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Annual Report 2014–15

Volume 1, Part 2 : Performance

Programme 1.3
Provision of Policy Advice and Management Services

Programme performance: The objective of Programme 1.3 is to meet government, ministerial and departmental expectations and timeframes for the provision of policy, advice on capital acquisitions, sustainment activities, procurement and contracting. Programme 1.3 also manages the support and delivery of industry support programmes.

Industry programmes with a total budget of around $27 million were successfully delivered, including skilling, business advice and grants programmes, as well as key measures designed to enhance Australian industry competitiveness and facilitate Australian companies’ entry into global supply chains. Current programmes have been extended to ensure continuity until new industry policy is released in the second half of 2015. Defence continued to facilitate opportunities for Australian industry to showcase its capabilities to multinational defence contractors and foreign governments, while also generating further interest for trade and investment opportunities in Australia, through a series of international exhibits and trade missions under the Team Defence Australia initiative. Defence’s responsibilities and processes with regard to facilitating international sales and equipment disposals were also significantly matured and enhanced.

Programme highlight: Working with industry partners, Defence, through the Australian Military Sales Office, the Counter Improvised Explosive Device Task Force and the Defence Science and Technology Organisation, developed two systems to counter the threat of radio-controlled improvised explosive devices: one for use by dismounted troops and one fitted to light vehicles.

With industry partners Micreo, Ultra Electronics Australia, Associated Electronic Services, AXIOM Precision Manufacturing and Lintek supporting an accelerated production schedule, deliveries to the Afghan National Defense and Security Forces began in January 2015.

Table 6.5: Programme 1.3 deliverables


Performance information

Specialist legal, procurement and contracting policy and services

High-quality and timely commercial law and contracting support was provided to DMO projects, system programme offices and other business areas. Significant work was done to maintain the currency of, and continue to improve, Defence procurement policy and contracting templates.

Significant work was also done to simplify and streamline procurement policy and practice, with an emphasis on improving the commerciality of procurement outcomes and reducing the costs of doing business with Defence.

Acquisition and sustainment advice

High-quality and timely advice was provided through regular reports, ministerial correspondence and briefings on acquisition and sustainment issues.

Defence industry programmes, engagement and advice to both the Defence portfolio and the Government

The DMO provided advice to Defence and the Government on industry capacity and capability. Defence’s industry programmes continued to be delivered, providing targeted assistance in a range of areas, including skilling, export support and commercialisation of new technologies.

DMO governance and accountability

A Ministerial Directive issued on 28 July 2008 outlines the accountability of the Chief Executive Officer (CEO) to the Minister for Defence to achieve the following outcomes:

  • timely, accurate and considered advice in the CEO’s role as principal adviser to the Minister on equipment acquisition and fleet sustainment
  • efficient and effective acquisition and through-life support of materiel for Defence capabilities
  • sound management of financial and other resources, operating within the budget and meeting statutory requirements for preparing financial statements
  • an appropriately skilled and experienced workforce while providing a working environment that attracts and retains people
  • high-quality governance and management, implementing agreed reform initiatives and embedding continuous improvement within business processes
  • savings and efficiencies for reinvestment in priority areas in Defence
  • appropriate representation of Australia internationally in the CEO’s role of National Armaments Director.

DMO Senior Committees

Three senior committees provided internal advice and direction and oversaw performance within the DMO
(Figure 6.2). These are:

  • the Executive Committee
  • the Council Chairs’ Forum
  • the Materiel Audit and Risk Committee.

Executive Committee

The Executive Committee advises the CEO on directing the DMO. The committee is chaired by the CEO and meets monthly to review strategic direction and performance. As required, the committee meets as the Strategic Budget Committee to focus on strategic investment and budget management.

Council Chairs’ Forum

The Council Chairs’ Forum is held quarterly and addresses DMO enterprise business performance risks and issues against the DMO’s functions of procurement, finance management, project management, materiel engineering, sustainment management and materiel logistics, work health and safety, human resources, industry engagement and administration.

Materiel Audit and Risk Committee

The independent Materiel Audit and Risk Committee allows the CEO to meet obligations under the Public Governance, Performance and Accountability Act 2013. The committee monitors and recommends improvements to the DMO’s governance, risk management, internal controls and financial reporting. Following the release of the First Principles Review and the recommendation to disband the DMO on 30 June 2015, the committee ceased operation on 30 June 2015.

Figure 6.1: DMO senior committees as at 30 June 2015

Projects of concern

The projects of concern regime is a proven process for the senior management of seriously underperforming projects. Once listed, the primary objective of the regime is to remediate these projects by implementing an agreed plan to resolve any significant commercial, technical, cost and/or schedule difficulties. Projects of concern receive targeted senior management attention and are required to report more regularly to the Government.

Significant changes to the projects of concern list in 2014–15 included:

  • successful remediation of the Air-to-Air Refuelling Capability (AIR 5402) and subsequent removal of the project from the list
  • addition of the ADF Satellite Communications Terrestrial Enhancements project (JP 2008 Phase 3F) to the list.
Table 6.6: Current projects of concern as at 30 June 2015

Project name

Project number/phase

Date added

Collins class submarines sustainable and projects


November 2008

Multi-role helicopter (MHR-90)

AIR 9000 Phase 2, 4, 6

November 2011

Direct fire support weapons

LAND 40 Phase 2

December 2012

Mulwala redevelopment project

JP 2086 Phase 1

December 2012

Air Warfare Destroyer Build

SEA 4000 Phase 3

June 2014

Australian Defence Satellite Communications Capability Terrestrial Enhancement

JP 2008 Phase 3F

September 2014

‘I marched in Melbourne with the Regimental Association of the 2nd/2nd Field Regiment 2AIF in honour of my uncle
Jack Fitzpatrick, who served in the first desert campaigns, Greece and Crete. I also marched in memory of my grandfather Bill Fitzpatrick, who served with the 7th Battalion AIF. He was in the second wave of landings at Gallipoli on 25 April 1915. The intermittent drizzle didn’t dampen our enthusiasm or that of the crowd. The warmth from the crowd was wonderful—their continuous applause, mixed with yells of encouragement, especially for our veterans, was really moving. As the march progressed
I found myself thinking increasingly of my uncle Jack but even more of my grandfather, who one hundred years ago would have been preparing to go ashore in the second wave of landings at Gallipoli.’