Lesson

Risks associated with requirements instability, software development and systems engineering were known at the time of contract signature but in the light of subsequent events were clearly not adequately addressed in pre-contract negotiations. The experience underlines the importance of having well-defined and stable requirements at contract award, and of contractors having sound systems engineering and software development processes.

A proper balance needs to be kept between proper engineering processes and contractor-perceived commercial imperatives to minimise risk that unrealistic technical programs will actually result in delays to the overall schedule.

Accessibility requirements should be agreed, specified and documented early in the contracting process to minimise risk of incurring excusable delays when access to the system to be upgraded is constrained due to operational reasons.

Best practice would suggest that for a capability acquisition that includes significant software development, a contract that allows for both fixed price elements as well as alternative cost structures which include; appropriate controls, incentive and penalty models that can be applied to the highly developmental elements involving significant risk, may be appropriate.

Milestone payments could be selected for those deliverables that have well defined objectives and the alternative payment method with incremental work packages could be applied to the software aspect of the project. This approach would require strict controls and metrics to limit the risk to the Commonwealth