Parliamentary Committees
The DMO interacted with a number of parliamentary committees throughout 2005–06. This section reports on the status of inquiries or other action by parliamentary committees in relation to the DMO as at 30 June 2006.
Information on the parliamentary reports, inquiries and hearings detailed below can be accessed through the Australian Parliament House website at: http://www.aph.gov.au.
See Volume One (Defence) for the following:
Public Accounts and Audit
Public Works
Joint Standing Committees
Foreign Affairs, Defence and Trade
Senate Standing Committees
Foreign Affairs, Defence and Trade Legislation Committee
Foreign Affairs, Defence and Trade References Committee
Senate Select Committee
House Standing Committees
Standing Committee on Science and Innovation
Joint Statutory Committees
The Joint Committee of Public Accounts and Audit inquires into and reports on progress in implementing systematic reforms in the areas of financial reporting and equipment acquisition at the Department of Defence and the DMO, as identified in ANAO financial and performance audits, the Defence Procurement Review 2003 (the Kinnaird Review) and the Senate Foreign Affairs, Defence and Trade References Committee's 2003 Report on the Inquiry into Materiel Acquisition and Management in Defence, including the following:
- Progress in implementing Defence's financial remediation plans, relative to international best practice in these areas, and recommend any further measures that can be adopted.
- Progress in implementing the Kinnaird Reforms, relative to international best practice in these areas, and recommend any further measures that can be adopted.
- Review Australia's relative achievements in procurement and financial reform relative to international best practice in these areas of defence administration.
- Assess progress in Defence's adoption of international business accounting standards relative to international best practice in this area of defence administration.
In May 2006, the Joint Committee of Public Accounts and Audit conducted an inquiry into financial reporting and equipment acquisition. The submission to the Joint Committee of Public Accounts and Audit was jointly prepared by Defence and the DMO. The submission was forward looking and focused on remedial and reform work in relation to financial management. It also addressed the post-Kinnaird review changes in acquisition.
The inquiry was initiated as a result of the Committee's regular reviews of the Auditor-General's reports:
- The Committee investigated the ANAO's findings of inability to form an opinion on the Department of Defence's financial statements.
- The Committee concluded that this audit finding was a culmination of a number of years of some poor record-keeping, information system failures and a failure to fully recognise the impact of accrual accounting.
At the conclusion of the Committee's review of the Defence financial statements, the committee resolved to conduct a broader review of Defence financial reforms and equipment acquisition, taking into account:
- Defence's progress in implementing financial remediation plans;
- the Kinnaird reforms;
- Defence's reforms relative to overseas defence agencies; and
- progress in adopting international best practice accounting standards.
Auditor-General's Reports
The Inspector-General Group is responsible for identifying Auditor-General reports that have implications for Defence. Seven Auditor-General reports, relating specifically to Defence, were tabled during the year. The key findings and recommendations of each report were referred to relevant areas within Defence for implementation.
Audit Report No. 3, 28 July 2005—Management of the M113 Armoured Personnel Carrier Upgrade Project
The objective of the audit was to provide an independent assurance on the effectiveness of the management of the upgrade of the M113 fleet for the ADF. The audit sought to identify the initial capability requirements and approval process; analyse the contract negotiation process; and examine the management of the project and contracts.
- Three Audit recommendations were raised from this audit.
- Defence agreed with all recommendations.
- All three recommendations have been implemented.
- Two of the three recommendations raised by the ANAO during this audit were already being addressed by Defence. The control mechanism to ensure changes in scope are approved at the appropriate level (in Materiel Acquisition Agreements and the processes to amend Materiel Acquisition Agreements, and management of liquidated damages Australian Defence Contract Templates, Defence Procurement Policy Manual, Defence Procurement Policy Instructions, Finance Instructions and Chief Executive Instructions).
The ANAO reports and information on the audit office's operations, including the audit timetable, can be accessed through the ANAO's website at: http://www.anao.gov.au.
Audit Report No. 10, 23 September 2005—Upgrade of the Orion Maritime Patrol Aircraft Fleet
The audit objective was to examine the adequacy of Defence and DMO management of the nearly completed elements of Project AIR 5276. The ANAO identified a number of causes for time delays and cost escalation in those elements. Those causes are outlined in the overall audit conclusions, to assist in the achievement of improvements in future planning and management of capital equipment acquisitions.
- There were no recommendations raised as part of this audit.
- There were a series of lessons learned raised.
The ANAO acknowledges in the report that "The Orion Upgrade Project met its performance objectives. The modified aircraft have achieved, and in a number of roles exceeded, the expected operational performance. The capability enhancements allow the aircraft to cover a given surveillance area in greater detail and in a third less time."
Audit Report No. 24, 24 January 2006—Acceptance, Maintenance and Support Management of the Jindalee Operational Radar Network System
The audit scope covered key lessons learnt from the Jindalee Operational Radar Network Project's acquisition and acceptance phases, and the Jindalee Operational Radar Network and joint facilities maintenance and support. The audit objective was to assess the effectiveness of the DMO's Jindalee Operational Radar Network and joint facilities maintenance and support arrangements. The audit examined the maintenance and operation of the Jindalee Operational Radar Network and joint facilities radars, and their facilities.
Audit Report No. 36, 2 May 2006—Management of the Tiger Armed Reconnaissance Helicopter Project—Air 87
The objective of the audit was to assess the effectiveness of management of the procurement of a major, new capability for the ADF by the DMO and Defence. The audit reviewed the initial capability requirements and approval process; analysed the contract negotiation process; and examined management of the acquisition and through-life support contracts. Coverage of the audit extended from development of the concept for the requirement, to acceptance of deliverables in the period prior to the award of the Australian Military Type Certificate (see shaded area of Figure 1). The audit fieldwork was undertaken during the delivery phase of the Project, following delivery of 1, 2 and 5.
Audit Report No. 40 17 may 2006 Procurement of Explosive Ordnance for the Australian Defence Force (Army)
The objective of the audit was to examine processes used by Defence and the DMO to procure explosive ordnance for the ADF, with an emphasis on Army requirements. The audit reviewed the extent to which the DMO effectively translated the explosive ordnance requirements of the ADF, and particularly of Army, into procurement and through-life support arrangements.