Sweeping changes to DMO

THE Defence Materiel Organisation (DMO) will receive greater autonomy to manage and deliver products as a result of the Kinnaird Review.

The organisation will remain under the Defence umbrella for administration but will report directly to the Defence Minister on financial matters relating to acquisition and aspects of logistics.

The review’s recommendations aim to improve capability definition before projects are handed over to DMO and to give DMO more independence in the management of projects and enable it to take a more business-like approach.

Defence Minister Robert Hill said that while the management of major Defence acquisitions had improved significantly there was room for further reform.

“As a result of our reforms, new projects such as the Airborne Early Warning and Control aircraft and the Tiger combat helicopters are running on time and on budget,” he said.

“But we are committed to making further improvements in our Defence acquisitions processes. We need to be confident that the extra money we have committed to ensure our Army, Navy and Air Force continue to be well equipped to defend Australia and our national interests is being spent well.”

Defence Secretary Ric Smith and CDF General Peter Cosgrove said in a Defgram the review is an important milestone for DMO.

“In accepting the recommendations of the review the Government has made it clear that the recommendations are part of the ongoing Defence reform program and will build on DMO’s success in reforming acquisition and sustainment over the last three years.”

“We understand that many people particularly those working in DMO, have been anxious about the review and its potential effects.

“The Government has now made its decision and people will be advised about the process of working through the outcomes and implications.

“We believe the results will produce an organisation better able to support the Defence capability development and acquisition process.

“We ask you to support us and DMO executives through the implementation process.”

Malcolm Kinnaird, Len Early and Bill Schofield were appointed in December last year to review a range of issues associated with major Defence acquisitions.

Key recommendations:

• Establishing the DMO as a financially autonomous agency under the Financial Management and Accountability Act to facilitate its evolution towards a more business-like identity.
  
• Strengthening the capability development and assessment process before projects are handed to DMO by forming a new Capability Group within Defence HQ to be managed by a three-star official (military or civilian) reporting directly to the Secretary and Chief of the Defence Force.
  
• Establishing an eight-member advisory board, including CDF and Secretary of Defence, to provide advice to the head of the DMO on strategic issues and to report to the Ministers for Defence and Finance and Administration on the implementation of the Kinnaird recommendations.
  
• Giving the Chief Executive Officer (CEO) of DMO an expanded range of powers, including empowering the CEO to revise DMO staffing and remuneration policies to attract and retain high quality project managers from the military, industry or public service on the basis of merit and for extended tenures.
  
• Establishing cost centres in Defence and the Department of Finance and Administration to strengthen the review of project costs and risks and provide a quality assurance role for Government.
  
• Conducting a world-wide search for a CEO to lead the DMO into the future.

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