10.6.2. Approval system description

The 'two-pass' process for approvals was introduced as part of the reforms after the Kinnaird Review138 in 2003 (see Figure 10-4)

Note: CDG = Capability Development Group; DMO = Defence Materiel Organisation; DSTO = Defence Science & Technology Org.

DCP = Defence Capability Plan; OT&E = Operational Test & Evaluation.; * New JV between DMO and DSTO announced 25/1/09 will increase this role

Source: Australian Department of Defence, Defence Capability Development Handbook (2006)

Figure 10-4: Overview of the acquisition process in Australia

At present, as Figure 10-4 shows, once capability gaps are identified in the "Needs" phase and endorsed by the National Security Committee of Cabinet, they achieve entry into the Defence Capability Plan ("DCP"). A ten-year view of the DCP is published approximately every two years with the aim of providing Industry "with sufficient guidance to enable broad business planning"139. Updates to the DCP are published in the (alternate) off-years.

At the First Pass approval stage, an Initial Business Case for each realistic option that addresses the capability gap is considered. It is expected that the options presented will include at least one off-the-shelf ("OTS") option where such an option exists140, as recommended by Kinnaird. Mortimer recommended stronger consideration of OTS options, with any decisions to move beyond the requirements of an OTS solution being based "on a rigorous cost-benefit analysis of the additional capability sought against the cost and risk of doing so".

The Rapid Acquisition Program allows low-risk projects to undergo an accelerated acquisition process with a combined First and Second Pass Approval stage. For example, four Boeing C-17 Globemaster III aircraft141 were acquired under the Rapid Acquisition Program in 2006. Rapid acquisition accounted for £169m in 2007-08, almost 10% of the DMO acquisition budget142 (cf., 13% on UORs in UK in 2008).

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138 Defence Procurement Review 2003, M. Kinnaird (Aug 2003)

139 Defence Capability Plan 2006-16: Public Version (Jun 2006)

140 DMO Acquisition and Sustainment Manual (Dec 2007)

141 Project AIR 8000 phase 3

142 Defence Annual Report 2007-08, Department of Defence (Oct 2008)