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Presentation to Land Environment Working Group. 28 October 2008 Damon Howes Industry Co-Chair. Aim and Scope. Land Warfare Conference – Some key points So what’s going on? The Mortimer Review Overview of a future option for Defence Acquisition Strategy based on NZDF Project ALEXANDER.

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presentation to land environment working group

Presentation to Land Environment Working Group

28 October 2008

Damon Howes

Industry Co-Chair

aim and scope
Aim and Scope
  • Land Warfare Conference – Some key points
  • So what’s going on?
  • The Mortimer Review
  • Overview of a future option for Defence Acquisition Strategy based on NZDF Project ALEXANDER.
  • Upcoming events
  • Land Warfare Conference 2009
  • Need seek your feedback on LWC for DSTO
land warfare conference 2008 10 th year
Land Warfare Conference 200810th Year
  • This afternoon: Chief of Army Conference delegates review the exhibition (need balance this with meeting DGLD staff).
  • LWC Newsletter, “LandForce”, will be produced daily. Short information segments, maybe with a photo. Send your points to: Colin.blair@dsto.defence.gov.au
  • Teachers/Students/Military/Govt due on Friday.
  • Feedback on LWC 08 to me at dhowes@thomascoffey.com.au
so what s going on
So what’s going on?
  • Lots inside Defence…complicated by the financial crisis (GFC) and unpredictable markets
  • Greg Combet, 21 Oct 08, said there would be some “tough arm wrestling” but expected the 3% real cost increase to be maintained.
  • White Paper and Companion Reviews.
    • Companion reviews pretty much finished
    • White Paper and Budget preparation require some direct linkages. Budget bought down in May 2009.
    • Equally the Defence Capability Plan needs linkages for major expenditure.
so what s going on5
So what’s going on?
  • Defence Capability Plan 2009-19
    • Public version will probably be released around D+I at end June 09.
    • Combet’s response to public DCP release question.
  • Between now and then, we can appreciate the LEWG forums for what updates can be provided.
mortimer review
Mortimer Review
  • David Mortimer, AO is Chair of the Defence Procurement Advisory Board – also Chairman of Leightons.
  • Titled, “Going to the Next Level” it is the report of the Defence Procurement and Sustainment Review
  • http://www.defence.gov.au/publications/mortimerReview.pdf
  • Announced by Labour Government on 7 May 08 and was released to the public on 23 Sep 08.
  • Review is presented as independent and makes 46 recommendations
mortimer review7
Mortimer Review
  • Five main areas covered:
    • The Strategy and Needs Analysis of Capability Planning;
    • Defining the Requirements of Capability;
    • The Capability Acquisition Process;
    • Sustaining and Disposing of Capability; and
    • Driving Cultural Change in the Defence Materiel Organisation
mortimer review8
Mortimer Review

The Government should work with industry and State Governments to address the skills shortages.

Changes to the scope of projects should occur through a disciplined process that considers the merit of the change mindful of the impact of cost and schedule.

Contracts should reflect the risks of the procurement being undertaken

CDG and DMO should be “adequately resourced” (my emphasis)….

Some “motherhood” statements…

mortimer review9
Mortimer Review
  • DMO more “business like” mentioned 14 times in the 118 page report
  • New SES Band 3 Commercial position in DMO
  • The challenge:

“Capability Development Group should develop the relevant information for a project’s entry into the Defence Capability Plan and it should focus on achieving a more disciplined cost, schedule and risk information for a project’s entry”

mortimer review10
Mortimer Review

DMO should be responsible for the acquisition strategy throughout the requirements definition process.

Greater emphasis on “off the shelf”

All projects assessed for potential as Public Private Partnerships (PPP)

Executive Agency??

Acquisition funding directly appropriated to the DMO (not through Defence)

mortimer review11
Mortimer Review

DCP: “Providing explicit cost information was contrary to the Commonwealth’s commercial interests” (replaced by Acquisition Category (ACAT) Framework?)

acquisition strategy an option
Acquisition Strategy – an Option
  • Recently had opportunity to be exposed to the New Zealand Defence Force acquisition process.
  • Project ALEXANDER – seeks to outsource some logistics support for NZ Army and other Government agencies. Project value is NZ $200- 250m over 10 years.
project alexander
Project ALEXANDER
  • NZDF staff did initial fact finding tour.
  • Released a ROI document requiring interested parties interested in establishing a relationship to respond to an “exam” (ROI).
  • Industry Brief, where they admitted they didn’t have all the answers.
  • Exam submitted
  • They marked the exam within 30 days and gave comprehensive feedback (four A4 pages) on your result as well as a marking guide
    • General statements of positives and negatives.
  • Followed up by 1-1 debrief.
project alexander15
Project ALEXANDER
  • Downselected six companies to attend a round table of discussions and site tours.
    • Focus on sharing ideas
  • Conduct three such workshops, each of a few days with specific agenda
  • Outcome is an agreed Statement of Work which has industry buy in
  • Release a Pre-Qualification Questionnaire to remaining interested parties
  • Assessment
  • Two companies/consortiums selected to receive the final RFT/RFP documentation
  • Assessment and parallel negotiations as required (so NZDF still get competition)
project alexander16
Project ALEXANDER

Outcome for NZDF is a partner who has been part of the process from early stages and yet has still needed to compete for success.

Outcome for industry is being part of a staged acquisition with robust and valuable feedback, and where they can drop out at any time.

Outcome for both should be a strong and robust partnership where each others strengths and weaknesses are identified and acknowledged.

To me, this is as close as I have seen to a win-win. The only thing NZDF could have done to really make Industry fall down in delight would have been to make a financial contribution to the companies expenditure. The reality is that these costs have actually be quite small relative to the project size and scope.

project alexander17
Project ALEXANDER
  • Take aways:
    • Acknowledgement that Defence does not have all the answers
    • Announce budget up front
    • Seek and deliver on a partnership arrangement
    • Open, robust and timely feedback on submissions
    • Open and transparent process that meets competition/value for money imperitive
  • This is based on a services contract, what process does NZDF use for a physical capability?
lwc 2009
LWC 2009

Ongoing issue…

View from Industry has been considered

For:

Cost effective while DSTO organise

Technological changes require annual refresh

DCP mid 2009 flows into Oct LWC/LEWG

Against:

Cost on industry and Defence of annual basis

Not just $$$

Way forward TBC by Friday

bits and pieces
Bits and Pieces
  • Note Defence Portal at www.DplusI.defence.gov.au
  • This has an acronym search feature and provides opportunities for overseas companies to search for Australian Industry partners.
  • Still doesn’t make sense?
    • Talk with others and ask questions
    • Defence Industry Unit, Australian Business
    • AIDN
    • DMO Industry Office
    • Defence 101 Course
  • LWC 2008 feedback to me by NLT end Nov 08 to dhowes@thomascoffey.com.au
upcoming events
Upcoming Events

ADM Conference – 17-18 February 2009 – Canberra

Avalon – 10-15 Mar 09 - Melbourne

D + I - 30 Jun – 2 Jul 09 – Adelaide

LWC 2009???

LEWG:

Canberra Drinks in Dec 08 and Apr 09

summary
Summary
  • Shared my thoughts on Mortimer Review and an alternate acquisition strategy.
  • Enjoy and maximise the LWC 2008
  • Feedback: dhowes@thomascoffey.com.au
  • Note D+I and LEWG