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DMO engaged the Helmsman Institute to review the complexity of DMO sustainment operations. The Pappas review had observed that sustainment was an area with significant opportunities for efficiencies.105. It is an estimate of the differential cost above that of the current capability and is included in submissions to government for approval. We recommend this process cease immediately. examining each Systems Program Office to determine where each fits within the smart buyer function, and the most appropriate procurement model for delivering the capability and achieving value for money. Defence published a final, complete edition, comprising 18 pages plus appendices with a date of 12December2016. 52Defence, Houston Review into Army Aviation, November 2016. 144The First Principles Review (p. 36) states: We consider that it would be possible to rationalise and reduce the Systems Program Office structure and staffing levels as more sophisticated contracting models are established and their individual support functions are consolidated as part of the service delivery reform. personnel and skill shortages in the DMO, delays due to industry capacity and capability, and. There is no record of whether the intended savings to sustainment costs were achieved from the Defence Materiel Organisations (DMO) 2008 initiative to identify efficiencies. [1], As of 30 June 2021, Defence through the Capability Acquisition and Sustainment Group (CASG) was managing 161 major projects and 13 minor acquisition projects, at various phases in the Capability Life Cycle, worth a total of $121.6 billion, with an annual acquisition budget was A$9.3 billion. 4. In May2016, the Sustainment Gate Review for the program found that the commercial incentive in the contract was insufficient to obtain the desired rate improvement. Create a collaborative framework for the management of sustainment without diluting individuals responsibilities. Key elements of the governance and organisational framework include: a specialist organisational unitcurrently the Capability Acquisition and Sustainment Groupstaffed by a mix of civilian and military personnel; contract-like arrangements for sustainment between that unit and the Chiefs of Navy, Army and Air Force (Defences Capability Managers); and day-to-day responsibility for most sustainment activities falling to Systems Program Offices, which carry out that work using a mix of in-sourced and out-sourced service provision. That review found sustainment is still being treated as a poor relation compared to the generally higher-profile acquisition work.27 The Sustainment Complexity Review (2010), which found 50 plus sustainment business models in DMOs Systems Program Offices, explained this diversity by reference to the greater attention Defence had given acquisition. 42Defence advised the ANAO in June 2017 that no decision had been made on the scope of the Program Performance Management System, nor its roll-out plan. 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 total spend was about $350000. Cash Conversion Ratio - the amount of time between when a business pays for its inventory (cost of goods sold) and receives payment from its customers is the cash conversion ratio Funding Gap - a measure of the shortfall a company has to overcome (how much more cash it needs) Dividend Payments - CF can be used to fund dividend payments to investors They include: 2.21The review is examined in more detail in Chapter 5 of this audit report, while the transparency of internal costs is examined in Chapter 3. 0000001615 00000 n
In June2017, Defence advised the ANAO that implementation plans for significant reforms to Systems Program Offices would be developed in the second half of 2017. The plan must include the purposes and activities that the entity will pursue, the results it expects to achieve and planned performance measures. The audit found that Defence had established and continued to refine a generally sound Materiel Sustainment Agreement (MSA) framework to facilitate the management of sustainment activity for specialist military equipment. 114Defence, Final Audit Report, Audit Task: 12-041, SRP Savings and Performance Reporting, Audit and Fraud Control Division, August 2012. 4.15Defence records show that the department made substantial efforts to keep track of the large number of diverse initiatives identified across the department under Smart Sustainment, including internal reporting to management. 191-202, available from
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