Today's hearing marks the second conducted by the committee as part of its inquiry into Defence sustainment expenditure, and will also examine the findings of an Australian National Audit Office (ANAO) report, Defence's Management of Materiel Sustainment.
This report found that, while the fundamentals of Defence's governance and organisational framework for the management of material sustainment are 'fit-for-purpose', more must be done to improve.
"There remains scope for Defence to improve its performance monitoring, reporting and evaluation activities to better support the management and external scrutiny of materiel sustainment," the report said.
The report also found reforms to the management and sustainment of Defence’s capabilities established in the 2015 First Principles Review are likely to take longer than the anticipated two years, and limited progress has been made.
The hearing comes as Defence deals with more troubles with its Tiger helicopters, which are currently grounded due to safety issues. The aircraft is under consideration for a midlife upgrade that is estimated to cost more than $500 million.
The helicopters were seven years late in reaching final operational capability and Defence is yet to confirm whether the sustainment costs of the aircraft have escalated from a budgeted amount of $397 million to $1.3 billion.
Defence’s expenditure on sustainment currently constitutes approximately $6 billion or 21 per cent of the department’s total budget – acquisition of new equipment has a similar annual spend.
Today's hearing will be chaired by Senator Dean Smith, and the committee will continue to explore how Defence reports both financial data and descriptive information associated with the sustainment of significant Defence assets or capabilities.