Therefore it was important to approach this from a Capability and Sustainment Group or Defence perspective.183. There are over 40 platform fleets being supported and they represent around 60percent of total sustainment expenditure in any given year. This high tempo period of exercises has tested the robustness of the logistics system and deficiencies have been identified. The Canberra Times reported that its 'senior public service sources' believe she is the highest-ranking Australian Commonwealth public servant to ever have been dismissed for underperformance. 171Defence, Airborne Early Warning and Control Sustainment Performance Gate Review, 30 July 2015. Defence has not published program level expenditure data on a consistent basis over time, or time series analysis, to assist with external scrutiny of its sustainment expenditure. The model seeks to capture the full cost of ownership throughout the life of an asset.77. The initiative was not prescriptive except that capability and safety should not be compromised by any savings proposal. F&A (indirect) cost pools must be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived., and set forth allowability and allocability principles for selected items of cost. Source:Defence, Portfolio Budget Statements and Additional Estimates Statements; ANAO analysis. Tiger is not currently deployed on operations. The number of SPO staff supporting activities such as planning, contract management, and assurance may not be sufficient and this is a risk to achieving FPR goals (including SPO reform) and ongoing delivery of [Integrated Investment Program] activities. Defence has not kept a systematic record of the outcomes of the Smart Sustainment initiative associated with the 2009 Strategic Reform Program. An output measure, which directly reflects achievement against the Materiel Availability outcome. These estimates, based on the latest available figures each year (generally from the Portfolio Additional Estimates Statements) are set out below (in Figure3.3) for the period 200506 to 202021 (the end of the current forward estimates period as at May2017). It is an output measure, which directly reflects achievement against the Sustainment Efficiency outcome. 2.15Coles took a similar view a few months later, in the Collins Class Sustainment Review, arguing that Defence should give sustainment much higher attention and priority during the initial phases of the assets lifecycle (Needs, Requirements, and Acquisition phases). ), Figure 3.4:Estimates of Service sustainment costs, 200607 to 202021. Defence has continued a program offering its staff professional development options in asset management. for Institutions of Higher Educations (IHEs). Note a:Navy Allowance (NAVALLOW) is the Navy logistics system. The Government agreed to the recommendation. 6. the project was approved in March1999 with a budget of $1.58billion (December1999 prices). Bechtel provides this assistance through Bechtel staff embedded within Defence. Reforms to the management of sustainment flowing from the First Principles Review remain at an early stage, and this stream of activity is likely to take much longer than the expected two years. Part of the context for this audit is to inform the Parliament as to whether Defence has developed its management reporting sufficiently to facilitate a program of ANAO assurance reviews of selected sustainment activities. 200.409 Special considerations. Such visibility would enhance Defences ability to benchmark its sustainment performance against allied countries with similar equipment. A separate reform stream began in July2010, when consultants engaged by DMO found its sustainment business model was strikingly different from those in the private sector. The last item of Support & Test Equipment requires codification before it can be formally accepted by the Commonwealth of Australia (CoA). 203Defence, The Helmsman Sustainment Complexity Review, July 2010, p. 29. 16Defence, Capability Acquisition and Sustainment Group, Accountability, available from [accessed 13 April 2017]. 191-202, available from [accessed 20 April 2017]. This narrower focus risks telling only a partial account of sustainment within Defence and is potentially at odds with the One Defence model promoted by the First Principles Review. As noted in paragraph 5.14, in July2016, a former senior Bechtel executive was seconded to the position of First Assistant Secretary Program Performance in Capability Acquisition and Sustainment Group, under the day-to-day direction of the senior Capability Acquisition and Sustainment Group leadership. A number of acquisition projects had been managed in project offices which are now counted as Systems Program Offices.20 Systems Program Offices do not endure indefinitely: for example, after the withdrawal from service of an asset and its disposal the relevant Systems Program Office may be dissolved or amalgamated with another. LAND 121 PH 3B Project Office [Project OverlanderMedium Heavy Capability, Field Vehicles, Modules and Trailers], LAND 121 PH 4 Project Office [Protected Mobility Vehicles (Light)Hawkei], LAND 400 [Combat Reconnaissance Vehicles, Infantry Fighting Vehicles, Manoeuvre Support Vehicles, and an Integrated Training System. 5.60In May2015, DMO released a sustainment policy stating that Defence assets would be managed in accordance with the international standard for asset management. [13], In March 2009, the Corporate general manager of the DMO, Jane Wolfe, was dismissed for unsatisfactory performance. 923. Outcome orientation Delivering what is required with processes, systems and tools being the 'means not the end'. Defence lacked a single set of accurate information to inform decision makingThe review found that, whilst significant levels of information and analysis exist across the Collins Class Sustainment Program, the basis for long-term decision making was not always consistent or accurate, with multiple systems and datasets in use for financial, maintenance and supply chain activities. The value of the contracts for this work is $8.8million. [Materiel Acquisition Agreement] Closure and accompanying Product Schedule Change Proposal (PdCP) to transfer the delivery of the Deployable Aircraft Maintenance Rig capability to CA12 completed and awaiting Assets Under Control (AUC) balance adjustments before paperwork can be processed for signature. Defence would benefit from evaluating future major change programs. 43 199798, Lifecycle Costing in the Department of Defence, examined Defences 1992 policy on lifecycle costing, finding that while Defences policy and procedures advocate the use of whole-of-life costings in acquisition decisions, in practice, Defences use of whole-of-life costing was uneven. 1.3In recent years, Defence has spent, each year, similar amounts on sustainment and the acquisition of new equipment (Figure1.1, below). Systems Program Office consolidation and reform is one of the largest reforms to Capability Acquisition and Sustainment Group deriving from the 2015 First Principles Review. apply to all NIH award instruments, award mechanisms, and special programs and authorities, including modular awards and awards under SNAP with one exception: they do not apply to Kirschstein-NRSA individual fellowship awards. 5.42A design guide for the establishment of the Centres of Expertise has been produced and initial establishment of these centres is scheduled for April2017, with the establishment of a balanced matrix expected to be over a two-year period.158. Once fully implemented this system should be capable of systematically reporting against a suite of performance indicators settled in agreement with Capability Managers. Completing this work is likely to take longer than the two years intended for the First Principles Review Implementation. 2.8As a consequence of the 2015 First Principles Review and the decision to consolidate and reform Systems Program Offices, Defence has adopted a new definition of Systems Program Office. 14. High levels of unplanned maintenance will affect Sustainment Efficiency through uncontrolled cost of repairs and a probable increase in Cannibalisations. Defence has not put in place plans to evaluate either the reforms themselves or its implementation of them. The allowable use of funds under those awards is included in Ruth L. Kirschstein National Research Service Awards in IIB. These meetings typically involve representatives of the Capability Managers, CASG and other Groups such as Joint Logistics Command. Part of the context for this audit is to inform the Parliament regarding Defences approach to managing sustainment expenditure, including in the context of the current JCPAA inquiry, and to inform the ANAOs future program in this area. Note d:In late 2016, Defence estimated that the Collins Class submarine sustainment program would achieve international benchmarks for cost per materiel ready day by 202223. 107The Pappas Review examined a sample of equipment fleets and interviewed senior Defence personnel. 3.52Under the PGPA Act, Commonwealth entities must prepare and publish a corporate plan by the last day of August each year. In February2016, the Deputy Secretary, Capability Acquisition and Sustainment Group, informed the First Principles Review Implementation Committee that the business framework project has commenced and been resourced to deliver a fundamental rebuild of all Group processes.159 The completion date was extended to 1July2016 and the objective was to have a High-level business framework approved. 5.23As discussed in paragraph 3.47 of this report, Systems Program Offices have had between three thousand and four thousand staff over the last decade. 200.403 Factors affecting allowability of costs. There remains potential to improve some core key performance indicators used within the systemfor example, to more usefully determine the total cost of the capability to Defence. 82In the case of the Smart Sustainment program (discussed later) Defence calculated any savings from the program on the basis of changes to MSA costs. 18. 111The ANAO has not verified the reported savings in the three cases quoted here. F&A (indirect) cost pools must be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived.. The existence of open Priority 1 / Priority 2 defects have a direct influence on the achievement of Materiel Ready Days (Materiel Availability outcome) due to reduced Seaworthy Materiel. The Reviews terms of reference included one specific reference to sustainmenta requirement that Defence ensure a commercially astute, focused and accountable materiel acquisition and sustainment capability. 4.18By June2015, Defence was claiming approximately $2billion in savings from the Smart Sustainment Program since its inception in 2009.
