In 2009-10, the Defence Materiel Organisation (DMO) had a productive year and managed over $10.6b in actual expenditure across the Acquisition and Sustainment Programs. The Acquisition Program (comprising over 200 major projects and over 100 minor projects) expended $6.0b against an estimated revised budget plan of $5.4b, reflecting strong capital performance by DMO projects, with reductions in slippage against in year plans and the acceleration of some program activity into 2009-10. Improved schedule performance in a number of acquisition projects has not increased costs, but has caused actual expenditure to exceed planned expenditure.
The Sustainment Program (representing over 100 sustainment products) achieved the planned Strategic Reform Program (SRP) savings target of $263m in 2009-10.
The DMO's budget represents about 38% of the Defence budget and approximately 0.9% of Australia's Gross Domestic Product with approximately 61% (or $6.4b) spent on local Australian suppliers.
While this report focuses attention on 22 of the DMO's most significant acquisition projects (an increase of seven from the previous year's report), it is also important to note the DMO contribution to force protection measures for troops in the field. This is especially the case given the nature of current Australian Defence Force (ADF) operations in the Middle East. To meet these needs the DMO is actively engaged in advancing some major projects ahead of previously foreshadowed schedules.
Defence industry plays an essential role in supporting ADF capability through the provision and maintenance of military equipment and the delivery of a wide range of support services. Growing the local Defence industry capacity and competitiveness is a Government policy objective, as outlined in the 2010 Defence Industry Policy Statement - Building Defence Capability. The DMO supports this objective through a wide range of ongoing projects and programs which invest in skills development, and improved productivity.
The large portfolio of projects that the DMO manages is also one of the most complex and technically difficult in the country. Benchmarking undertaken by the Helmsman Institute in 2009, comparing DMO and industry project levels of complexity, indicates that the DMO projects are more complex than the average of other industries such as IT, construction, telecommunication, engineering and finance sector projects.