In 2010-11, the Defence Materiel Organisation (DMO) managed over $10.6b in expenditure across the acquisition projects, sustainment programs and other management services - this represents a total spend of 102% against the revised 2010-11 budget of $10.4b123 through improved delivery. This is not an overspend, but an acceleration of 2011-12 planned expenditure. As at 30 June 2011, the DMO managed 281 major and minor acquisition projects with an annual budget of $5.0b, the sustainment program (comprising 106 sustainment products) managed with a budget of $4.5b, and $0.9b for provision of management services.
The Smart Sustainment Stream of the Strategic Reform Program (SRP) achieved the planned savings target of $288m in 2010-11124.
In 2010-11, the DMO's budget represented about 33% of the Defence budget and approximately 0.8% of Australia's Gross Domestic Product with approximately 57% (or $6.2b) spent on local Australian suppliers.
While this report focuses attention on 28 of the most significant DMO acquisition projects (an increase of six from the previous year's report), it is also important to note the DMO's contribution to supporting Australian Defence Force (ADF) personnel deployed on operations. To meet these needs the DMO is actively engaged in advancing certain projects ahead of previously planned schedules. Some recent examples are the rapid acquisition of a fifth C-17 Globemaster (the additional C-17 will expand Australia's capacity to deploy personnel and equipment rapidly to operations in the Middle East), Digital Terminal Control Systems, and the Counter Rocket Artillery and Mortar.
Defence industry plays an essential role in supporting ADF capability through supply and maintenance of military equipment and delivery of a wide range of support services. Growing a competitive local defence industry capacity is a Government policy objective, as outlined in Defending Australia in the Asia Pacific Century: Force 2030 - Defence White Paper 2009, and the Defence Industry Policy Statement 2010. The DMO supports this objective through a wide range of ongoing programs that invest in skills development and improved productivity.
The large portfolio of projects that the DMO manages is the most complex and technically challenging in the country. Benchmarking undertaken by the Helmsman Institute in 2009 and 2010 - comparing DMO and industry project levels of complexity - indicates that DMO acquisition projects and sustainment products are more complex than the average for projects and products in other industries such as IT, construction, telecommunications, engineering and finance.
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123 Portfolio Additional Estimates Statements 2010-11, Defence Portfolio
124 Defence Annual Report 2010-11