2.3 In accordance with agreed administrative arrangements, at the start of each calendar year, Defence provides Finance with a list of projects the department proposes to refer to the Committee. Finance and Defence discuss projects coming up throughout the year. The agencies maintain a cooperative relationship when referring projects to the Committee, and when developing material to enable the expediency motion.
2.4 Defence's Infrastructure Management System provides a detailed checklist of information to be prepared for the Committee. The key tasks include:
• preparing referral documentation, to be forwarded to Finance, to allow the referral to be presented to Parliament;
• preparing the statement of evidence, gaining Ministerial clearance and sending copies to the Committee Secretariat around six weeks prior to the planned public hearing date;
• preparing confidential cost documents;
• providing the Committee Secretariat with the list of witnesses who will appear at the public and confidential hearings;
• organising the site inspection and briefing;
• organising the public hearings (venue, booking Defence staff travel, arranging vehicles for the Committee and Secretariat members to get to the hearing, catering and so on18);
• responding to any questions taken on notice at the hearings; and
• preparation of the expediency notice, to be forwarded to Finance.
2.5 Defence provides a total figure for the cost of the work in its public submission on each project. To allow the Committee to make an informed recommendation on the cost effectiveness of a project, the department provides further detail to the Committee including confidential cost information. The cost details are discussed, as required by the Committee, in private hearings. This is the case whether the project is financed through direct procurement or by a PPP.
2.6 The confidential cost information is provided to the Committee no later than two weeks prior to the public hearing. For direct procurement projects, this information comprises a document indicating the expected cost of items like demolition, building construction, furniture and equipment, design and management fees, and a Defence contingency19. The November 2006 version of the Committee's Manual advises agencies that confidential costing papers prepared in relation to PPPs should include the raw Public Sector Comparator20 and an identification of the risks to the project and where they are best assigned (to the private company or consortium taking on the project, or retained by the Commonwealth).
___________________________________________________________________________
18 The Committee Secretariat advised the ANAO that they undertake these arrangements where the hearings are held at Parliament House, or public venues, rather than Defence venues.
19 The Defence contingency amount provides for un-anticipated items that will increase the cost of a project. For example, finding that there is asbestos that needs removing when it wasn't expected that this would be an issue or to provide for changes in design required to accommodate necessary items that were originally overlooked.
20 The raw Public Sector Comparator (also called the Project Cost Benchmark) is the base level of costing of the project. It does not include any allocation of value for risks and contingencies, which may affect the cost of the project. The Public Sector Comparator is developed to provide the benchmark costs against which PPP proposals can be prepared and it is also provided to the bidders for PPPs.