

Software support

Foreign Military Sale

1,967,137

Aircraft equipment and services

Foreign Military Sale

2,257,239

Light weapons and ammunition

Foreign Military Sale

2,401,646

Light weapons and ammunition

Foreign Military Sale

3,703,959

Military equipment

Foreign Military Sale

3,862,886

Aircraft equipment

Foreign Military Sale

4,345,494

Management advisory services

Foreign Military Sale

5,411,344

System follow-on engineering and support services

Foreign Military Sale

5,723,450

Aeronautical products

Foreign Military Sale

5,883,120

Equipment and support

Foreign Military Sale

7,038,874

Support acquisition for Triton

Foreign Military Sale

8,429,128

Electronic equipment

Foreign Military Sale

11,226,276

Technical refresh—war vehicles

Foreign Military Sale

13,531,176

Equipment and support

Foreign Military Sale

18,657,814

Explosive ordnance

Foreign Military Sale

19,909,766

Secure communication equipment

Foreign Military Sale

21,768,078

Aircraft components and equipment

Foreign Military Sale

24,354,117

Explosive ordnance

Foreign Military Sale

26,242,295

Acquisition of missiles

Foreign Military Sale

49,165,176

Aircraft maintenance and repair services

Foreign Military Sale

55,029,101

Services, specialist personnel, tooling and parts

Foreign Military Sale

59,431,757

Acquisition of AIM 9X-2 Sidewinder

Foreign Military Sale

103,366,053

Mobile training system

Foreign Military Sale

752,596,622

Acquisition of aircraft

Total for Defence Materiel Organisation

1,219,425,202

Contracts exempt from AusTender

In 2014–15, Defence (excluding the DMO) reported a total of 248 contracts, standing offers or variations thereto, with a total value of $616.1 million which were subject to an exemption under the Freedom of Information Act 1982.

Advertising and market research

Defence conducted recruitment, campaign and other advertising in 2014–15 as detailed in Table A.6. Further information on the advertising campaigns is available at www.defence.gov.au/Publications and in the reports on Australian Government advertising prepared by the Department of Finance. Those reports are available at
www.finance.gov.au/advertising/index.html.

Total expenditure relating to advertising and market research paid by, or on behalf of, Defence during 2014–15.

Table A.4: Total advertising and market research expenditure by type of agency, 2012–13 to 2014–15

Type 

2012–13
($)

2013–14
($)

2014–15
($)

Advertising

11,229,656

11,358,414

16,278,341

Market research

1,260,844

2,391,525

2,282,994

Polling

Direct mail

11,754

22,633

Media advertising

21,907,228

51,542,841

43,386,073

Total

34,409,482

65,315,413[1]

61,947,408

Note

  1. The figure of $61.578 million in the Defence Annual Report 2013–14 was incorrect. It should have been $65.315 million GST inclusive. The error emerged as the total was not GST inclusive and resulted in a miscalculation of totals.
Table A.5: Total advertising and market research expenditure by Group, 2012–13 to 2014–15

Group

2012–13
($)

2013–14
($)

2014–15
($)

Office of the Secretary and Chief of the Defence Force

40,334

33,443

88,102

Navy

81,836

738,163

48,738

Army

40,969

70,044

44,337

Air Force

147,617

265,158

154,324

Intelligence and Security Group

92,640

39,185

31,716

Chief Operating Officer

108,806

8,480

Defence Support and Reform Group

458,333

128,467

235,201

Chief Information Officer Group

315,766

323,995

25,671

Defence People Group

32,933,303

63,343,289

60,967,930

Defence Science and Technology Organisation

25,985

23,068

14,927

Vice Chief of the Defence Force Group

25,985

204,036

131,414

Joint Operations Command

Capability Development Group

Chief Finance Officer Group

728

Defence Materiel Organisation

44,024

37,759

196,569

Total

34,207,520

65,315,413

61,947,408

Details of the persons or organisations paid are provided only for payments of more than $12,565 (including GST).

Table A.6: Total advertising and market expenditure by Group, type and company, 2014–15

Group, type and company

($)

Purpose

Office of the Secretary and CDF

Market research

Australian National University

38,500

Production of a report on extant opinion poll data on Australian attitudes to defence and security issues

Media advertising

Mitchell and Partners Australia

18,218

Advertising for public submissions to the White Paper

Mitchell and Partners Australia

22,867

Advertising public submission process

Navy

Advertising

Spatchurst Design Associates

11,649

Advertising on panels—Naval Heritage Collection

Media advertising

Spatchurst Design Associates

2,517

Brochure design for museums

Army

Media advertising

APN News & Media Limted

28,419

To inform the community about military activities

Air Force

Advertising

Star News Mayalsia

20,451

Recruitment advertising

Star News Mayalsia

517

Vehicle disposal

Media advertising

Last Minute Media

46,509

Royal Australian Air Force Museum advertising

Intelligence and Security Group

Market research

Day Hodge Associates Pty Ltd

19,698

AGSVA communication and customer satisfaction research

Defence Support and Reform Group

Advertising

Mitchell Adcorp Alliance Pty Ltd

33,457

Newspaper advertising for NACC

Countrywide Australia Pty Ltd

69,212

Child Safety Handbook—UXO message

Mitchell Adcorp Alliance Pty Ltd

11,978

Public notices legal

Mitchell Adcorp Alliance Pty Ltd

83,028

Public notices (NSW, ACT, Tas.)

Defence People Group

Advertising

Havas Worldwide Australia Pty Ltd

14,191,879

ADF recruitment advertising

Mitchell Adcorp Alliance Pty Ltd

35,705

Online advertising and targetted e-mails for marketing of Defence civilian graduate programmes

Market research

GFK Australia Pty Ltd

63,470

Qualitative and quantitative research to maximise
ADF recruitment targets

Hall and Partners Open Mind

1,749,336

Qualitative and quantitative research to maximise
ADF recruitment targets

Horizon Research

291,774

Qualitative and quantitative research to maximise
ADF recruitment targets

Media advertising

Universal McCann Australia

29,113

Planning and placement of campaign advertising, including dissemination and other fees

Adcorp Australia

83,243

Planning and placement of non-campaign advertising

Mitchell and Partners

39,855,612

Planning and placement of campaign advertising including dissemination and other fees

Defence Science and Technology Organisation

Advertising

Mitchell and Partners Australia Pty Ltd

14,927

Advertising the Capability and Technology Demonstrator Programme

Vice Chief of the Defence Force Group

Advertising

Mitchell Adcorp Alliance Pty Ltd

13,651

Non-campaign advertising, including dissemination and other fees

Market research

Newspoll

114,285

Employer research to measure the level of awareness among employers of Reserves and Reserve Service

Defence Materiel Organisation

Advertising

YAFFA

27,253

Promote conferences and courses

Media advertising

Adcorp Australia Pty Ltd

161,097

Promote conferences and courses

Legal expenses

Defence

Expenditure on internal and external legal services in 2014–15 is shown in tables A.7 to A.9. 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.

Table A.7: Estimated expenditure on internal and external legal services, 2013–14 and 2014–15

Type of legal expenditure

2013–14
(GST inclusive)
$m

2014–15
(GST inclusive)
$m

2014–15
(GST exclusive)[1]
$m

Internal

41.8

42.3

42.0

External

21.3

23.6

21.5

Total

63.1

65.9

63.5

Note

  1. As opposed to previous years, legal compliance reporting to the Attorney-General’s Department is now done on a GST exclusive basis.
Table A.8: Estimated cost breakdown of internal legal expenses, 2013–14 and 2014–15

Items

2013–14
(GST inclusive)
$m

2014–15
(GST inclusive)
$m

2014–15
(GST exclusive)
$m

Salaries for military lawyers

18.5

19.2

19.2

Salaries for civilian staff

13.3

12.8

12.8

ADF Reserve legal officers

6.8

6.3

6.3

Operating costs of the division

2.9

3.6

3.3

Military justice disbursements

0.3

0.4

0.4

Total

41.8

42.3

42.0

Table A.9: Estimated cost breakdown of external legal expenses, 2013–14 and 2014–15

Items

2013–14
(GST inclusive)
$m

2014–15
(GST inclusive)
$m

2014–15
(GST exclusive)
$m

Professional fees—Defence legal panel

19.7

19.6

17.8

Disbursements

1.6

2.8

2.6

Legal assistance at Commonwealth expense

1.2

1.1

Total

21.3

23.6

21.5

Defence Materiel Organisation

DMO expenditure on internal and external legal services is shown in tables A.10 to A.12. Internal expenditure includes salaries for civilian staff and operating costs that are directly related to the provision of legal services by DMO. External expenditure includes professional fees, disbursements and other legal expenditure incurred principally through the Strategic Commercial Legal Panel.

Table A.10: Estimated expenditure on internal and external legal services, 2013–14 and 2014–15

Type of legal expenditure

2013–14
$m

2014–15
$m

Internal

3.1

2.99

External

11.0

12.16

Total

14.1

15.15

Table A.11: Estimated cost breakdown of internal legal expenses, 2013–14 and 2014–15

Items

2013–14
$m

2014–15
$m

Salaried legal staff costs

3.0

2.95

Operating costs attributable to legal services

0.2

0.04

Total

3.2

2.99

Table A.12: Expenditure on external legal services, 2013–14 and 2014–15

Items

2013–14
$m

2014–15
$m

Professional fees—Defence legal panel

11.0

11.87

Professional fees—Attorney-General’s Department

0.00

Legal expenditure—other

0.29

Total

11.0

12.16