Implementing the White Paper

Initiatives to Get the Best Value for the Defence Dollar

Acquisition reforms

The Defence Materiel Organisation and industry have worked together to achieve a range of structural, policy and process reforms over the last three years. The restructure of the Defence Materiel Organisation and the establishment of System Program Offices brought significant improvements in performance, acquisition and through-life support; development of the 'ASDEFCON' suite of contracting templates and training has made it easier and more cost effective for industry to tender for Defence business and provides industry with greater input into the capability life-cycle management plan; and the 'Company ScoreCard' has improved Defence and industry relationships through a fair and consistent feedback mechanism on company and contract performance. At the 2003 Defence and Industry Conference in June 2003, seven awards were issued to companies for consistently good performance under the program.

A Defence procurement review undertaken in 2002-03 by a team led by Mr Malcolm Kinnaird will help to shape priorities for the next stages of acquisition reform.

[ Read more: Defence Materiel Reform ]

Efficiency Savings

The White Paper required efficiency savings of $50m in 2001-02, $100m in 2002-03 and $200m recurrent from 2003-04. In addition, Defence was required to find an additional $97m in administrative savings as a one-off budget measure in 2002-03 as a contribution to the cost of operations in that year. The actual achievement of savings against both measures in 2001-02 and 2002-03 is shown in Table 1.4 as well as an estimate for 2003-04.

Table 1.4: White Paper Savings
2001-02 Actual		2002-03 Budget Estimate	2002-03 Revised Estimate	2002-03 Actual	2003-04 Estimate
$m		$m	$m	$m	$m
36.2	Fringe benefits tax liability reduction	14.2	14.2	14.2	14.2
20.0	Qantas travel contract	20.0	20.0	20.0	20.0
1.9	Reduction in, and improved management of, the Defence commercial vehicle fleet	4.3	-	-	-
-	Re-basing of Group budget allocations	69.0	69.0	69.0	165.8
58.1	Sub-total	107.5	103.2	103.2	200.0
-	Reprioritisation of administrative spending to operational requirements⁽¹⁾	97.0	97.0	97.0	-
58.1	Total savings	204.5	200.2	200.2	200.0

Note

This comprised one-off additional savings in 2002-03 to partially offset additional funding provided to meet operational requirements, through efficiencies within administrative expenditure such as travel, facilities maintenance, publishing and printing, advertising, consultants and contractors and other general services.

The fringe benefits tax and Qantas travel contract savings explained in the Defence Annual Report 2001-02 are ongoing. The remaining savings were realised by re-baselining the non-capability-related element of Group budget allocations. This measure will achieve savings of $165.8m per annum from 2003-04 to complete the savings requirements set out in the White Paper.