Projects 'Under the Spotlight'
The DMO is providing intensive management focus on a number of significant products.
These products include:
- the Standard Defence Supply System (SDSS);
- procurement of explosive ordnance for the ADF (Army); and
- clothing procurement.
The Standard Defence Supply System
The SDSS is an inventory management system that controls those items of supply that support the ADF and its operational capability. It commenced operation in 1993.
The SDSS is used to manage over 1,600,000 lines of items in General Stores Inventory, worth some $1.8 billion. In association with other supporting systems, SDSS manages transactions to support Repairable Items to the value of $3.72 billion. The SDSS user community is over 8,000 Service and civilian staff within both Defence and external service providers.
The core software is MIMS (provided by MINCOM Ltd) and is complemented by interfaced applications that include Defence-built CENCAT (NATO cataloguing and codification), NAVALLOW (Navy allowance management), CVS (cargo visibility) systems and commercial systems—AIMS (inventory optimisation software) and SLIMS/AMPS (shipboard inventory management). As an integrated system, SDSS manages identification, procurement, requirements determination, warehousing, requisitioning and demand fulfilment, entitlement management and cargo tracking. This functionality enables the management of Defence's end-to-end supply chain from supplier through Defence warehousing down to unit-level holdings within the three Services' logistics operations. It supports all operational platforms and the units that use them in the area of operations.
The operational effectiveness of the SDSS is dependent upon successful performance of all its key elements—the information architecture and supporting hardware (such as servers and bandwidth), the core software, supporting business processes (both their design and compliance with them), data on the system (both its input and its quality), user training and competence, and reporting, compliance monitoring, investigation and audit processes. Shortcomings in any of these elements may impact on the system and its capacity to support both the management and operational needs of Defence. Equally, the ongoing refinement and future development of the system requires attention to all of these elements.
There are increasing demands on the logistics information system—arising from the increased operational tempo and deployment of the ADF, the increased number and dispersal of users, the introduction of accruals-based budgeting and accounting, and advances in computing technology. There are identified shortcomings in the performance of SDSS, related primarily to system controls, business process compliance and data quality. The SDSS has also been subject to both assurance and performance audits by the ANAO. The performance audit of the SDSS Upgrade project, which concluded in 2003, found deficiencies in project management and approvals which were acknowledged and addressed. Recent assurance audits, as part of the annual audits of Defence's financial statements, found continuing problems with the quality of some data held on SDSS. In addition, a 2005 assurance audit found that there was an insufficient level of controls reliance across parts of the system and associated business processes.
Development of the system is focused on the following issues:
- Addressing identified shortfalls in current performance—particularly,
the introduction of an enhanced information technology controls framework;
enhanced business processes; improved reporting capabilities; and
remediation of a date processing problem (the Julian date issue).
- We have introduced an SDSS information technology controls framework, based on industry best practice. The framework covers both the operation of the system and the control of the business process that the system supports.
- Julian date remediation—In April 2006, Defence and MINCOM successfully analysed and addressed a date limitation with the software, through a code change and complementary update to the database.
- Continuing the future development path and introducing greater functionality,
through a major project JP2077. The next phases of this project will
deliver new core software, increased financial functionality, improved
in-transit visibility, an improved deployable capability and a radio
frequency identification capability.
- Phases 1 and 2A that define capability requirements and set the strategic direction for development and implementation have been completed. Phase 2B.1, which will provide new core software and improved financial management capability, attained second pass approval from the Government in July 2006 with the acquisition phase commencing in September 2006 and is planned for conclusion in late 2008.
- Phase 2B.2, which proposes an enhanced deployable capability as well as improved in-transit visibility, is scheduled for second pass consideration by the Government in late 2006.
- Phase 2C, which provides a radio frequency identification capability, gained second pass approval from the Government on 1 July 2005 and is planned for completion by the end of 2006.
- Phase 2D will address further upgrade proposals and is scheduled for first pass consideration at end of 2006.
- Improving compliance of users with, and the quality of data on,
the system:
- user compliance with the process and controls will include training, expert assistance, ongoing exception reporting and investigation, and enhanced compliance and review activity; and
- data will be progressively reviewed and amended through normal stocktaking processes.
The project will exceed half a billion dollars in cost (not all yet approved by the Government) and will be one of the three largest information technology projects currently under development in Australia.
Explosive Ordnance Sustainment
The DMO provides sustainment, procurement and through-life support for the ADF's $2.6 billion guided and non-guided explosive ordnance inventory. Our deployed forces and the Service capability managers continue to receive safe and effective explosive ordnance to meet operational and raise, train and sustain requirements.
The current high operational tempo and associated rapid acquisition and replenishment procurements have placed extreme pressure on the resources of the DMO. As a result, however, its ability to remediate the ongoing 'legacy' explosive ordnance backlog decreased.
The most significant issue facing the sustainment of explosive ordnance is the DMO's ability to sustain the technical integrity of its explosive ordnance inventory, while maintaining the ever increasing level of operational support for overseas operations. This is being addressed under a multi-year program Project Phoenix.
The acquisition and through-life support of explosive ordnance requires unique competencies, processes and experiences. This was highlighted by the ANAO with the release in May 2006 of its audit report 'The Procurement of Explosive Ordnance for the Australian Defence Force (Army)'.
Project Pegasus is addressing workforce, structural and cultural issues specifically dealing with explosive ordnance. Extensive improvements are required within Defence to better align explosive ordnance procurement and introduction-into-service processes with ADF preparedness requirements to train and meet contingencies. The ANAO report noted work already commenced to improve procurement and management of explosive ordnance and the DMO is currently implementing the recommendations.
The 2006–07 Materiel Sustainment Agreements demonstrated the maturity of the relationship between the DMO and the Service Capability Managers, and provided a good basis for the establishment of solid requirements determination processes. Similarly, the establishment of an agreed net personnel and operating costs during 2005–06 facilitated the transition of multiple new guided weapons into the sustainment framework.
The DMO made excellent progress during 2005–06, addressing the ANAO's financial audit findings with both the financial statements and Computer System Armament (COMSARM) audit findings. Accounting processes for explosive ordnance were implemented to comply with Australian Equivalents to International Financial Reporting Standards. Compliance moved Defence explosive ordnance accounting policies and processes towards industry best practice.
Clothing Procurement
Since August 2005, the DMO has been the subject of sustained management attention to improve the management of clothing for the ADF.
In early 2006, anomalies were detected in the procedures and processes for procurement and technical specifications for the combat fleece jacket. There was intense media scrutiny of these anomalies and on ADF combat clothing. In March 2006, the Minister for Defence established a review into the ADF Combat Clothing Procurement Program. An independent team of industry experts presented the report to the Minister and it was publicly released on 25 July 2006, providing 29 recommendations.
The report created an exciting opportunity for the DMO to continue its reform agenda in this critical area, to ensure that all ADF troops continue to receive the best available clothing and personal equipment.
The DMO has undertaken significant management-initiated reforms to the clothing program. These involved the creation of a new structure, the rotation of new and qualified staff into the clothing program, and the adoption of new business processes.
The reforms created greater transparency of past, current and planned procurement activities. Management actions including audit activity continue to mitigate against future irregularities in the procurement and technical specifications for ADF clothing.
Part of improving the Defence and industry relationship will be the formulation of a clothing capability plan to provide industry with greater certainty of planned procurements as well as the requirement for Defence suppliers to be quality certified. This will instil mutual confidence in the acquisition processes and quality of materiel supplied to soldiers.
The prospect of enhanced relations with industry has been encouraged by the report and its recommendations.
Industry forums have already occurred, which have highlighted the intrinsic nature of industry's role in supporting the soldier in the field.
These improvements, along with those being implemented from the Kinnaird Review, have assured improved services from an organisation that has always been focused on providing the best available clothing and equipment to our customer—the ADF.