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, an ANAO report has found.
The ANAO report, Defence’s Management of Materiel Sustainment, found that reforms to the management of sustainment flowing from the FPR remain at an early stage, and are unlikely to be completed in the expected time frame.
"This stream of activity is likely to take much longer than the expected two years," the report says. "For example, the Systems Program Office reviews are not yet complete and Defence has provided no evidence that decisions have been taken on changes to their structure and functioning."
The FPR was commissioned in August 2014 and released 1 April 2015. The team that undertook the review were tasked with ensuring that Defence is fit for purpose and is able to deliver against its strategy with the minimum resources necessary.
The review had six key principles and 70 recommendations. The key principles were:
1. Establish a strong, strategic centre to strengthen accountability and top level decision-making;
2. Establish a single end-to-end capability development function within the department to maximise the efficient, effective and professional delivery of military capability;
3. Fully implement an enterprise approach to the delivery of corporate and military enabling services to maximise their effectiveness and efficiency;
4. Ensure committed people with the right skills are in appropriate jobs to create the One Defence workforce;
5. Manage staff resources to deliver optimal use of funds and maximise efficiencies; and
6. Commence implementation immediately with the changes required to deliver One Defence in place within two years.
The report said that not only has Defence failed to implement measures of efficiency and productivity for all sustainment products, as recommended in the FPR and previous reviews, "the ANAO found that, 18 months after implementation commenced, there had been limited progress".
Other reforms flowing from the First Principles Review remain underway:
• Introducing performance-based contracting into Defence sustainment has been underway for over a decade. Defence does not yet have a completed register of its acquisition and sustainment contracts though, since January 2016, it has had a facility in place and had commenced populating it;
• Initial establishment of ‘centres of expertise’ in Capability Acquisition and Sustainment Group is underway. Defence expects full implementation to take a further two years. Similarly, the new CASG Business Framework is expected to take ‘many years’ to fully implement; and
• Defence has developed its own meaning for the term ‘smart buyer’, which does not clearly articulate the intent of the First Principles Review recommendation. This introduces risks related to ensuring that Systems Program Office staff working on outsourcing have the necessary skills and competencies.
The report also found Defence's spending data to be incomplete and unreliable and that its sustainment monitoring and reporting must improve.