Managing major Defence equipment acquisitions that successfully deliver front line capability for the Australian Defence Force represents a significant challenge, not unique to Australia. As major Defence equipment acquisitions are often expensive and technically complex, there are significant risks, not only to delivering within budget and on schedule, but also to delivering the required capability.
This fourth review of the status of selected Defence equipment acquisition projects builds on the work undertaken by the Defence Materiel Organisation (DMO) and the Australian National Audit Office (ANAO) to improve the transparency and public accountability for major Defence equipment acquisitions. The 2010-11 Major Projects Report (MPR) includes 28 projects with approved budgets totalling $46.1 billion, which is over half of the approved budget for the DMO's major capital investment program ($79.5 billion).
The preparation of the MPR has received strong ongoing support from the Government and the Joint Committee of Public Accounts and Audit (JCPAA). In April 2011, the second examination of the MPR by the JCPAA culminated in the publishing of JCPAA Report 422, Review of the 2009-10 Defence Materiel Organisation Major Projects Report. Report 422 made nine recommendations to further progress and improve the transparency and accountability of major Defence equipment acquisitions. Action already taken by the DMO to implement the JCPAA's recommendations contributed to the enhancement of this MPR, in terms of improved reporting on each of the three key elements of the MPR: cost, schedule and capability. As the DMO further progresses the implementation of these recommendations, future MPRs will also benefit.
In addition, the Foreign Affairs, Defence and Trade References Committee is currently undertaking an inquiry into Procurement procedures for Defence capital projects. This report, which covers DMO's most significant procurements, along with other ANAO reports on Defence acquisitions, provides relevant information to assist the Committee in its deliberations.
This year's review continued the strong working relationship between the DMO and the ANAO in the preparation of the report. Defence and industry stakeholders also provided valuable input to assist with the review.
I would like to thank the former Chief Executive Officer of the DMO, Dr Stephen Gumley AO, and the acting Chief Executive Officer of the DMO, Mr Warren King, and their staff at the corporate and project levels for their work on this report, and the assistance provided to the ANAO staff in conducting the project reviews.
Ian McPhee
Auditor-General
14 December 2011