Improvement Initiatives

Commercial Support Program

The Commercial Support Program is Defence's primary mechanism for undertaking competitive tendering and contracting. The program, which began in 1991, aims to ensure that support services are provided to Defence in the most cost-effective manner. Services are contracted out when it is operationally feasible, a viable market exists and industry can demonstrate better value for money.

The Commercial Support Program includes activities that were carried over from the Defence Reform Program, which officially closed on 30 June 2000. Examples are the Defence Integrated Distribution System and ADF Health Services activities.

The Defence Employees Certified Agreement 2002-2003 facilitates the application of the Commercial Support Program in Defence. The agreement covers all market testing and any other competitive tendering or equivalent processes that may result in the contracting out of a Defence civilian activity.

Table 4.1: Status of the Commercial Support Program as at 30 June 2003

CSP evaluation decisions made	120
Commercial contracts	81	(68%)
In-house options	32	(27%)
Status quo retained	7	(6%)
Number of positions tested	15,935
Mean projected annual savings(1)	31%
Total value of Commercial Contracts and In-house Options(2)	$5,935.4m

Notes

1. Savings, values and positions tested are based on information provided at the time of decision announcement. |
2. Total value of contracts covers the full term of the contracts.

Table 4.2: Activities Under Way

Activity Name	Status
Defence Integrated Distribution System	Preferred contractor announced on 30 July 2003, contract negotiation is continuing
ADF Health Services in Victoria	Contract negotiations(1)
ADF Health Services in Australian Capital Territory and Southern New South Wales	The Commercial Support Program tender evaluation did not recommend a single tenderer, alternative contracting options are being considered to achieve efficiency savings

Note

1. Contractor subsequently withdrew from negotiations.

Table 4.3: Activities to be Progressed or Considered

Activity Name	Status
ADF Health Services in Northern Territory	Activity and rationalisation review to be carried out
ADF Health Services in Queensland	Activity and rationalisation review to be carried out
ADF Health Services in South Australia	Activity and rationalisation review to be carried out
ADF Health Services in Sydney/New South Wales Region	Draft activity rationalisation review report pending approval
ADF Health Services in Tasmania	Activity and rationalisation review to be carried out
ADF Health Services in Western Australia	Activity and rationalisation review to be carried out
ADF Rotary Wing Flying Training	Scope under assessment
Anzac Ships - Fully Contracted Integrated Materiel Support	Scope under assessment
FFG Ships - Fully Contracted Integrated Materiel Support	Draft statement of requirement being developed
Information Technology Infrastructure Support Services - Central Office - Deakin ACT	Draft statement of requirement being developed
Navy Technical Training Services	Scope under assessment
Personnel Services (Corporate Services and Infrastructure Group)	Functions being rationalised/restructured
Routine Pathology Services	Scope to be assessed

Table 4.4: Activities not Proceeding under the Commercial Support Program

Activity Name	Reason
Army Marine Commercial Support Project	Insufficient generation of savings
Catering and Accommodation Services - Anglesea Barracks Hobart	Activity contracted out on 14 December 2000; too small for commercial support program
Royal Military College Transport Unit	To be included with other garrison support functions when they are reviewed
Amphibious Ships - Fully Contracted Integrated Materiel Support	Aggregation of existing contracts